Updated on 04.16.11

Reader Mailbag: 3 AM

Trent Hamm

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. Locking in student loan rates
2. Future of Roth IRAs
3. Handling a mini-windfall
4. Planning for the unpredictable
5. Time for fun hobbies?
6. Stay at home mom decision
7. Overseas trip planning
8. Personal threats
9. Giving up a hobby
10. Ten best books

As I’m writing this, it’s three in the morning. Why am I writing this at three in the morning? We have a baby who seems to be crying every hour or so with some incredibly painful teething.

A nap may be in my future later today.

Q1: Locking in student loan rates
My girlfriend has one private $25K student loan that has a pretty good interest rate (4.2%)….for now. It’s a variable interest rate, which concerns me. I’m certain that interest rates will start creeping back up soon and before that happens I want to know if there is any way possible to fix the interest rate. We tried calling the lender and asking them to fix it, but to no avail. Do you have any other suggestions? Would writing a letter help our cause? Can you consolidate just one private loan to get a fixed rate?

– Josh

If your current lender won’t cooperate with locking in a rate, I would shop around. Contact other lenders in the private student loan business and see about consolidation.

Yes, you can consolidate a single loan if you’re eligible for loan consolidation. In that situation, it’s more of a refinancing than a consolidation, of course, but the procedure is the same.

You may have some difficulty finding a lender, however, as many lenders would prefer to have a variable rate loan on the books with interest rates as low as they are.

Q2: Future of Roth IRAs
I agree that the way the Roth IRA rules currently exist make it an appealing investment vehicle. However, I am not confident that the rules will remain unchanged for the thirty years until I start withdrawing the money. Do you see ROTH IRA’s as an easy target for which politicians will try to reduce the tax effectiveness?

– Tim

It’s difficult to say that any aspect of the tax code will remain consistent over the next thirty years.

However, I don’t see Roth IRAs as being the easiest target for politicians who want to increase revenue. Roth IRAs tend to be used heavily by people making between $50,000 and $150,000 a year – a group that both political parties want to have supporting them at the ballot box.

There are many other tax targets that the government will aim for besides Roth IRAs that don’t come with the political liability of targeting Roths.

Here’s my situation: My husband and I are at a point in our debt-reduction/financial turnaround where we are seeing encouraging results and feeling pretty positive about the do-ability of our dreams. Together we have *huge* student loans (about 2/3 federal, 1/3 private) that have recently entered repayment and we’ve got a handle on those payments for the time being – not really freaking out about it but sufficiently aware of the seriousness of this type of debt. We also have some credit card debt that we’ve been snowballing; we’re about a third of the way through that, estimating it’ll be gone in about 12-16 months. When that’s gone, the plan is to take the money that once went to cards every month and split it between savings and attacking student loans. We currently have two small savings accounts – only about a month’s salary in those, combined. We don’t own a car, we rent a small apartment in a major city, have good benefits thru work, and are generally getting by a little better every month, thank goodness.

So, in the coming weeks & months we expect some irregular bumps in our income due to some side work we are each taking on (about $5000 total, after putting away some for taxes since it’s freelance work). In addition, our rent for the month of June ($1200) will be free because of a promotional deal when we signed the lease. We’re debating how best to handle this surplus – really wipe out a huge chunk of cc debt, or put it toward the loans, or add it to savings, or somehow divide it up between the three? I realize I didn’t give you specific debt numbers to work with – but based on this, can you get a sense of what would be a wise use of this money? And for the record, we do plan to use about $100 on a train ride or car rental for a much-needed day trip out of the city (don’t worry, we’ll pack a picnic!).
– Angela

It is really hard to say what the best move is without specific numbers.

For starters, I would make sure that you’ve got a debt repayment plan in place, preferably ordered by the interest rates on the loans. Pay off the high interest rate loans first.

Where should a large emergency fund fit in there as a priority? There is no right answer. I usually encourage people to first have a $1,000 emergency fund, then pay off their high interest rate debts (anything over, say, 8% or 9%), then build a larger emergency fund (up to three months or so of living expenses), then pay off all remaining debts. I think this is a good general plan to follow.

Q4: Planning for the unpredictable
I am graduating from college this May and will immediately commission as an USAF Officer. Since childhood my parents have always been supportive of my interest in personal finance and are very open about their own financial situation. In particular, what struck me is that they were very regular about saving for retirement until ‘life’ happened in the ‘80s: my two older brothers and I were born in two year increments like clockwork. Since that time, for various reasons, they have saved very little for retirement and will have some tough decisions ahead.

My current situation: My service commitment is 10 years (pilot). I am single, will not buy a house for at least a decade (I PCS every 3 years to a new location), and I have just purchased (in cash) a nice used diesel Jeep that I plan to see through 300,000 miles. I have one $27,000 personal loan with a 5-year term @ 4.99% interest left over from school, no credit card debt, and I already have a 6-month emergency fund in place. I will have very predictable income, expenses, and pay increases during my service.

My plan: Fully fund Roth IRA to $5000/year, fully fund Thrift Savings Plan (Government 401K) to $16500/year, and make minimum monthly payments on the loan. Achieving this is as simple as not letting my lifestyle ‘inflate’ too much from college.

My rationale: While I don’t like the idea of debt, my logic is this: by not making additional payments on the loan, I am able to fully fund TSP – reducing my tax burden by more in a single year than I will pay in total interest on the loan over the course of 5 years. My pay will increase at the 2 year mark, and I can use the excess monthly income to pay down the loan rapidly. If my circumstances change (marriage, etc.) it is only a matter of reducing my contributions to TSP to put more money in my pocket each month. When the loan is paid off, I will have plenty of monthly income to start saving for other goals (like a house).

Is my logic sound? If I anticipate “life” happening at some point, but can’t predict when, is it not logical to take FULL advantage of the investment vehicles available to me while I am a bachelor with essentially no commitments?
– John

I absolutely think it makes sense to “front-load” your retirement savings with as much money as you can when you’re very young. Every dollar you contribute to your retirement in your twenties is the same as contributing several dollars in your forties and fifties.

My only suggestion to you would be to make sure you have something of an emergency fund in place – at least $1,000 in cash. This way, when small “life” events happen, you’re not forced to dip into debt to handle them. Replenish this fund as soon as possible every time you need to use it.

It is often very tempting to stop contributing to retirement when big “life” events happen, but try as hard as you can to avoid it. People never complain about having too much money in their retirement accounts.

Q5: Time for fun hobbies?
How do you find time for fun hobbies like boardgaming and still have time for your career and for your family and for any kind of self-improvement?

– Elliott

The biggest reason is that I don’t “waste” time. I don’t spend time idling in front of the television and I rarely do it in front of the computer.

If I have spare time, I usually try to engage in some activity that has real value to me. That means either engaging in something that needs to be done (a household or work task), some kind of self-improvement, or a clearly defined leisure task (such as playing a board game with someone).

I’m often amazed at how much time I wasted once upon a time.

Q6: Stay at home mom decision
My husband and I are 28 years old and recently found out we are pregnant (which we are THRILLED about and it was planned), and before this, we had done some inventory of our budget and have been saving pretty intensely. My husband makes about $3,200/month (after taxes) and we try our best each month to use only his salary for all of our bills, groceries, everyday expenses, etc. We usually come up at least $500 short. I make about $3,400/month after taxes, and of that we put just about $2,400 directly into savings, and the other $1,000 gets put into a separate checking account that we pull from to make up the difference in our monthly expenses that can’t be made using just my husband’s paycheck. We also decided we’ll try to use this checking account for most expenses when summer comes (my husband is a teacher and therefore doesn’t get paid in the summer). We’ve been exploring other ways of saving some money, which has included the possibility of getting rid of cable (this will be a tough one for the husband – huge sports fan. But we do have Netflix and a Roku box which would allow us to stream from amazon and hulu when we wanted), and we’ve gotten pretty good at planning meals at the beginning of each week and only going to the grocery store once per week (that alone as saved us up tp $75/week or more), and rarely going out to dinner. We currently have $14,000 in a savings account, plus a few stock accounts which probably add up to about $10,000. Our only debt other than our mortgage is my student loans (about $45,000 worth) which I pay the minimum payments on each month which ends up being about $350/month with a 6.125% interest rate).

I recently just started a new job (accepted the position and two weeks later found out I was pregnant!). We are struggling with the decision of whether or not I should stay home when the baby comes. This is something that means alot to BOTH of us. I’ve always wanted to be able to stay home, but I worry that it will put us in a tough financial situation if I do. Since I just started, I will not be eligible for any sort of extended leave with the Family Medical Leave Act, therefore the most I see myself being able to take off is about 8 weeks (6 weeks disability plus 2 weeks vacation time). This upsets me to even think about. I can’t imagine only staying home this long. While I know my husband is supportive of me staying home for a little while (we figure we can easily do this for one year or maybe a little more with what we have in savings), I worry that 1) I have no idea what the job market will be like when I decide its time to go back to work. The economy is so bad, and I work in public health (on grant projects no less). These types of programs are frequently the first to get cut when state budgets are struggling. 2) I worry that if I do stay home, we will be unable to save much of anything until I get back to work.

We’ve thought about how much we would save in childcare costs – which is substantial. We’ve also realized that I spend almost $200/month on gas, given my job is about 33 miles away from home. This is money saved if I were to stay home. BUT – we also have decided that we may want to trade my husband’s car which is a 2 door coupe for something more family friendly. This would add a car payment to the mix, which would easily replace the $200/month we’d be saving on gas.

I guess I’m just looking for advice. What do you think of our situation? Do you think its a stupid decision to leave a good paying job to stay home for a year or two, not knowing what the job climate will be when I’m ready to return? Any help is so appreciated!
– Kate

I don’t think it’s a stupid decision at all. My wife took FMLA leave (unpaid, without benefits) for almost a full year recently to be with our children when they were young. I changed my career path so that my time would be more flexible, too. The time that your children are young is a time that, once it’s passed, will never return.

I would not stress yourself out about what the job climate will look like in two years. It’s almost impossible to say what it will look like then. The job you have now might not exist, either, so staying in isn’t a guarantee that you’d be working in that field in two years.

It sounds like you’re in pretty good financial shape for making this move. If it’s something you feel compelled to do, then you should do it.

Q7: Overseas trip planning
I am taking an overseas trip towards the end of the summer this year. I will have the money for the trip saved up by then. I like to put all of my purchases on my credit card(s) and pay them month to month. I know both of my current credit cards charge a foreign exchange fee of 1% of each American dollar spent. One card is a Visa and one card is an American Express, which I have read is not accepted outside the country often. Do you have a recommendation for a card with a 0% foreign exchange fee? Or is there a better way to handle money/purchases overseas? Does the exchange rate make a difference in the choices I should make? Although, I suppose 1% is not very much money considering how frugal I am on trips; pictures and experiences, not souvenirs’, are what make a trip worthwhile to me.

– Daniel

Right now, there aren’t a ton of cards that offer a 0% foreign exchange fee. Most of those cards are pretty limited in terms of rewards, so if you’re an active rewards user, it’s probably not worth it.

If you are seeking such a card anyway, most of the major credit card issuers (Capital One, Chase, Citi, etc.) offer a few cards that have a 0% foreign exchange fee.

My experience with foreign travel was that my ATM card handled everything I needed quite well. I was able to easily use international ATMs after informing my bank that I was traveling abroad.

Q8: Personal threats
I started a blog like you suggested as a creative vent and to maybe earn a bit of money. It was going really well until yesterday, when someone sent me a very personal threat. Have you ever received such a thing? How do you handle it?

– Shanda

I receive two or three such disturbing messages a week. At one time, they really bothered me – in fact, I closed up my first successful blog (a parenting blog) because of them.

Now, I basically ignore them. The people who would send such things are people who are “internet brave,” meaning they’re willing to show their sadistic side only because the internet offers them some anonymity. They’re cowards, in other words.

I have been called almost every insult you can imagine. I’ve been sent Photoshopped pictures of my children. I’ve been sent a few emails that I would describe as being essentially “snuff.” Frankly, I don’t care any more.

The only drawback I’ve seen to such things is that it basically desensitizes me to some things that might be considered legitimate complaints. I often view people who come at me with negative tones as being the type of person who would send such stuff, and I’ll either just ignore them or respond with a “get a life” type of message.

Q9: Giving up a hobby
I used to play guitar and bass in a band through college. I put a lot of money into the equipment I have. I have 5 guitars/bass of various styles and 3 amps, which I probably spent $7,000 when all is said and done. Now that I am out of college the inevitable happened: I don’t play with a group anymore. While my finances are good (1 year out of college, no debt, own my car, $60k in income a year) part of me says just letting the equipment sit there is not doing me any good. The other part of me is in pain thinking about trying to sell them (memories of playing and thought of trying to sell all of it doesn’t exactly thrill me).

– Josh

The first question is whether any of this has significant re-sale value. Can you get much out of it used? I can’t tell you the answer to this because I don’t know the equipment and I’m not familiar with guitars. Does this type of equipment sell well used on, say, eBay?

If you can’t get a large return on it, I’d just keep it. You might yet have value from those instruments.

If there is significant value there, you have to ask yourself how much time you want to put into selling it. Generally, the more time you put into selling it, the more you’ll make from the sale because you can break the sale down into smaller pieces and try more approaches. If you just want to get rid of the lot, invent a fairly low price and list it all on Craigslist as one giant lot.

Q10: Ten best books
My question is what are 10 books recommended to read? I don’t mind financial, investing or leisure books and if you categorize them but what are you top 10 favorite/most read/most worth reading books.

– Samantha

That’s like asking a record collector what his ten favorite records are. I’ve read thousands of books over the years. Picking ten favorites is basically impossible.

I tried to come up with a list based on asking myself what ten books I’d keep if I could own only ten books. These would have to be books I could read and re-read and read again and find value in each time I read them, either from the content or the writing style or from something else entirely. This is what I came up with.

Your Money or Your Life by Joe Dominguez and Vicki Robin
Getting Things Done by David Allen
Walden by Henry David Thoreau
Voluntary Simplicity by Duane Elgin
The History of Western Philosophy by Bertrand Russell
The Complete Poems by Walt Whitman
Invisible Man by Ralph Ellison
A Prayer for Owen Meany by John Irving
A Game of Thrones by George R. R. Martin
House of Leaves by Mark Danielewski

This list is far from constant, and I might give you a drastically different list in a month.

Got any questions? Email them to me or leave them in the comments and 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 hundreds of questions per week, so I may not necessarily be able to answer yours.

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  1. Tom says:

    You can’t always refinance student loans. In fact, I think you can only consolidate once. Its not like a mortgage or other loan that you can just “shop around”

  2. Amy says:

    Aside from political implications, there would be legal ramifications for any attempt to change the tax status of existing Roth IRAs. Sure, the government could start disallowing new Roth IRAs at all, or implement a law that would allow taxation on all *new* Roth IRAs from that point forward, but since those of us who choose Roth IRAs have done so based on the government’s choice to not tax that income, they can hardly change it retroactively for existing IRAs. They would have to grandfather current tax rules for existing Roth IRAs.

  3. Rebecca says:

    Being a stay at home mom is definitely doable on $3200 a month. We do it and our mortgage alone is $1400. Once you add up the amt of cost for child care, plus clothes, makeup, hair cuts etc, it can be much cheaper to be at home, cook from scratch, shop second hand etc. That is what we do.

    Also, I would wait to do that bigger car. One, it will get significantly worse gas milage. Two, although it is inconvenient to get a baby in and out of a two door car, it does work. We have 3 kids in the back of ours now, all with car seats. Staying in the car you have will also save you that car payment. If you want a bigger car, start saving for it now. I know so many people who assume they need a minivan or bigger vehicle when the get pregnant. But you really don’t, unless you are having quads.

  4. Adam P says:

    Don’t use foreign ATMs often while travelling overseas as Trent suggests. There’s a host of reasons but not only will they charge you a foreign exchange fee the same as your cc will but you’ll often face hefty usage fees for the withdrawal as well, sometimes as much as $5.00 a transaction.

    Carrying around cash in large doses isn’t safe in a lot of places; thieves love to target tourists leaving ATMs; you also risk having your card compromised by a shady machine. When I travel I take a token amount of US money with me (I’m Canadian) as it’s universally accepted, say $200 or so and use my cc for the expenses.

    Use your Visa and/or Amex and pay your bill in full when you get home. They have competitive forex to your bank’s exchange rates and none of the inconvenience of carrying cash. Just call your card company before you leave and explain you’re going on holiday and where you’re going.

    Have fun!

  5. SystemError says:

    For someone who finds it hard to *not* play in bands, even now with a full time job and grad school, I can say you will most likely find yourself wanting to play again. And if your equipment holds both sentimental and monetary value, you will regret selling them. As long as space/storage isn’t an issue: keep them.

  6. Tom says:

    Q6: I totally agree with Rebecca too.. My stay-at-home wife and I get by with a newborn on about the same amount of money, we just became more budget conscious after she left her job. Based on your email and that your husband doesn’t get checks in the summer, it sounds like you guys can handle a big change in income. Good luck!

  7. Danna says:

    I actually wish I could have stayed at home when my son was in middle and high school. I could have had much of an influence over him at that time versus as an infant.

  8. TLS says:

    Regarding Question 7

    I have had the opposite experience from #4 Adam P when travelling abroad. I usually just use my ATM card to withdraw money, and use cash for most of my purchases (the fees are far lower to use my ATM card than to use my credit card). It is my experience that many places do not even take credit cards, or only take credit cards above a certain amount (so not for smaller purchases). But it depends on where you are travelling.

    And yes, if you carry cash, you have to be careful. I usually take out an amount needed for several days, and carry only part of it in my wallet. You can put the rest in a money belt or maybe your hotel’s safe.

    This is what worked for me. Enjoy your travels!

  9. Laura G says:

    Q8 I agree you should largely ignore these messages, but you should also either dump them in a side “folder” in your email, or print them and file the hard copies. That way, on the off chance something shady *does* happen, you have a paper trail to turn over to the authorities.

  10. Johanna says:

    Q7: If your credit cards’ foreign exchange fee is really only 1%, that’s pretty good – the standard fee, last I checked anyway, was 3%. It’s built into the exchange rate, so it doesn’t show up on your statement as a separate fee. And as Adam P says, ATM transactions are subject to exactly the same fee.

    It’s always useful to have a backup source of funds. Even if you tell your credit card company about your trip, it’s possible that they’ll freeze your card anyway.

    As for Adam’s concern about thieves, you don’t say where you’re going, but many cities in Europe, for example, are a lot safer than cities of the same size in the US. Take the same precautions as you would in an unfamiliar place in the US, and you’ll almost certainly be fine.

  11. Jane says:

    I assume that means you’re watching Game of Thrones on HBO? It premiered last night and was great. My husband has been excited for months, so I read the book in the past few weeks and plan to watch it with him. It’s not usually my thing (nineteenth century novel lover here!), but I’ve enjoyed it. The book is brutal but excellent.

  12. Bradley says:


    My wife and I are in a similar boat, although she didn’t have quite the job prospects at the time we found out she was pregnant. The best advice I can steer you to about staying home versus working ties in to Trent’s earliest advice about straightening your finances out – priorities and goals. What are those big values. Are you more career motivated or family motivated?

    My wife knew instantly that no career could ever be as rewarding and satisfying for her as motherhood and since our baby was born last year, staying at home has been a blessing (especially amidst the cut throat job market).

    There’s always a reason not to have kids or not to stay home, but if you are really interested in being a stay at home mom at least for a year or more you might also consider reading a book called “The two income trap”, and work to find a way to live just on your husband’s income if it means you’ll be happier overall.

    Sorry if this seems long winded and rambling.

  13. Johanna says:

    Q9: I encourage you to make a decision: Either take the steps now to start playing with another band (or find a way to have fun playing more informally, or by yourself), or else declare that this is a hobby that’s run its course (and either sell the instruments or keep them with the knowledge that you’re keeping them *only* for their sentimental value).

    If you keep them because you’re thinking “Maybe someday I’ll play them with another band,” you’re going to find that the years will slip away and “someday” will never arrive. But in fact, today is “someday.” So what are you waiting for?

  14. Adam P says:

    You wrote:
    “the fees are far lower to use my ATM card than to use my credit card”

    I am surprised by this. I’ve never been charged for using my credit card to pay for something, but ATM foreign withdrawals at my bank are:

    PLUS system (U.S., Mexico)………………….$3.00 each
    PLUS system (Outside U.S., Mexico)…….. $5.00 each

    Those fees are on top of the fees charged by the ATM, which is usually anywhere from $2-$5 on top of that. So every time I take out money I would pay up to $10 CDN on top of the 2.5% exchange rate charge.

    Again, I’ve never paid for a meal or a service with a credit card and been charged a fee for using the credit card; only the 2.5% exchange charge of the transaction (which I would pay when I withdrew cash as well) which is hidden to me on the bill and just part of the exchange rate used.

    Please explain where you came across such a credit card fee, as I’ve yet to see one in my travels (limited only to NA, Europe, Australia and the Carribean admittedly!).

  15. John says:

    Anytime a blogger complains about the “death threats” they’ve received, they are trying to drum up sympathy. Political bloggers are especially prone to this: they’ll cite “internet threats” as evidence that their point of view is being persecuted.

    But the truth is that anyone with any notoriety whatsoever is going to get hate mail. Back when I was writing a column for my local paper, people would threaten to violence against me because MISPLACED A COMMA.

  16. Kerry D. says:

    On Q4, the USAF states that she already has a 6 month emergency fund… Trent, you tell her that she should set funds aside for at least a $1,000 emergency fund… Oops.

  17. Daria says:

    We have traveled extensively through Europe, the Far East and Southern Africa. We use Capital One and we have never been charged an ATM fee because they reimburse us. We also carry a large amount of cash which I carry in a money belt tucked into my bra and my husband has carried under his pants waist. We have run into pick pockets in France and Italy and have never lost anything to them because we are very aware of our surroundings and keep our hands on our wallets and purses when traveling through the trains and subways which is where you are going to find them. I always carry all of our passports tucked in my bra and our credit cards. When I know that I need to use a credit card, passport or replenish the small amount of cash in our pockets, I go to the bathroom. Then I go back to the bathroom to tuck the credit card or passport away after making the transaction. I prefer to travel on a cash basis to keep to my budget and to minimize fees. I feel safer overseas than in my own country.

  18. Johanna says:

    @Adam P: Your bank’s foreign transaction fees are exhorbitant. My bank charges $2 for an out-of-network withdrawal, whether in the US or abroad (and since there aren’t any in-network ATMs abroad, that’s $2 for any foreign withdrawal). Plus, I’ve never seen an ATM in Europe charge any kind of transaction fee at all, so the $2 from my bank is the only fee I pay. That’s on top of the 3% foreign-exchange fee, which is exactly the same for ATM withdrawals and credit-card transactions. So, it costs a little more to use the ATM than to use a credit card, but it’s worth it to have some cash. Usually one ATM withdrawal is enough to get me through a week-long trip.

    I haven’t used a European ATM for about a year and a half, though – maybe things have changed recently.

  19. Courtney20 says:

    Tangential to Q6 – Trent’s wife did not take FMLA leave for a year. FMLA only guarantees your job will be there after 12 work weeks of leave in any 12 month period, and Trent’s wife was fortunate enough that her employer held hers longer for her. Not all employers will do this, so please don’t assume that yours will. Political parties claim to ‘support families’ but the US is the only first world country without any form of guaranteed maternity leave.

  20. Adam P says:

    Agree with you Johanna (as usual)! Canadian banks (all 5 of them, huge oligopoly here) charge ridiculous fees compared to the USA. The fees I stated are for the highest end account (which I have for free but need to keep $5,000 in the account). We don’t get reimbursed for anything, sadly!

    I do find I have seen ATM fees in London, but I haven’t used ATMs in Europe so you could be right about them not having ATM fees there for non-customers.

    US Banks are much more user fee friendly it seems; I guess this is another topic like taxes or health care that changes the advice if you’re taking a Canadian v US perspective.

    And yes, also agree you need always need a bit of cash while away, no one can do 100% credit card but I find taking $200 or so cash with me (US funds) is enough for a 2 week or less vacation if I use my cc wherever possible. In my case the $200 usually finds its way onto a bar, where I am using cash and not my cc to buy a round and tip. :)

  21. Johanna says:

    Q3: You’re looking at a $6000+ windfall, and you’re worried (and think Trent is going to be worried) about the cost of a restaurant meal on your much-needed trip out of the city? If packing a picnic is what you actually want to do, go right ahead, but if restaurant meals are something you enjoy, go ahead and have one. I won’t judge you either way.

    As for what to do with the rest of the money: It’s hard to give detailed advice without knowing some more numbers (interest rates *and* balances), but unless the credit-card interest rates are huge, I’d encourage you to put at least some of the money toward the student loans, especially the private ones. That’s because credit-card debt goes away in bankruptcy, but student loans don’t. Nobody thinks they’re going to declare bankruptcy, but many people find that they have to. It sounds like you’re facing several years, at least, of paying down debt, and a lot can happen in that time that you can’t anticipate right now. So chip away at the student loans while you can.

  22. JJ says:

    Q9: False dichotomy alert! :-)

    Why not just sell some of your gear? Whittle it down to just one guitar, one bass, and maybe one guitar amp and bass amp. Or if it’s all too specialized, sell all of it and use some of the proceeds to buy more all-pupose gear. One Tele and one P-Bass. Or a Variaxe. Maybe run through a POD instead of a real amp.

    Or pick either guitar or bass and just go with that.

    That way, you can pull some money out of an idle asset, but you still can drag an instrument out and practice, jam with friends, or even get into another band some day.


  23. Johanna says:

    @Adam P #20: Well, I’ve never seen an ATM fee in London either – maybe we frequent different parts of London. :)

    As for bringing US dollars along – the one and only time (that I know of) that I was ripped off while abroad, it was by a German bank teller who shortchanged my friend and me when we went in to convert some dollars to marks (this was back when they still had marks). He was counting on us to be either too stupid/oblivious to notice the difference (we weren’t, because the difference was huge) or too inept with the language to voice our objection (we were, but a very nice passerby helped us out with that). I imagine that you’d face the same danger if you use US dollars to pay for things directly (I’ve never tried this). It’s still a good idea to bring some along, though – just something to watch out for.

  24. Kevin says:


    No offense, but this is financial insanity.

    You racked up $45,000 in student loan debt, so you could work a job for 2 weeks, then become a stay-at-home mom? Won’t you regret wasting all that money on an education you’re not even going to use?

    Not to mention, you make more than your husband ($3,400/month vs. $3,200/month), and he has the summers off anyway. Wouldn’t it make more sense for HIM to stay home with the newborn? You’d be giving up 10 months of income instead of 12 (because he already doesn’t get paid for the summer), and it’s the lower of the two incomes to boot.

    Also, I’ve got to nitpick on the “we are pregnant.” It’s a pet peeve of mine. YOU (Kate, individually) are pregnant. Not your husband. You wouldn’t gather your family in a room and announce “we have cancer,” would you? Only one of you is pregnant.

  25. Josh says:

    @Kevin #24, this is what I refer to as graduating with the “Mrs.” degree

  26. Anitra says:


    If you really want to stay home, do it. You can make it work on that kind of income. It will make things a lot tighter, but I don’t think you will continue being $500 “short” every month.

    I took my alloted 8 weeks of maternity leave from my job, and realized that I couldn’t leave my baby to be raised by someone else 50+ hours out of every week. It wasn’t possible for me to go back part-time, so I quit. I do miss the work, but I am glad that my husband and I are the biggest influence in our kids lives (we now have 2). I can always get a job later.

  27. Johanna says:

    Q6: It’s not often that I agree with Kevin on anything at all, but yes, I do think that it would be a stupid decision to quit your job for a year or two.

    Let’s look at some numbers. You say you’re usually at least $500 short of being able to live on your husband’s salary alone. That means that your expenses average at least $3700/month. That number is likely to go up when the baby arrives, since you’re going to have another whole person to feed, clothe, and support. But let’s say you can save enough (by cutting cable, eliminating your commuting costs, etc.) to offset that increase, so your expenses stay at $3700/month, or $44,400 a year.

    Assuming your husband’s salary is for 10 months of the year, that’s $32,000/year. That means that over the course of the year, you come up more than $12,000 short. You say you only have $24,000 in savings, total. So if you stay home for two years, all of your savings will be gone. If you don’t want to fall any deeper in debt, you absolutely must find a job at the end of the two years. You have no wiggle room at all.

    And I don’t think it’s unreasonable at all to worry about what the job market in your field is going to look like two years from now. True, the picture might improve, but it could also stay just as bad. It could even get worse. And Trent’s comment that you might get laid off anyway is a red herring – it’s almost always much easier to keep a job you already have than to get a new one.

  28. Amy says:

    Q6: Kate, when I was pregnant, my income made up 52% of our total earnings, but my husband and I were both determined that I would stay home and care for our children, so that’s where we started. We did not ask, “Is it possible for me to stay home?” We basically said, “Mom is staying home, period. Now, what do we have to do to make that work?” And those were the things we did – using pretty much every frugal tip in the book to accomplish our goal. It has been the best decision we’ve ever made.

    Also, years ago, I read that when one parent stays home, the other parent often doubles his/her income in about 5 years time. This seemed outrageously unrealistic and impossible to me at the time, but my husband did indeed double his income in 6 years time – mostly through promotions. He got promoted by devoting more time to work, which he was able to do because I was always there on the home front. He didn’t have to leave early because it was “his turn” to pick up the kids at daycare. When they were sick, he didn’t have to take time off because I was there to care for them. If he had to stay late, no problem.

    It IS possible to raise your own children and live well at the same time. I have worked very part-time through the years, as well, but I never worked at anything that would require daycare for the kids. So start with the commitment to staying home (you obviously want to do so very much) and then do whatever you need to do to make it happen. It has worked out very, very well for us.

  29. Des says:


    I’m not sure you can compare pregnancy to cancer. In one case, the individual is sick and may die. In the other case, *both* people are soon going to be parents, and it is as much the father’s baby as the mother’s. Saying “we” are pregnant just acknowledges that there are two people involved in making and raising this kiddo.

  30. Jane says:

    No, Josh. The Mrs. degree refers to women who go to college solely to meet a man. In no way does Kate’s situation resemble that. She is 28 and we have no idea how long she has been married. Newsflash, guys. Women in their twenties and thirties have babies. Some of them want to stay home with their babies. Yes, it is bad timing in this case, but her degree is neither useless nor a ploy to catch a man.

  31. Kevin says:


    Then say “We’re going to be parents.” That works. I have no problem with that.

    But “pregnant” is a medical term. Twisting it to apply to both members of a couple just to make it sound cute and warm and fuzzy (“We do everything together, so we’re pregnant together”) is just nauseating, and plain inaccurate.

  32. Kevin says:

    @Des (again):

    Sorry to double-post, but imagine a lesbian couple pulling this kind of linguistic barbarism. They gather their families together and announce, “Guess what? We’re pregnant!”

    What would their families say? “Wow, that’s fantastic, congratulations! That’s amazing, I’m so happy for you!”

    “But seriously – which one of you is ACTUALLY pregnant?”

    It’s just confusing, for no good reason.

  33. Katie says:

    It IS possible to raise your own children and live well at the same time

    Correction, if you’re going to define “raising your own children” as staying home with them: it is possible for one parent to raise their own child while the other one devotes more time to work and doesn’t ever have to stay home with them. By your definition, your husband isn’t actually “parenting.”

    Note: I do not actually agree with this definition, but I do always think it’s funny how people are so quick to insist women who work aren’t really raising their children while fathers who work are just being responsible providers.

  34. Des says:


    I agree that with a Lesbian couple it would be confusing, but that is not the case here. People assume that when a heterosexual couple says “we’re pregnant” they mean that the woman is the one (and only one) pregnant. No confusion there.

    Saying “we’re going to be parents” would be confusing, because that doesn’t explain HOW the couple is to become parents.

    What would their families say? “Wow, that’s fantastic, congratulations! That’s amazing, I’m so happy for you!”

    “But seriously – are you adopting, or what?”

  35. Mister E says:

    Regarding comment #4, be careful about assuming that US dollars are “universal”.

    They are certainly WIDELY accepted and near-universal in heavily touristy areas and hotels, but from personal experience I can tell you that not ALL shops or restaurants will be interested in foreign currency.

    My travel experience has mostly been limited to contintental Europe and I am by no means an expert in this, but as I say I’ve had personal experience (specifically in France and Hungary) where US dollars were simply not going to cut it, Hungary didn’t want Euro’s either for the most part. Some amount of local currency is always advisable, in my opinion.

    Again specific to my own limited experience primarily in Europe, but if you are using plastic, make sure that you have one of the newer chip cards with a pin number and that your pin is exactly 4 digits. I’ve had nasty experience with older swipe cards where they wouldn’t take them (Visa assures me that they should be acceptable anywhere and I’m reasonably sure that the vendors simply didn’t want to or didn’t know how to process them rather than truly being unable to but I have run into that situation). And just last year in Netherlands I couldn’t use machines to buy transit tickets because they wouldn’t recognize my 6 digit pin and the first 4 digits wouldn’t cut it either. All shops and restaurants were fine with 6 digits, just not the ticket machines and good luck finding a human selling tickets outside of the city.

  36. Kacie says:

    @Kate … ignore Kevin in #24. All of it.

  37. Courtney20 says:

    @ Kevin #24 – I don’t think it’s insanity. General rule of thumb is take out no more in loans than you expect in annual income – and she’s probably making about $55K by my rough calculation. Babies aren’t babies forever; Kate will probably want to go back to work at some point. Also, I think even if women intend to become stay-at-home moms they should have some type of education or skill to fall back on in case something happens to the main income earner.

  38. Steven says:

    I think we’ve had this conversation before…

  39. Johanna says:

    I suppose I should clarify that I do NOT agree with Kevin’s philosophy that women have no business being educated if they’re ever going to spend any time out of the workforce. And I’m staying out of the “we’re pregnant” debate (except…would “we’re expecting” work?) But from what we know of Kate’s situation, it does seem like it would be foolish for her to plan to leave her job for a year, or especially two.

  40. valleycat1 says:

    What I took away from Kevin @ #24 was simply that they should not automatically assume mom should be the one to quit her job.

  41. Courtney20 says:

    @ valleycat1 – sure, if they were looking at it from purely a financial standpoint, then it makes sense to heed Kevin’s advice and not automatically assume that mom should quit her job. But Kate says “I’ve always wanted to be able to stay home” – so no, Kevin’s advice does not make sense from a personal standpoint. If they can find a way to make it work on the husband’s salary, then that is the right decision regardless of who technically brings home more money.

  42. Kevin says:


    “I do NOT agree with Kevin’s philosophy that women have no business being educated if they’re ever going to spend any time out of the workforce”

    Johanna, please don’t put words in my mouth. I certainly would never suggest something so sexist. Of course, I would strongly encourage ANYONE – regardless of gender – to get as much education as they want/can. As long as they can afford it.

    My problem is with people who BORROW enormous sums of money to get those educations, then make deliberate life choices that severely constrict their ability to repay their lenders. Bonus points for those who whine and complain about how student loans are not bankruptable.

  43. Adam P says:

    Re the US currency thing, obviously this is from my Canadian perspective where leaving with $200 US Cash, which I can get from a Canadian bank machine next to me quickly and easily on the way to the airport.

    Then I use this US$ cash to swap for local currency (or directly use it if possible) when I arrive at the country.

    This is usually better than getting CDN$ and trying to swap in the country of arrival–no ONE wants Canadian money abroad trust me they give you crap exchange rates; and usually also works out better than trying to buy the local currency at a CDN bank, where they may not have that currency (hard to get $300 Australian dollars or South African Rand from a local CDN bank, although Euro’s and Pounds are available readily as US dollars!).

  44. tarynkay says:

    Q6- Have you considered your husband staying home instead of you? He might really appreciate the opportunity to spend more time with the baby. You could take the first 8 weeks, then he could take the next 12 off, since he is presumably eligible for FMLA. You could then consider going part time or working flex time, if you are able to.

    If you’re deadset on being the stay at home parent, I would say that you need to get your montly expenses down now- don’t just count on spending less when you’re not working. Go to somewhere like babycenter dot com and work up a post-baby budget. That’ll tell you how much extra you’ll need a month. Start taking that amount out of your paycheck and putting it in savings right away.

    As to the car- yes- you can absolutely put a baby in the backseat of a 2 door car. This works best if you leave the carseat strapped in the car and just take the baby in and out. This is better to do anyhow, since the APA recommends that babies spend as little time as possible in carseats and no more than 2 hours at a time, since leaving babies in carseats for extended amounts of time contribute to SIDS.

    Also- have you considered downsizing to just one car? This might be fine for you if you are staying home with the baby all day anyway.

  45. Johanna says:

    @Kevin: “Bonus points for those who whine and complain about how student loans are not bankruptable.”

    No whining here – just pointing out a fact. And I think it makes perfect sense for anyone with student loans to consider that fact when figuring out a debt repayment plan. Do you disagree?

  46. Lesley says:

    You don’t have to get a new car!


    We had a 2-door when our oldest was born. With the car seat base left in the backside, we could slide his car seat in and out, it was not a big deal. Or just lean slightly and do the straps.

    It is a small, small hassle that I would not trade for a car payment.

    It was nice to have a 4-door when we got it, and I truly appreciate our minivan now (with 3 kids). But the 2-door was not a big deal at all.

  47. Lesley says:

    Well — with our 2-door, it was easier to put the car seat in and out than to do the straps after he was back there. Maybe something about what car model is used.

  48. Lesley says:

    We shared a car — but I dropped my husband off at work on many days. There are a lot of doctor appointments and different things, I didn’t need a car every day, but if it had not been pretty convenient to drop off my husband at work and pick him up (or let him get a ride) I think that a SAH possibly does need a car. Depending on where you live, etc.

  49. Courtney says:

    RE: International CC fees

    The best combination I’ve found is a Capital One credit card and a Schwab checking account. No international transaction fees or conversion fees for either one, and it certainly beats the $15 my younger self spent checking BoA balances at an ATM abroad once. Plus, Schwab refunds any ATM fees (home or abroad) that the ATM provider charges you, too.

  50. Kelly says:

    Q6- some thoughts on the stay at home mom issue
    I think if you want to be a stay at home mom, you and your husband will make it work. But of course you should be smart about it. Definitely do not buy a new car right now. The baby will add plenty of his or her own expenses, you don’t need to add any yourself. If you are home, you’ll want to use that time to help save money for the family- while the baby is napping, clip coupons, make your own baby food etc.
    Also, you and your husband may be able to make some extra income. Could your husband pick up a couple of tutoring jobs or a summer job? I’m a teacher and I always work in the summer. Another idea, is you could babysit for another child while you watch your own child. I know a lot of mom’s who have done this when they only have 1 child. Hopefully you can get creative and think of some other ways to bring in some money.

  51. AK says:

    She mentioned that SHE wanted to be the one to stay home, so I’ll skip the husband staying home argument.
    I agree with a lot of the other posters; if you want to stay home, do it. However, realize that there are sacrifices that you and DH will have to make to make it work if staying home is what’s important to you. Cut out all unnecessary expenses (ESPN3 shows sports games online for free; cable is not necessary) and see if you can somehow reduce your necessary expenses. Also, don’t add a car payment simply for comfort. Every time you put your baby in and out of your 2 door car and it’s a PITA think of all the money you have in the bank. I think that as I put my three carseat-bound kids in the back of my Honda Accord, and it is much more comfortable to have money in the bank. :)

  52. jim says:

    Q6 Kate: I think the key for you will be to come up with a plan to live off of your husbands income alone. You’re coming up $500 short right now and cutting cable and not driving so much won’t make up for that. Plus what about the cost of the baby? You need to make sure you can afford to live on 1 income for a longer period before you make any longer term decision. Work on your budget to cut it down so you can feasibly live off his income alone.

  53. Andrew says:

    The couples who announce that “we are pregnant” are the same people who, a few months previously, were referring to their pets as “furbabies”. Yecch.

  54. Jonathan says:

    I will weigh in on Q6. First, Kate states that she has always wanted to be a stay at home mom and can’t imagine only getting to take off 8 weeks for the pregnancy. It also seems like having her be able to stay at home is important for her husband at well. While it might make more sense financially for her husband to stay at home, it sounds like her being a SAHM mom is important to them both, so I think she should do it. It is all about priorities. If this is truly a priority, then Kate and her husband will find a way to make it work. I agree that buying a new car right now is not a good idea.

    I think that Kevin brought up a good point, though, regarding the student loans. Kate doesn’t specify what her long term plans are, but I get the feeling that she would prefer being a SAHM for more than just a year or two. If this is the case, then going into so much student loan debt probably was not a good move. Especially since the pregnancy was planned. It does seem like poor planing to me. Having said that, however, it can’t be undone at this point. I think that in some cases the best decision is not necessarily the one that makes the most sense financially. Parenting decisions happen to fall into that category for me. I would suggest Kate do whatever is best for her family and deal with the financial consequences. I would also, however, suggest that any young readers use this as an example and consider it before going into student loan debt with plans of being a SAHM.

    I also agree with Kevin in the “we are pregnant” thing. I think it sounds silly.

  55. EngineerMom says:


    First, have you considered working during the first year of your child’s life, then staying home?

    I had to go back to work when my son was 6 weeks old. My husband was in grad school, and there was no way we could get by on just his salary. I found a daycare center near where I worked so I could visit him during my lunch hour if I wanted to. I learned a lot about how to parent and deal with small children from his caregivers.

    Shortly after his first birthday, our situation changed – my husband finished his Ph.D., I was laid off, and we moved 14 hours away for a new job for DH. I became a stay-at-home mom, something I had wanted to do earlier, but couldn’t.

    When we found out we were pregnant, we sold my car (which covered the rest of the loan and then a bit) and relied solely on my husband’s paid-off Mazda Protege. When that car was the victim of a poor driving decision in a snowstorm a year ago, then we decided to buy a “family friendly” vehicle – a Mazda5.

    Honestly, if you’re serious about being a stay-at-home mom, you first need to be serious about reducing your expenses, cable included. If you’re not paying a mortgage (and therefore tied to a house), consider moving into a less-expensive area, preferably one accessible by walking and public transportation so you can get rid of that second car. We live on $2700/month, and that includes $50-$100/month into savings.

    I love staying home, and I feel fortunate to be able to do so. However, it does mean a grocery budget of $425/month, a “fun money” budget of $20/month for each of us, negotiating use of our single car, and not seeing movies until they’re in the cheap theater. But every sunny afternoon I spend in my garden while my now-2.5-yr-old son digs holes next to me has made it completely worth it.

    If you want a good idea of what it truly is like to live as a stay-at-home mom, including the trade-off of money for time/work when it comes to clothes, home decor, and gardening, I recommend thefrugalgirl.com

    On a side note, a college degree is NEVER an Mrs. degree. An Mrs. degree is when a woman goes to college never intending to finish, but only to find a husband. A very expensive and stupid way of going about that, by the way.

  56. Gretchen says:

    How is 6 “in good finanical shape”?

    They aren’t making it on one salary now, and that’s before the kid.

    I tend to agree with Jonathan, 54.

  57. Caz says:

    I’m interested in Q6 although there seems to be some debate around it which I don’t really care to engage in.

    What are the parental leave schemes like in the USA? Is it possible for Kate to take her 8 weeks and her husband to take a year or more of unpaid leave considering he’s only paid for 10 months and seems to be in his job for longer. Do fathers qualify or is it just mothers? Could your husband pick up some private tutoring on the side for a bit of extra income?

    In Australia, where I currently live, the parental leave scheme is eligible to either parent. When the time comes for my boyfriend and I to have kids (5 years away), I will take off the first 6-12 months that is given to me my the government. I will then go back to work as I will likely have the higher salary. My bf (will be husband) will then become a stay-at-home-dad as he has the career means to work from home on a part-time basis.

    Maybe this is because we’re lucky to have such gov’t schemes not available in the USA, maybe it’s partly because I want to work, and he’s comfortable being at home… but to us it makes sense to look at ALL the options and not just assume it’s the Mom staying home.

  58. jim says:

    Caz, In the USA we have a FMLA (family medial leave act) law that generally gives us the right to up to 12 weeks of unpaid leave for parents. Fathers usually qualify. There are some qualifiers, like minimum employment of 12 months etc. But the law doesn’t provide for leaves longer than 12 weeks. Some employers are flexible enough to offer longer unpaid leaves, but theres no legal right to it.

  59. TLS says:

    In response to Adam P:

    Several other people have already posted replies, but here’s my response.

    Using an ATM card to withdraw money abroad (Europe, Japan), I was only charged a small fee (I think it was $2) and got a good exchange rate. This ATM card was from a credit union, not a bank, so that may have made a difference.

    I have a credit card from a bank (not a credit union). I have never withdrawn money while abroad using this card, but I did use it to purchase several items a few years ago during a vacation in another country (in Canada, actually). Each time I charged something, this was accompanied by rather hefty fee (I don’t remember exactly how much or what it was called). This amount turned out to be quite a lot for the few purchases I made. So after that trip, I decided this was NOT a good plan for vacations. Now I usually use the ATM card/cash plan, which works fine for me.

    I think it depends on your credit card and your bank.

  60. Des says:

    @Caz – I’m fairly certain we have the single worst parental leave scheme of any developed nation (and a lot of developing nations beat us, too). It is really unfortunate. Like jim said, it is 12 weeks unpaid. While it is technically available to both parents, I’ve never worked at a place that didn’t frown on fathers taking more than a couple weeks off.

  61. Courtney20 says:

    @Des and Caz – according to the internet, only five countries in the world offer no mandatory paid maternity leave. The other four are Swaziland, Lesotho, Papua New Guinea…and Iran.

  62. mary m says:

    House of Leaves – good one!

  63. Gretchen says:

    FMLA can also be taken for sick relatives, such as parents.

    But as others noted, it’s unpaid.

  64. Bill says:

    It has been said, but I always do cash when abroad. I was trying to pay for dinner in Rome and 3 cards in a row were declined (all 3 were notified in advance) I was glad I had real euro’s in my wallet. I went to India last year and my bank said it was hit or miss weather my card would work. I don’t know the laws of India are but there is no way I want to find my self in some jail in India because my credit card didn’t go through and I could not pay my bill.

  65. bogart says:

    @Kate if you and your DH are really determined that *you* should stay home while your child is a baby, I’d say, just figure out a way to make it work.

    But seeing that your DH is a teacher and knowing nothing about your employment except that you have a new job (but may hold several years of experience in your field — I don’t assume that you’ve just started working, as @Kevin appears to), I wonder if it would be worth talking with your employer about flexibility / working part-time for awhile and seeing if you can juggle a way to stay in the workforce. My DH and I have, with flexible schedules, been able to get by with 32 hours/week of care provided to DS by someone other than us, and both work full-time. And it sounds like your DH may be able to be home earlier than 5 pm (and of course probably has to get to work earlier than 8, too), so if you could work, say, a 12-6 shift (30 hours/week), you could perhaps get away with far less than that, depending of course on what child care options are available in your neck of the woods and appeal to you (though your commute may complicate that).

    I’ll add that I’m with the other posters who express concern about when your child is older. It’s true, as Trent says, that “The time that your children are young is a time that, once it’s passed, will never return,” but neither will the year that your child is 8, or 10, or 16, or even 23. Personally I’ve preferred to spread the time I’ve got available to my son (and not at work) over a longer span of years rather than concentrating it in his earliest ones, though not everyone prefers (or can choose) this alternative.

  66. Julie says:

    I didn’t see anyone mention that Baby #1 is usually followed by Baby #2 about two years later. Thus the idea of returning to work in two years really doesn’t make much sense unless they have decided in advance that they don’t want more than one child.

    I am also wondering how everyone expects the cost of FMLA leave to be paid. Does the fact that the debt of our Federal Government was downgraded today not bother anyone at all? What government entitlement program should we give up so we can have paid parental leave and exactly which Socialistic developed nation should we be trying to emulate?

    As a relatively small employer in the grand scheme of things (150 employee) I can assure you that the cost/difficulty associated with having an employee out for 12 weeks to one year is not a cheap/easy situation to deal with. Often it puts quite a bit of extra stress on co-workers who are attempting to cover for the missing employee, and thus their families are negatively affected. Or if a temporary replacement employee is hired, you have training costs involved.

  67. SwingCheese says:

    Let’s not castigate Kate for the decisions she made nearly a decade ago (i.e., her major). It’s not as though she took out the student loans immediately before graduating, then discovered she was pregnant two weeks after beginning her first job. Presumably she has been in the work force for about 5 years or so. Also, one should be living in their means before having children, but having a fully funded retirement account, no debt, and home ownership are not necessary prerequisites for having and raising loved, wanted children.

    Lastly, I’ve been pregnant, but to the best of my knowledge, my husband never was. :)

  68. deRuiter says:

    Q6, One obvious point is that husband needs to get a part time job during the school year and a full time job over the summer. Teachers have so much leisure time that a second job makes tons of sense if they are $500./ month short, they will be more short if Kate is not working. If not, then Kate can get a part time job during the school year and full time summers, and husband can stay with the baby. Rather than Kate devoting herself 24/7 to the baby, they can share parenting. Husband’s job gives them great flexability because he works so few days. Kate can work part time and full time summers to get some contact with adults, and hubby can have the parenting experience during his generous times off work. Keep the current car until it dies of old age. The reason you may be short each month is your idea of buying things like a newer car, which you don’t really need.

  69. deRuiter says:

    #6 Too cutesey and totally innacurate, you’re pregnant and he’s the sperm donor.

  70. Sharon says:

    For the stay at home mom…
    State laws on family leave can be more generous than the federal law. Oregon provides the 12 weeks of leave after three months of work for employers with more than 25 workers.
    Also have the husband read his contract carefully. Many teacher’s unions have negotiated much longer family leaves. One year is not unheard of. Also he may be able to work for the district without affecting his status as a protected leave worker. Think of him doing “before school” care and then coming home to take the child for the day while mommy works. Maybe it wouldn’t be a permanent solution but it could get them through until they either felt comfortable with other plans for care or the wife could quit and stay home.

  71. Jonathan says:

    @deRuiter (#69) – They are short $500/month when trying to live off of the husband’s income only. With Kate’s income they easily cover expenses. Her leaving her job is not going to impact this. In fact, if not for the added expense of having a baby, they would likely save almost enough simply by her not working to be able to break even. The added expense of the child, however, is a different story, that I’m not sure she’s accounting for.

  72. Allie says:

    Trent, your love for A Prayer For Owen Meany makes me very happy. That’s a huge favorite of mine.

  73. Tom says:

    “I am also wondering how everyone expects the cost of FMLA leave to be paid.”

    As a small employer, you would probably be disappointed to hear that, and this is just my guess, that the people would want the government to force the private employer to make FMLA paid instead of unpaid. It’s not really on any political radar screen though.
    In the case of the mother, many places that offer short term disability will pay some percentage of salary for 6 weeks, as you are “temporarily disabled with childbirth”


    Two more thoughts on Q6 – my family was in her shoes about 10 months ago, where we were trying to simulate living on one income because my wife wanted to stay home. While she was still working we weren’t quite making it, it was close but we weren’t living on my salary alone. We got serious about the budget, were lucky to have no severe health issues along the way and are currently getting by because we both have good money habits. It sounds like this couple has good money habits too, and they’ll probably find a way to make it work. Don’t forget that husband’s take home might go up if she is going to stay at home because he can increase his W4 exemptions by two or three (based on child tax credits and mom not working).
    Also, if her first couple months are anything like ours, they wont really have the time, energy, or desire to go out and spend frivolously on things that eat away at the budget.
    Finally, not to be negative, but some women who think they want to be stay-at-home moms do it for a while and realize its not what they actually want. So it could be a moot point in the end.

  74. Dee says:

    I would be very cautious about stopping work on such a tight budget. What if the baby requires extra medical assistance / special baby formula (allergies/intolerance)? What if you need to spend money on co-pays for the pediatrician? Children cost money, however frugal you are. You should also figure in some costs to staying at home, i.e. extra heat/ AC, electricity. I would say plan to return to work, even for a little while, then see if you can come up with alternative sources of income to supplement the lean times.

  75. Jonathan says:

    The more I’ve been thinking about Q6 the more I want to look at it from purely financial standpoint. Not for Kate’s specific situation, but as an example of the situation people put themselves in with poor planning and taking on student loans then make other life choices.

    I’m going to work under the assumption that Kate finished school and began working at age 23, which means she’s been in the work force for 5 years. We don’t know what the total student loan amount was, but during that time she has been unable to pay off the debt. They have accumulated approx $24,000 in savings/investments, so could theoretically knock out about half of the student loan debt if they wanted. This still leaves $21,000 in student loan debt.

    We can probably assume that Kate and her husband have received some benefit from her salary over the years. She could have gotten a job, though, without a degree, even though she likely would have made less. Has having a degree allowed her to make enough extra income to justify $45,000+ in student loans? I would suggest that the answer is no, since they are still so far in debt and she plans to leave the work force to focus on parenting.

    Since Kate said that she has always wanted to be a stay at home mom, it is obvious that leaving the workforce is not a decision she just suddenly made. Why then, did she take out such a large amount of debt when she knew she would be leaving the work force for some time? If not for the $350/month student loan payment and $200/month in gas she spends to drive to work they could make it on her husband’s current salary (based on her assessment that they usually come up $500/month short currently).

    This whole conversation would not even be necessary without the student loans. The $350/month payment, however, would be more than 10% of their take home pay if she stops working. Add to that a mortgage and now the talk of adding a $200/month car payment, and its easy to see how things would be tight.

    Again I’ll say that I think that Kate should follow her heart and leave the work force to focus on parenting. Its obvious this is what both she and her husband want, and if they make it a priority there is no reason they can’t make it happen. However, I urge any young readers to really think about this and similar situations before taking on a large amount of student loan to get a degree that may never pay for itself. I’m not suggesting that a degree isn’t valuable. I do not think, however, that a degree is worth $50,000 if you plan to be a stay at home parent.

  76. Joan says:

    Q10 Trent: Your last sentence was great. I’m in the process of reading several books right now. Most are over items I want more knowledge. My list would always have a few regulars, but then there would also be changes in the rest. I liked your orginal list of 100 books and I have read a few of them which I would never have considered if you hadn’t mentioned them in a blog. If I do read a novel, I usually finish it is a day or two, sometimes skipping several pages as I read.

  77. Johanna says:

    More on Q6, and the advice of so many commenters to “just find a way to make it work”: I’m reminded of the reader mailbag question from some time ago from a family in a similar situation – their way of “making it work” was to keep pulling money out of savings until they’d blown through their entire $40K emergency fund in a year. Only when their savings were almost gone did it occur to them to write to Trent to ask what to do.

    Kate, whatever you do, don’t be like them. If you’re going to leave your job, at least do it with your eyes open. You say you’re $500 short of being able to live on your husband’s salary, but that’s just for the months that he’s working – averaged over the year, you’re more than $1000/month short. If you’re going to cut $1000/month from your budget while still covering the increased costs of supporting the baby, you will need to make some major, major lifestyle changes. Will you be able to do that? Trimming a cable bill here and a few gallons of gas there is not going to cut it (although certainly, every little bit will help). That is what you need to be asking yourself.

  78. Courtney20 says:

    One other thing that no one has mentioned is that on just hub’s teaching salary, Kate would probably qualify to have her loans shifted to income-based repayment. I put her numbers into one calculator online and it spit out an estimated payment of $100 instead of the $350 that she’s currently paying…So between the reduced student loan payment and the $200 she’s not spending on gas, there’s pretty much all the $500 shortfall right there. The child tax credit and the additional personal exemption should net them an additional $125/month. Their $500 shortfall just turned into a $75 surplus.

  79. JB says:

    Q7 – I would look into Capital One and Charlwa Schwab. Capital One has credit cards with no transaction fees on international charges. And Charles Schwab for banking offers refunds on ATM fees, and has no international transaction fees.

  80. kristine says:

    @ “teachers have so much leisure time…” made me laugh. De Ruiter- I have no idea what you do for living, but I would never presume to know what your professions was like, or how physically and/or emotionally demanding your job might be, or how much time out of the office it required your mental attention, or judge you based on your “in-office” hours, unless I had done the same job for myself, and lived with it for quite a while. It’s just bad form.

  81. Flybigd says:

    Trent, a little infant Motrin will help that baby! Hope he feels better soon.

  82. JS says:

    Q4: When I was in grad school, I plugged some numbers into a retirement calculator and realized that every dollar I put in a retirement account would be worth 10-20 dollars (depending on rate of return) when I was 67. Obviously, inflation will reduce the purchasing power of those dollars, but it’s still been a huge motivator to me whenever I think about reducing my retirement contributions so I can have more fun money. Given the low fees charged by the TSP, I think it’s a good idea to max that out.

  83. Georgia says:

    I find I question the idea of FMLA being 12 weeks “unpaid” sick leave. Perhaps that is if you have no sick leave on hand at all.

    When my husband was diagnosed with a rare cancer in 1999, I had just over 600 hours of SL time. I was going to use that, but my boss pushed me into signing up for FMLA because, even though I had the SL, I could be fired if I used too much of it. When he died in 2007, I still had @ 200 hours left – after accumulating 120 hours a year.

    I signed up and in 1999 alone, I used about 8-10 weeks. Other years it seemed to be more, but I didn’t keep track of it. However, each and every hour I took was “paid.” My husband did not take FMLA, but his employer was very helpful. The most time he was out (43 days), he had enough SL to cover.

  84. SLCCOM says:

    Georgia, I am so sorry for the loss of your beloved husband. I’m glad you had the ability to spend time with him, and hope your heart heals.

    As was pointed out, often the idea of being a stay-at-home mom is far more alluring than the actual job. Even if the new mom is besotted with her child, it is a big mistake to stay out of the workforce too long. To count on getting a good job after years out, while your degree gets out of date and you lose contact with the working world is a fools path. Working part time, even if the money earned is eaten entirely eaten up by child care expenses, can pay off big down the road.

  85. Courtney20 says:

    Georgia – FMLA is unpaid leave. The Department of Labor defines it as such. I’m glad you were able to accrue enough paid leave to care for your husband and not have to worry about money at such a time, but paid sick leave is not a benefit everyone has access to (my mom didn’t, when she was in the same situation; my dad ended up on medical disability for several periods before he passed away). A quick googling brings up Department of Labor statistics showing that 39% of all workers in the private sector, and 79% of minimum wage earners, do not have paid sick leave. Yet another area where the US is ‘different’ since over 80% of countries in the world guarantee some access to paid sick leave.

  86. TeethingRelief says:

    Try whole cloves wrapped in a cloth bundle for the relief of teething discomfort. The cloves contain a natural anesthetic called Eugenol and the chewing or gumming of the bundle helps to express the clove oil exactly where it’s needed most.

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