Updated on 05.21.13

Reader Mailbag #99

Trent Hamm

Each Monday, The Simple Dollar opens up the reader mailbags and answers ten to twenty simple questions offered up by the readers on personal finance topics and many other things. Got a question? Ask it in the comments. You might also enjoy the archive of earlier reader mailbags.

Do you get involved when someone you care about (sibling/friend) is heading down the road to financial ruin. If yes, how would you get involved, and to what extent?

Without getting into too much detail, my sister/husband/children are all living way beyond their means. His income from a construction business has dropped considerably, but they continue to spend like he is making a six figure income. We know they are already having some financial trouble, but they seem unwilling or unable to adjust to their new situation.
– John

This is a situation that requires a lot of care. Quite often, when one person in a friendship sincerely feels that the way they live their life is in some way better than the way their friend lives their life, it can very easily put some sand in the oil and really damage the friendship. The person thinks they’re helping their friend, while the friend feels looked down upon and resentful.

Rather than being heavy-handed about it, just have a casual talk with your friend. Tell them that you went through a financial hard time yourself in the past and give them a copy of a simple personal finance book that can help them with their problems – then let it drop. Do not hammer the person. Do not insist that they change their ways. They have to find the path to financial freedom themselves – you can lead a horse to water, but you can’t make it drink, and if you try to force the horse to drink, you’ll find yourself kicked.

I would probably recommend Dave Ramsey’s book The Total Money Makeover for this very situation, but it somewhat depends on the personality of the friend.

I’d like your opinion on my current predicament.

I’m in the military, I don’t like my job, and I’m in a lot of debt. My options from this point are: 1. Continue serving the two years I owe, create a budget that will eliminate my credit card debt ($23K) by my separation date, making the huge pay cut more manageable, and be incredibly unhappy until then. 2. Petition to separate within the next 6 months, use the GI Bill to begin my Masters and cover minimum credit card payments (unless I find a job), and be MUCH happier. I have been in the military for 5 years now and knew since the beginning that it was not my passion. I tried separating last May, couldn’t find a job a month out, then withdrew my separation from fear that I wouldn’t be able to pay my bills. Of course, I didn’t consider then as I am now moving back home to eliminate the lodging expense and using the GI Bill for school and other bills. I have nothing in savings or investments.
– Cassie

The most financially sound choice is to stay in the military for now – that’s fairly clear.

What’s not as clear is what exactly “incredibly unhappy” means. There’s an enormous difference between “I don’t like my job” unhappy and “I’m going to kill myself if this goes on another day” unhappy.

If it’s the latter, the situation is truly untenable and you should get out as soon as you can. However, if it’s the former, I would encourage you to stay in the military and get yourself in a much better position before leaping into a different life.

My suggestion would be to put off your separation for a month. During that month, dig deep into the aspects of your life that bring you happiness. You might just find that your current situation is more tenable than you think right now, and if that’s the case, the choice is clear.

I am 25 years old and have a steady job in California. My parents live in Ohio and want me to buy an income property near them. The house rents for $700/ month. There is also a small apartment above the garage that rents for $300/ month. Both units are currently occupied and the renters want to stay.

The house is listed at $115,000. I can have close to 25% down if I clean out most of my savings, not counting IRA’s and 401k. I am thinking that the mortage will be aroud $600/ month, if the units were vacant I could still handle the monthly payment.

This seems almost too good to be true. What are your thoughts?
– Stephen

You’re missing more than a few costs. Property insurance, property taxes, landlord insurance, and landlord-related (read: higher than usual) maintenance costs are all going to go right on top of the pile here, meaning your costs are going to be significantly higher than just the $600 a month for the mortgage if you choose to go this route.

I would also be concerned about what a property inspection might reveal. A house big enough for two rental units selling for $115,000 sets off my alarm bells as being a bit on the low side, especially given the rents that people are paying, which indicates that it’s not in the least expensive neighborhood (such a house in my hometown, for instance, would rent for less).

Don’t jump into this feet first or you might regret it. Get quotes on the insurance you’ll need. Get a property inspection and also calculate what it’ll cost to get things up to snuff. Find out what the annual taxes are on the property. Then, take a serious look at whether or not you can really swing it.

Do you have any recommendations for billing related tracking? I have accrued multiple clients in a side business I run, and most of the payments I receive are to be recurring, and each varies by client. I am looking for something (maybe a spreadsheet) that will make it easy to track recurring payments for each client, including the amounts, and the time frame for which they have already paid.
– Seth

It sounds like you’ve got a very small business that’s nowhere near the level of needing an industrial-strength accounting package but is busy enough to stretch your ability to keep track of things. If that’s the case, the first place I would start looking is the accounting and billing software category at Download.com.

After reading through the reviews of several of the packages, my pick for you would probably be Microsoft Office Accounting Express. It’s free, integrates well with other Office products, and upgrades to a more full-fledged package when you need it later on (like Dynamics GP.

If you don’t like the Microsoft route, I’d look at Quickbooks Simple Start free edition. Again, it provides a nice upgrade path when you need more horsepower, but gives you what you need today.

What health insurance do you have if you’re self employed?
– Bob

Right now, our entire family uses my wife’s health care benefits, but that was the case already before I switched careers because her health care has always been better than mine.

We’ve done some research into what it would take for us to self-insure (in the event that my wife chooses to switch careers or something to that effect) and we found some good things and some bad things. The good: even if you can’t find insurance because of a pre-existing condition, you can usually find some insurance in many states thanks to the existence of high risk pools; in those states, which bargain collectively for policies. The bad: almost every option is painfully expensive. You’re either going to have to be earning a lot or you’re going to have to live with high deductibles.

If you want to know more about it, the place to start is HealthInsurance.org, which has a truckload of information.

my family of 4 is planning a trip to Walt Disney World this year. Of course I want the best experience possible without leaving a major hole in my pocket book… any tips or suggestions?
– Michelle

Five suggestions:

1. Shop around for tickets. There is no “best” place for airline tickets – they’re all roughly equal, but some sites seem to have better rates with some specific airlines and some specific routes. Look at lots of options before you buy.

2. Compare flying to driving and even to using a train to get there. Amtrak does go to Orlando, after all.

3. Consider camping when you arrive. This works well for some people (like us, who love camping) but not so well for others.

4. Consider buying an Entertainment book for Orlando. Since you’ll likely be hitting lots of sites in that area and eating out some, it will probably pay for itself on the trip. If you wait until close to your departure, you’ll probably get a further discount on the book.

5. Make as many meals for yourself as possible. Get sandwich supplies and make them yourself. Fill up backpacks with food and take them with you where you go. Don’t pay high prices for food if you don’t have to.

I’m curious what you think about having a set budget for charity when a crisis such as the one in Haiti occurs. Should you have an “emergency fund” for charity, so you can make an immediate contribution without busting your budget? “Borrow” money from next year’s charity budget and donate now? Not do anything, but perhaps re-evaluate the charities you donate to, and next year give more to ones that help in crisis such as this?
– Joseph

I have an annual amount that I plan to give to charity each year. With a few exceptions (where I’m dead certain we will be giving a certain amount to a charity, like Iowa Public Radio), we let this roll until the end of the year and then give of what’s left in the last week of the year.

Thus, if something like Haiti happens, we can give within this charity budget and not have to worry about it. We just keep the receipt and use it when we total up at the end of the year.

It’s much easier if you just keep a running tally of your charity spending somewhere, like in a spreadsheet.

I have $3000 that I rolled over many years ago from a 401K to a traditional IRA. I would like to roll that money into my Vanguard Roth IRA just to have less institutions that I do business with. What are the rules for converting from a traditional to a Roth IRA? What things do I need to consider before doing so?
– Stephanie

The big thing is that you’re going to have to pay income taxes on the amount you roll over into the Roth IRA now (once it’s rolled over, you won’t have to pay those taxes later on, of course). Depending on your tax bracket, that means Uncle Sam will eat somewhere around 25% of the money. However, you’ll effectively get it back in retirement – and, if your investment options are better at Vanguard, you’ll probably earn more, too.

One big thing to think about: what do you expect your income tax rate to be in retirement? Do you expect it to be lower than it is now? It’s hard to judge this, but I would expect that if my income in retirement is going to be a lot lower than it is right now, my rate in retirement will be lower. If it’s about the same, I would expect my rate in retirement to be higher.

Now, if your rate in retirement will probably be lower than it is now, it’s not a great move to roll things over, because you’ll pay more taxes on it now than you will then. Only make this move if you think your retirement income will be somewhat comparable to what you’re making now.

I graduated from college 1 year ago and have been able to save about $30,000 from working and living at home. Now I am ready to move out and have contemplated either purchasing a home in downtown Baltimore (however, the median house price for my desired location/amenities is about $300,000 and I would definitely have at least 1 roommate) or renting with some roommates for about $600/month rent. My question is, would it make sense for me to try to purchase a house or rent? And, if I choose to rent, what should I do with my savings? Right now I have it in an online savings account earning 1.55% APR just because I want it easily accessible if I choose to purchase a home.
– Joe

First of all, 10% down on a 30 year mortgage means you’re either going to be paying PMI or paying a higher rate because you don’t have that 20% down. So, if nothing else, I’d say to wait until you have at least 20% down before buying.

Let’s say you did have 20% down. You’d then be taking out a 30 year fixed rate mortgage for $240,000 at, say, 5%. Your monthly payment would be $1,638.37, and that wouldn’t include property taxes or homeowners’ insurance. Alternately, you could rent at $600 a month.

If I were you, until there were additional reasons to buy (familial or otherwise), I would continue to rent. Save until you have at least a 20% down payment, then make the move when you’re ready.

As for saving it, if you must have it liquid, a savings account is probably the best choice for you. However, if you’re going to save for that 20% down payment, that gives you at least a year or two in which you won’t be spending the money. In that time frame, a CD is probably the best choice for you, but if the timeframe is longer, you may want to look at putting at least a small percentage into stocks or some other investment.

With the economy in such turmoil, I’m thinking that we may be headed for another Great Depression. There a lot of people who believe this. Do you have any tips from your grandparents or other sources for living on practically nothing? I bookmarked the recipes from that lady Clara whom you highlighted in the Simple Dollar last year who told about what her mother cooked for the bleak depression years, but I wanted something I could print and save for when I will need it.

Thinking this way has made me re-evaluate how I live, what I’m spending my money on, and what’s important. I realize that I’ve accumulated things to make my life more convenient and enjoyable without much thought as to what I really need. Now I’m faced with the situation of getting rid of gobs of “stuff” , and feeling remorse that I’ve wasted money over the years on such unimportant things.

How independent and self sufficient can we really become? I’d be most interested on your comments and suggestions.
– Junia

It’s very possible today to live a completely self-sufficient lifestyle without reliance on any external sources at all. The big question is what type of quality of life are you looking for?

Do you want electricity? In that case, you’ll probably need some sort of generating capacity. If you live in the Midwest, as I do, a wind turbine is one possibility, but to be self-sufficient, you would also need to know how to repair it and maintain it. Do you want water? That means you’d have to dig a well – or have it dug for you. If you want sustainable food, you’re going to have to get into some degree of agriculture, raising livestock and plants from non-hybridized seed sources. These things are all possible. These things all have significant startup costs, but once they’re running, there’s not much cost other than work.

An alternate question would be what do you consider an acceptable level of self-sustainability? Recipes like Clara’s are great, but they still rely on sources for all of those food items. If that’s the kind of thing you’re looking for – merely tips for how to live if we were suddenly whisked back to the 1930s – there are many, many internet sites devoted to such things. This page, for example, has a ton of Depression-era recipes.

The real concern, I think, is that you have a sense that your current skill set would not function well in an economic depression. If this is a genuine concern for you, spend some time developing the skills. Start a garden. Make recipes with very basic foodstuffs. Take control of your own home repairs. Go as far down that path as you’d like, so that you know how to do these things. Not only are they useful life skills, they save money and they often teach you a lot about yourself as you’re learning them.

Got any questions? Ask them in the comments and I’ll try to include them in a future reader mailbag.

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  1. Maureen says:

    Stephen, were you planning on leaving your job in California and returning to Ohio to do this? I do not think you should attempt to manage the property from California. There was a great discussion about owning rental property in ‘Get Rich Slowly’ yesterday. I’m not sure you have considered all your obligations as a landlord.

  2. Jules says:

    Oy, I feel John’s pain. But it’s like navigating the Twilight Zone when I bring it up.

  3. SavingFreak says:

    Joe – Why don’t you try the foreclosure market. You will need to do some home work but with the depressed housing market foreclosures are at an all time high. You will need to make sure there are no liens against the property and have someone do a thorough inspection but there should be enough foreclosures in the Baltimore market that you can get to 20% down and maybe have some money left over to do repairs. Just be prepared to do some hard work to fix what needs fixing.

  4. Ben says:

    Also, I have concerns about taking investment advice from family when they aren’t involved in those types of investments. The reader didn’t say whether his parents own profitable rental properties or not.

  5. Johanna says:

    @Joseph: Is your budget so tight that any money given to an organization working in Haiti right now has to come at the expense of other charities? Can’t you pull a few dollars out of your entertainment budget, your general emergency fund, or other savings?

    I ask because there’s a case to be made (google “the case against disaster relief,” in quotes) that responding to disasters such as the Haiti earthquake is a fairly inefficient use of charities’ resources. So if giving more money to help in Haiti means giving less money to help elsewhere in the world, you might actually be decreasing the amount of good you do.

    Another thing to consider: The Haiti earthquake has killed some 200,000 people (so far). That’s about the number of people who die each and every week around the world from causes related to their extreme poverty. But those people don’t get as much media attention because they’re not all in the same place. (Another useful comparison: The death toll from extreme poverty is equivalent to about ten September 11ths every day.)

    This is not to say you shouldn’t donate to help Haiti – not at all. But the poorest people in the world need help all the time, not just when a disaster happens that makes the TV news.

    If you want to help the earthquake victims, please give some thought to which charity to give to. An important question to ask is whether the organization was working in Haiti before the earthquake hit. (If they weren’t, they’re likely not familiar with the area and the culture, and they have to spend a lot of time and resources getting their act together before they can start helping.)

  6. asithi says:

    I second the Entertainment book idea, but only if you have a rental car in Orlando and a good map or GPS. We sold back our Orlando Entertainment book at half the price that we brought it on Ebay listing the coupons that we already used. Saved us a lot of money on meals.

    If you have a rental car, then you can stay in the surrounding hotels instead of the Disney hotels which is a little cheaper. However, if you have young children that needs naps during the day, it might be more convenient to stay at the Disney hotels so that you do not have to deal with leaving the park and driving back in later.

    Another thing you can do is buy a some Disney souvenirs beforehand at a discount store (ie. the Mickey ears), then give them to your kids once you get there. That way they get to have some Disney stuff like the other kids at the park, but you save some money this way.

  7. Chapeau says:

    For the Disney trip, if you know the dates you want to travel, Disney is currently running a promotion for staying in their hotels, but you have to book by 1/31. Depending on what grade of Disney hotel you book in (deluxe, moderate, basic), you receive a couple of hundred dollars per level in Disney gift cards, which will (at least help) pay for your food and souvenirs in the park.
    Friends are planning another trip to Disney this year, and based on their experiences, they know that staying at a Disney hotel is the best choice for them. It’s not just the price, but the convenience. And they don’t have young kids anymore, they just like not having to worry about driving. They always tell me “It’s a vacation, after all!” They also get a dining package (usually the Quick Service, I think), because then they know to the penny how much the trip has already cost, including several meals (and snacks). They know how much is left in the budget to pay for souvenirs/incidentals (and the French pavilion’s bakery).
    Also, if you decide to go Amtrak to Orlando (not California) and stay on the Disney property, they do provide a shuttle to and from the train station. It’s not advertised on the transportation section of the park website, but it can be arranged.

  8. Debbie M says:

    We also chose to stay in (the cheapest) Disney hotel when we went. The extra cost over lower-priced hotels was made up for by the free shuttles from the airport and not having to rent a car. We did not get the food plan.

    The breakfast omelets at the hotel were the best omelets I’ve ever had.

    We got the 10-day Disney tickets, though a week would have been enough. There is so much to do there, you don’t really need to leave.

    That said, there are a lot of fabulous places to visit in Orlando, so the rental car/grocery shopping plan is also viable.

  9. Michelle says:

    Just an FYI- you can not bring outside food into Disney Parks. They confiscated my sandwiches when I tried to take them into Disney World. You can bring water, and that’s it.

  10. FrugalJane says:

    re: Disney – this year, if you volunteer for a day, you can get a free day at any of the parks. You have to sign up at the Disney parks website first to get the credit.

  11. Jeanne says:

    Can you explain the philosophy behind the practice of canceling a credit card (especially one that you never use) LOWERS your credit score? I have an excellent credit score, and have several cards I would like to cancel, but won’t if it is going to lower that score by 50 points for each–or so I’ve been told.

    Thank you.

  12. Michelle says:

    Stephen – You started with the comment, “my parents want me to buy an investment property…” That raised a red flag for me for two reasons: 1) is this something you also want? and 2) at age 25, you may still be relying on your parents for life direction (not a judgement – I certainly was) which indicates you may not be ready to take on such a major financial and practical responsibility of owning rental property 2000 miles away. When you can write in and say, “I’ve heard about a great opportunity…” without mention of your folks (even if that’s who you heard it from) that’s when you’re ready to really do it.

  13. Steve says:

    @Jeanne – The way that canceling a card may lower your score is that it can increase what they call your “utilization ratio,” which is your total balances divided by your available credit. My understanding is that you want to keep your ratio under 10%. Note that even if you pay off your card(s) each month, the balance on the statement is typically reported. So, given all that, you can definitely cancel extra cards if your remaining cards have a total credit limit of ten times your credit card debt and/or monthly spending, and it won’t hurt your score and may help a tiny bit. (There is a part of the score that can ding you for having too many open accounts, but it’s relatively minor.)

  14. Nicole says:

    You can buy a person a copy of TMM, but you can’t make a person read it. (Flashback to uncomfortable phone conversation last night.)

    We’re also really worried about a relative, but don’t see any way to help. It’s a very complicated dynamic and the whole family has to be on the same page for anything to happen. It’s especially difficult when they’re just about to crash– the subject of spending becomes especially emotionally charged. I wish there were a solution.

    We’ve been trying to figure out what to do in advance when they do hit bottom– last time we sent money we could barely afford (and a copy of TMM) because they said they needed groceries but they bought an X-box with it instead, so we’re feeling burned.

    We did send a copy of Your Money or Your Life this year… it’s less in your face and an incredibly thought-provoking book for anybody. We’ll see if it gets read.

  15. Des says:

    @Jeanne – In addition to what Steve said, if the card you cancel is your oldest card it can cause your score to drop as well. Whoever told you it will drop you by 50 points per card is full of it. There is no way to definitively say how much canceling a card will lower you score, it is very individual. Too many cards can also make you look like a credit risk.

  16. LC says:

    @Jeanne — I am not sure that cancelling a credit card automatically lowers your score, but whether you don’t have access to the credit in a closed account, or you do in a dormant account seems irrelevant in the calculation.

    The length of time the account is open does affect you score. If you close the accounts, you may have to apply for more credit in the future, leading to a higher total number of accounts on your record, and some accounts with a short history — both negatives. So, there is potential downside to closing the accounts, but no penalty for keeping them open and unused, unless there is an annual fee.

    So, both age of accounts and number of accouts are both potentially affected when you close accounts, not when you keep them open, which is why most people advise against closing accounts.

  17. Molly says:

    @Nicole and John:
    One of my relatives paid for another relative to see a bankruptcy lawyer. The lawyer advised not filing for bankruptcy, but having the consultation and guidance was very useful. It’s not easy to watch somebody else spiral down, but it helps to have a third-party do the talking.

  18. IASSOS says:

    For Stephen:
    (1) Remote management of a rental property is difficult.
    (2) Real estate is an inflexible investment. It takes time and expense to sell, so getting out can be frustrating.
    (3) You would be putting a lot of eggs in one basket, probably, and therefore not be well diversified.

    My old ex-father-out-law was a real estate broker and landlord. He always maintained that the value of a property was 100 times the monthly rental. Since your property yields $1000, the apparent value according to his reckoning is $100,000. Based on that you might consider bargaining the price down a little, or raising the rent.

  19. jim says:

    Stephen: I would not buy a rental property if doing so will empty your savings. You should have an emergency fund for yourself and it sounds like putting 25% down would empty your savings entirely. That would put you in a pretty risky state especially given the current economic condition.

    If you had more cash on hand to afford the down payment and leave you with a savings buffer then I might consider the purchase in question. But you’ve got a big problem in that the rental in question is half way across the country. Its hard to run a rental from out of state. If you have a good, trustworthy solution for management then the other problem is the exact expenses. There will be expenses so don’t count on pocketing $1000 a month. I would also look at that market in question to see if the rents are high or low compared to norm and if the house purchase price is a steal or typical. Maybe thats a great deal and maybe it isn’t.

  20. Valerie says:

    Regarding the charities. Plan your annual budget by considering various “buckets” for contributions. 1) Tithing, supporting missionaries, and other religious charities. 2) Disease or medical research that you are passionate about. 3)Local social charities such as public broadcasting, scouts, Salvation Army. 4)Humanitarian/disaster relief both national and worldwide.

    Some of these can be combined. I used to donate to a religious charity (they have since disbanded due to death of the leader) that provided humanitarian and disaster relief. When the tsunami hit a few years ago, I knew that my monthly payment meant that water and food was already on the way.

    Also, when my friends come to ask me to buy Boy Scout popcorn or support the MS walk-a-thon, I already have money in those buckets to be able to support them.

  21. Nicole says:

    @17. They’ve already done bankruptcy… can’t do it again for another few years. He’s somewhat willing to do further financial counseling, she isn’t and there it stands. Interfering may cause more fights between them and make things even worse.

  22. Molly says:

    @Nicole – What about gift cards to a grocery store? Or is it likely that they will get used in a not-so-great way? Or you could make cheap meals and share them – like casseroles or beans and rice or something. I’d also suggest he go to further financial counseling on his own, and the two of them look into couples counseling – there may be a graduate school nearby willing to take them on pro bono for their students to get experience.

  23. jgonzales says:

    I’m with Molly (#22) about the gift card idea. Although you can still get around it, if you really need something like food and you have a gift card, you’re much more likely to use it then to sell it. With cash, it’s much to easy to spend it on something else.

    And I do think this is something for a professional if it’s causing strife in their marriage.

  24. Nicole says:

    If it were my life, I could easily say, stop spending so much money, get couples counseling, get credit counseling or take a class, save an emergency fund, pay off the high interest debt, sell some stuff, maybe get some more education, and don’t think that owning things is a measure of success if you have no safety net. Then when the plant does close down, you won’t be in such a bad situation, and your credit scores will improve so you can get a new job elsewhere.

    But you can’t change other people unless they want to be changed.

    There’s also some measure of them not trusting our suggestions specifically because we are financially solvent and we don’t fight. We couldn’t possibly understand. (I like the way TMM says to take advice from people who succeed, but you’d have to read TMM to get that advice.)

  25. Doug says:

    I will second what FrugalJane said about volunteering to get a free day at Disney. Hopefully you can find someone near you who is in the program. Here in Cincinnati, we have people driving the family from Indianapolis and other areas to volunteer because there is no opportunity near them.

  26. asithi says:

    A co-worker of mine is also planning to do the volunteer for free day at Disney. She also planning to bring her kids along at the animal shelter because the minimum age to participate is 6 years old.

  27. Steve says:

    Trent –

    My wife and I did the TMM when we first got married – and have, by God’s grace (and hard work), paid off ~$30,000 in just under two years. We now have no consumer debt (both cars are paid for, and we carry a $0 balance on our CC.) Our emergency fund is at about 5 months. We’re wondering where to go next.

    I currently contribute about $250/mo to a Roth IRA — which puts us at $3k a year, under the $6k max for the fund (or is it $5k?). I’m interested in upping the contributions and maxing out the Roth.

    However, we’re expecting our first child in March and want to start a college fund – and we’d like to have two or three kids, total.

    I guess there’s no reason to not do both, but we really don’t know what the smart thing to do is. So, what would you recommend – and how would you start a college fund? How much do you invest? Where do you put it, etc?

    Max out the IRA? Extend the emergency fund?

    We have no idea what to expect in regular expenses with a child(ren), so we don’t know how that will affect those things, either.

    We’re in our late 20s, we make ~$100k pre-tax. Our house payment is $1600 – if that info is relevant. We just want to stay on the right track, and make sure our kids are taken care of.

  28. Dee says:

    JD at Get Rich Slowly did a post about his adventure at Disney World. The comments provided lots of tips on how to save money. I know links don’t really show up in the comments (I think?) so I will just say the post was on May 29 and called My Great Disney World Adventure.

  29. Shevy says:

    They said they couldn’t afford *groceries* so you sent money and they bought an XBox??
    They’ve already *done* one bankruptcy, are in bad shape (again/still) and she isn’t ‘willing’ to get more financial counselling?
    Unless they have little kids who aren’t getting fed or clothed properly it’s time to let them crash and burn. If they have little ones buy actual groceries and take them over (have them delivered if you live elsewhere). Or they will us their grocery gift card (suggested earlier) to buy the latest DVDs, expensive facial creams, cigarettes, etc.
    Sometimes people really have to hit bottom. For most folks that would be bankruptcy. But they obviously haven’t gotten there yet.

  30. Nicole says:

    @28. Yeah, they have several small children, though they are all school age now. Otherwise it would be a lot easier to ignore. The local grocery store is Walmart, but we will cross that bridge if the plant closes. They’re not bad people but it is frustrating watching them spiral down again, especially in this economy.

  31. deRuiter says:

    If flying to Disney World, shop Kayak and the other sites for the best deals. Make sure you have frequent flyer cards for that airline and register the number before the flight. If you choose Continental, and use the Continental Airlines Credit card (only spend what you can pay off before the billing date arrives!) you get double miles for every dollar spent, a bonus of miles for booking multiple tickets, and a mile for every dollar flown for each traveler with their own mileage card. You’ll be amazed how quick it is to get a free domestic flight in the future. If you don’t use the frequent flyer card, you get nothing back. I’m a frequent flyer miles junkie, and it shows!

  32. Critterknit says:


    Also think about where you’ll get the money to pay the tax due to the conversion. Upping your withholding at work (if this applies to you) is a fairly painless method. Other non-retirement savings works too. But, if you need to pull money from the Traditional IRA to pay the tax, and you’re under 59.5, there’s an extra 10% “early withdrawal” penalty.

  33. littlepitcher says:

    I’ve had a longtime interest in self-sufficiency living and have had to practice depression living on a large scale, at times.
    First, check out Mother Earth News and Backwoods Times, two magazines tailored to that market. Your library should have at least one, and back issues of MEN are available on CD. Start planning self-sufficient income sources which are depression-resistant. I can tell you from sad experience that rental property is not, unless you are in a college town with a captive market. Plan on owning something which can be paid off fast, or getting a long-term caretaker job on a large property, and those are hard to find. Do-it-yourself skills have been blessedly augmented by YouTube. Research solar heavily. And be aware that such a choice, if single, will narrow your potential pool of life partners. Good luck!

  34. cynthia says:

    Thanks for posting about Disney. Can you write an article about camping at Disneyworld sometime? I am planning on doing this, but have never been camping with my 5 year old and have a lot of questions. It would be great to hear about this from someone who has done it, as well as learn more about doing it at Disneyworld.

    Disney is currently promoting volunteer work with their “Give a Day, Get a Day” promotion. If you find a registered volunteer opportunity in your area and volunteer a day with them, they will give you one day of free admission to the park. My daughter and I did a Service Project for MLK day and we are now excited to try camping this year and go to Disneyworld. There is more information on their site and also from this blog:

  35. prodgod says:

    @Nicole: It sounds like their behavior is much like alcoholism or other such addictive behavior and by “helping” them, you’re actually enabling them. I’ve been in similar situations with friends and family members and even when you think you’re helping by buying them groceries or filling their cars with gas, you’re really just freeing up more of their income for more poor financial choices. I know it’s difficult, but I would advise stepping aside and letting the chips fall where they may. Good luck.

  36. Heather says:

    @Michelle – For your Disney trip, check out the Mousesavers website. It has TONS of money-saving ideas and exclusive deals for subscribers (just sign up for the newsletter and Hot Deals announcements). I personally have used the hotel deals and the discount ticket sites to save a lot of money. Have a great vacation!!

  37. sharon says:

    Stephen, you need to make sure that you are not buying a property where meth has been manufactured. If you buy a property like that, then you are held responsible for the clean-up costs, which can be significant, even if the manufacturing took place prior to you becoming the property owner.

  38. Lisa Ramaci says:

    My question relates to personal charity. I give yearly to my favorite organizations, and also to some of the supplicants found everywhere in New York these days, but can’t give to everyone who asks, or I’d become one of them myself. The problem is this – I’ve lived in my neighborhood for 30 years, and for almost that long have been cordial to a man who hangs out on the corner right by the subway entrance. He’s obviously a bit mentally challenged but friendly, always shakes my hand, asks how I am, if I’m working, how’s my mother. He told me when first his mom, then his dad died, and I get the feeling he’s on his own now. About two years ago I saw him one night, asked how he was, and he told me he was hungry, hadn’t eaten all day, so I gave him a couple of bucks. Now, every time I see him and ask after his welfare he tells me he hasn’t eaten, and as soon as I give him money he tears off to the McDonald’s, so I know it’s probably true. The issue is, I just can’t afford to give him money every time he tells me he’s hungry, but I also find it difficult to turn away from him knowing he is. I now go home a different route, or if I see him, hide in a store or something; I’ve tried to tell him about various soup kitchens and food pantries in the area, but I’m not sure if his cognitive level can absorb the info. I hate feeling like a cold-hearted b*tch for dodging him, but don’t have the finances to feed him on a daily basis, and thanks to my work schedule, also don’t have the time to try and get social services involved. Any suggestions as to what to do? Thanks.

  39. Joe – According to these Fortune and others, the Baltimore housing market is expected to decline 10-13% in 2010.


    Consequently, it would probably be better to rent for the next year until prices hit bottom. As far as your money, if you want to eliminate all possibility of loss and earn a little more, you could put it in a CD like Trent says – high rate CDs are paying 1.8% according to Bankrate at this link


    When you do decide to buy your home, you can get a first loan for 80% (thus avoiding PMI and without any increase in interest rate) and a second loan for 10% (this will be at a higher interest rate, but will also be deductible). It’s called an 80-10-10. You will also want to spend the next year making sure your credit is spotless so as to get the best loan pricing. Pull your credit report and check it now.

  40. mellen says:

    @Michelle, I recently saw an advertisement for Disney tickets for free when you volunteer to help certain organizations. If you know you are going you can plan to donate some time in exchange for tickets, it’s like a part time job to pay for the tickets but you get the satisfaction of doing something good and getting a “bonus” of tickets to Disney. I don’t know your situation so I don’t know how feasible it is for you but here’s the link:

  41. SLCCOM says:

    You can call the nearest Independent Living Center and tell them about him. They are likely to be able to direct him to resources and shepherd him as needed. It sounds like he should be getting Social Security Disability Income, and other assistance.

  42. Donald says:

    Cassie – you need to forget about the GI Bill. Even if legally you can use it, morally you have no right to it if you leave the service early because you don’t like it and aren’t passionate about it. Either grow up and serve out your CONTRACT that you agreed to in exchange for 3 hots and a cot, and the GI Bill, or be a quitter and go on with your life, not taking something that is intended to help those who complete what they contracted to do. I served my 6 years to EARN my GI Bill. You signed a contract to serve.

    Joe – You are 22, a year out of college, and have saved $30G. Good job!!! But, why the heck are you looking at a $300G house in the location and with ammenities you want? Buy a small house in a halfway decent area, that you can easily afford. Grow from there. So many young people get into trouble because they want their parents’ standard of living, but the parents have been working toward that for 30 years! You have time. Keep on with your fantastic start, but live below your means and you will end up wealthy!

  43. Crystal says:

    For the trip to Orlando – try GoOrlandoCard.com or google gocard to find other available cities cards. This was a great way to do things other than just Disney. You get to choose how many days you want the card to last, and you can do as many of the 50+ activities you can for those days. You don’t have to notify anyone which days you choose. There are a couple of dinner shows, NASA tour, boat trips, and tons of other great things to do with kids.

  44. marie says:

    This is a question for future mailbags:

    I’m a student and in front of the computer most of the time when I’m not in class or at work. Often I’ll be doing readings for class, and working on assignments or papers. I also use the computer to listen to music. However, I can’t help getting distracted by always wanting to check my email, facebook, and google reader. I can check up to 3-4 times per hour, and its a huge waste of time. How can I stop this habit without taking away the computer or internet which I need? Any ideas would be great.

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