Updated on 12.24.11

Reader Mailbag: A Day for Gaming

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. Conflicting messages on spending money
2. Career options in conflict
3. Extreme cutbacks
4. Sports salaries
5. Confusing tax code
6. Saving on a fixed income
7. Best book of 2011
8. Getting started with blogging
9. Getting off the treadmill
10. New Years party hosting

Because our close group of friends mostly has this week off of work, we planned a day where we would get together and just play board games all day long, sharing lunch and dinner.

That day is today. I have some friends to laugh, think, and play with.

Q1: Conflicting messages on spending money
We are encouraged to spend money because spending helps our economy. Then again, we are also told to spend wisely. How can these two viewpoints/ideas be reconciled? Is it possible to believe and act on both of these concepts?

– Megan

Those two viewpoints are coming from two different groups with different goals.

It is obviously good for retail businesses and commercial product manufacturers if you go out there and buy as much as possible. The more you spend in this way, the more jobs are created in the retail and manufacturing industries. On a national scale, the best thing you can do is spend.

On the other hand, on a personal scale, the best thing you can do is save. Spending with reckless abandon does not help your personal finance situation. People who recommend saving are generally more concerned with this end of the economic scale.

Which is right? They both make good points. The solution, I think, is balance. Spend with some sense, but don’t be completely tight-fisted in every aspect of life. Be discretionary and spend less than you earn, but don’t avoid all splurges. Support businesses that make good products and have good business practices. That way, everyone wins.

Q2: Career options in conflict
I am an educator currently at a university 45 minutes away, instructing first year physics students in a laboratory setting two days a week. With the other 3 days I try to substitute teach at local school as much as possible. One of those schools is literally a 1 minute drive from my apartment and will have an opening in February covering for a teacher whose course load is grade 11 and 12 physics along with an upper level math course. Those courses would be my dream to teach if I were to get the position.

Timing is the real issue. The 2nd semester for the university starts in January and they need to know if I will be continuing on very soon and I can not do both the university work and the high school one.

My conflict is this: do I NOT take the university course and HOPE that I get the position at the high school?

I really enjoy the university work and subbing since it allows for a lot of freedom in the evenings but is less pay and more commuting (and more temptation to eat out on the way in). The high school classroom would be wonderful too and would allow for a meatier paycheck, but would involve much more time in the evenings planning and marking.

Do you have any advice or questions that I should be asking myself?
– Ron

A bird in the hand is worth two in the bush. Take the job that’s available to you now, then cross the bridge of other options when you get there.

The worst case scenario if you take the university job is that in February the other job becomes available. In that case, what are your options? Is there any reason you couldn’t walk away from the university job for a better opportunity?

Unless there’s some sort of clause preventing this, I would suggest taking the university job and seeing what happens next.

Q3: Extreme cutbacks
Currently I am working on my 2012 budget. I am very fortunate to be the mother of five children (ages ranging from 3 to 12), I hold a pretty good job for which I am sometimes frustrated but always grateful, but unfortunately, my husband’s business has not made any money over the past three years and has cost a little. Yet, I have made ends meet, saved some and several years before we had paid off all mortgage debt.

This year we need to save for a major improvement to the land where our home is located. We need to put in major revetment to protect the property from further erosion. The project will cost $150,000. Currently, I make pre-tax $75,000. Total expenses have been about $55,000. I track EVERY penny. Expenses include about $5,000 in business costs and $5,000 in work to the house that my husband does each year (our house was a serious fixer-upper, and we’ve worked on it for 15 years).

This year to accelerate savings I have created a budget, but it means we must really cut back on all expenses…including gas and food. The projected budget brings spending down to $40,500 — allowing me to save more for the revetment and also still put money into my ROTH.

I have strange feelings about this budget. It will require real sacrifice, and we already live frugally. We do not eat out, go to movies, take a vacation…we do have indulgences like a sailboat that was given to us that costs $1500 a year for a mooring, but that is our summer fun for the family. I admit that I have spent too much on clothing for work in the past, but not outside the realm of moderate – just not frugal.

Entering this new phase of finance feels like starting a really strict diet…I wonder if it’s realistic, or if I’m setting myself up for failure. The budget would require me bringing food from $688 a month to $625 — which might not sound like much, but I already make most food from scratch — and it’s not like I’ve been buying any expensive items. Also, it will require monitoring fuel for the van carefully…an item that sometimes I cannot control.

Anyway, how realistic is cutting back so extremely, and do you have any recommendations for keeping these goals and remaining positive even when it seems insurmountable.
– Shannon

Without seeing your budget, it’s hard to know whether it’s realistic or not.

However, if your gut is telling you it’s too tight and you already carefully watch the numbers, your budget is probably too tight. A person’s gut feeling is often right in matters like this.

So, what do you do from here? I’d suggest looking seriously at solutions you might not have considered before, like selling the property or selling another asset that you have with significant value.

Q4: Sports salaries
Do you think professional athletes and entertainers are over paid?

– Lucien

They’re paid exactly what the market will bear for them.

Think about it this way. If you knew that your boss would pay you $10 million for your job, would you not accept that $10 million? Very few people would turn down that level of income.

So, should the owners be paying that much? Well, they make more money if they put a competitive and entertaining team on the field. They do this by hiring skilled players that people want to watch. People want to see Chris Paul throw an alley oop pass to Blake Griffin. They don’t want to see Joe from the YMCA. If the owner hires entertaining players, more people attend the games of his team and more people buy their products (like shirts and posters and jerseys and trading cards…).

In the end, it comes back to the fans. As long as they buy tickets, shirts, jerseys, and other materials at the prices charged for them, the athletes will be highly paid.

Q5: Confusing tax code
Why on earth is simply paying your income tax so confusing? Every time I try to read an IRS document, I just get confused. I pay someone else to do my taxes for me and it’s ridiculous that I should have to do that.

– Shawn

I agree with you wholeheartedly.

What we have now is a tax system that’s a compromise between a lot of different interests. You have some who want to make the tax burden lower on huge numbers of lower income people. You also have some who want to minimize the taxes on the rich people who will (in theory) invest their money.

Give these people lots of years to compromise and negotiate and insert clauses to help their groups and you get the tax code as it is right now.

Does it need a reboot? Yes. Do enough people in Congress and in the executive branch have enough courage to make that reboot happen?

You make the call.

Q6: Saving on a fixed income
At the age 30 I became severely disabled with a mental illness and had to go on Social Security disability. Since then I have tried to work several times part time unsuccessfully. Now I am trying to save money just to get a car because, since then, I have developed back problems which make it impossible due to the pain to ride a bus which would have been a good way to save money.

So, saving $400 a month is half of what I live on which is $800 per month. In addition, I am trying to save for an emergency fund. I have been able to save the money for the car and the emergency fund due to ending my eating out, cutting out my cable, finding the best price possible for my car insurance, but retirement savings seems impossible. Is there any alternative for people like me who find themselves on a limited budget at such an early age?
– Ron

Set goals. Recognize that it’s going to take a long time to get there. Celebrate the little victories as you approach your goals.

There’s really not much else you can do. You have to figure out what’s really the most important thing for your life situation and work diligently toward whatever that goal is.

Each person’s life is going to be different, with different needs and different values. The best thing you can do is figure out what you most want and focus on that like a laser beam.

Q7: Best books of 2011
What was your favorite book of 2011? No cheating – just name one!

– Linda

That’s a tough one and it depends on what you’re asking.

My favorite book published in 2011 is Moonwalking with Einstein by Joshua Foer. It’s a great book about the realities of memory and how to improve your own memory, backed by great anecdotes and science.

My favorite book I read in 2011 was A Way of Kings by Brandon Sanderson. It’s the most enjoyment I’ve had from reading a fantasy novel in a very long time.

Q8: Getting started with blogging
My question is how you built such a robust following on The Simple Dollar. Was it largely through the guest posting model advocated by sites like “Blog Tyrant?” Or did it happen more organically through the quality of your writing and posting frequency? The “romantic” part of me would prefer for the second option to occur, but I fully realize that some more active promotion is probably necessary to get my blog to the level I want it to be. I promote it among my friends on facebook, but beyond that, I’m a little unclear on how to approach fellow bloggers regarding guest posting and whatnot, especially in a field (“self-improvement” or “lifestyle design”) that is dominated by a few big names like Tim Ferriss and Chris Guillebeau. Is it better to start as a commenter and work up a repoire that way? Or is cold e-mailing people okay, too? It’s a lot of the little personal interactions on the internet that I could really use some help with.

– D. J.

I did very little guest posting in the early days of The Simple Dollar.

My early success, I think, was due to writing some articles that were heavily linked on some very popular blogs. I did that with some degree of intent, of course. I looked at the popular blogs I read and asked myself what kinds of things they linked to and what kinds of links I clicked through on, then thought of post ideas accordingly, wrote them, posted them, and submitted them.

At this point, you might want to shoot for Twitter mentions from those guys to get the ball started, but you’re going to find that popular bloggers are BURIED in material like this. You reach a point where you absolutely have to filter what you look at and do because if you didn’t do that, you would never, ever get anything done. Keep that in mind and make it very easy for them to see what you’ve done.

I think the sustained success has come from having a large backlog of posts. There are a LOT of terms you can type into Google and find pages from The Simple Dollar as a result. I’ve made a conscious effort all the way along to try to write in an approachable fashion.

So, get the attention (and a link from) big names and write lots of good posts.

Q9: Getting off the treadmill
I am 27 years old living with his mom, lots of experience in different fields but nothing to back it up (jack of all trades, no specialty). I did a mistake 3 years ago (realizing this now) getting a 15 000$ loan for a nice Cadillac & to cover my credit card. I now have 8 000$ left on this debt paying 330$/month, but with interests i am really giving about 230-250$ towards the actual amount.

Seems my monthly bankroll is tied up in car paiments (330$) + insurance (75$), high speed internet (60$), cellphone (70$), a bad smoking habit (160$ more or less), newly acquired Gun hobby.

Any suggestions to help me get out of this never ending loophole? I want to move out and move on with my life without always paying bills and feeling stuck!
– Alan

Get rid of the smoking habit and the gun hobby?

Right there, you have two expensive things that are gobbling down significant chunks of your money. If you want to escape from your never-ending loophole, you have to look for things that aren’t necessary that are gobbling up your resources.

Quit smoking. Enjoy the guns you have. You’ll find yourself with a couple hundred more a month. Apply them to extra payments on your car loan and you’ll get rid of that payment in half the time. At that point, you’ll have almost six hundred more a month than you have now.

Q10: New Years party hosting
I’m hosting a New Years party this year and I’m kind of unsure what to serve to people. What’s appropriate to serve at a New Years party without spending a ton of money?

– Jean

It depends on the type of party you’re having. Finger foods are usually appropriate – at our New Years parties, we tend to serve plenty of finger foods. One way to get started is just to ask some of the people what kinds of finger foods they like and choose frugally from those options.

As for drinks, you really don’t need to splurge. A bottle of bubbly or two is appropriate for the turning of the year. Guests often bring bottles to such parties, though.

There’s nothing wrong with asking some of the guests to bring something simple, either. A simple request to bring a bottle of wine or a simple snack food is completely appropriate and trims costs for you.

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. SwingCheese says:

    @Ron, question 1: I would caution you against walking away from your university position after you’ve signed a contract. I’ve never held a teaching job that didn’t require signing a contract, and in the education field (as anywhere else, I’d imagine) there can be dire consequences for walking away from a contract. (For example, breaking a contract in my previous district allowed the state to investigate yanking your teaching license.) That being said, I would maintain the university position, unless it is clear that you will receive this long term sub position, or unless you are sure you can maintain your income on subbing alone (if the long term position doesn’t work out). The last thing I would caution you to keep in mind: you mentioned that the long term sub position would be teaching both physics and upper level math. Do you have state certification to teach both of these positions? Do you need the proper certification for a long term sub position? Could this negatively affect your standing with the state board of education? (I live in a district that requires all substitute teachers to have a valid teaching license from the state. Not all districts have this requirement from what I understand, so my questions may not be pertinent.)

  2. Johanna says:

    Q2: Since January is almost upon us, I’m guessing that this is an old question and that Ron has already had to make his decision. But in case he hasn’t: If you sit out this semester at the university and it turns out you don’t get the high school position, would the university allow you to go back to teaching there in the fall? Can you make it through this one semester on your income from subbing alone (and drawing on savings if necessary)?

    Those are the questions I’d be asking if I were in your shoes.

  3. Johanna says:

    Q5: If your tax situation doesn’t change much from year to year, you should not have to pay someone else to do your taxes more than once. Just take your forms from last year (you kept those, right?), figure out which numbers go in which boxes, and fill out the forms with the corresponding numbers for this year.

    You do not need to understand the entire tax code to do your own taxes – if you’re like most people, most of it doesn’t apply to you.

  4. valleycat1 says:

    Q5 – Also, most tax reporting software for the individual user is very easy to use, as it quizzes you about various types of income & expenses and about your family size etc, and then plugs all the numbers in the right places. Unless you have a really complicated situation or are itemizing deductions & needing to identify every single one, I agree with Johanna that you shouldn’t need someone else to help. Also, once you’ve figured out where your various numbers go, set up your filing system for the new year organized by tax form line, & next year you’ll be in even better shape to go it alone! If you use accounting software, set up your categories on there by tax form line too & it’s even easier.

  5. Johanna says:

    Q3: Could it be time to pull the plug on your husband’s business? On a budget as tight as yours, a $5000 net loss is not “a little,” it is a lot. Even if he just did nothing instead, you would be a lot better off. If he could do some part-time work and odd jobs to get some money coming in, even better. Best of all is if he could get a real full-time job, but that may not be possible in your area right now.

  6. Johanna says:

    Q9: How much money do you make? The numbers you list add up to about $700/month – is that all you’re bringing in? If so, then priority #1 should be to make more money. Even in a low-cost-of-living area, you’ll have trouble making it on your own on that little.

    Your cell phone and internet numbers seem high to me. So I’d also suggest looking into cheaper options (including prepaid cell phones) as soon as your contracts allow.

  7. Riki says:

    Q9 Alan —

    It’s hard to tell from your post but it looks like you’re not making a ton of money. Are you under-employed? Do you have a post-secondary education? Where are you working right now? These are all important questions that I don’t have an answer to.

    The cold truth is, you’re wasting a lot of money. It’s actually an easy trap to fall into while still living at home without significant bills to pay. You need to rein in your spending significantly and start saving. You also need some goals; part of “getting off the treadmill” is having a destination in mind. Once you figure out where you want to be and what you need to do to get there, making changes is a lot easier.

  8. Michael says:

    Q1: Buy assets that improve your situation, not consumed goods and services.
    Q3: Tell your husband to get serious or give up on the budget, assuming you haven’t pledged to support the business for X years.
    Q4: It’s not that they’re entertaining, it’s that a winning team sells more tickets and the best players win. It’s a zero-sum game so they’re overpaid in that they don’t make anything better, but because there are so few of them vs. revenue the market bears it.
    Q5: Use TaxAct.
    Q6: You probably will collect disability the rest of your life which will help with retirement, so in a sense you’ve already met a retirement goal in the sense of “not work and keep receiving income.” With that perspective, saving even $100 per year is extra so don’t worry about not being able to save as much as someone with a good job.

  9. Gretchen says:

    What is a “gun hobby”?

    For parties, I do chili, which for some reason my family eats on a roll (like sloppy joes) and lunch meat trays (made myself).

  10. moom says:

    The US and Australian tax codes are probably just as complicated in their own ways but the instructions that come with US forms are much harder to understand than the Australian ones. A lot could be done in the US to make the tax system easier to understand without actually changing the code. That said, most people in Australia get someone else to do their taxes anyway…

  11. beth says:

    If husband’s business hasn’t made any money in past 3 years, it is time for him to move on and find a paying job. Period.

  12. jim says:

    Gretchen : “What is a “gun hobby”?”

    I assume it is owning, collecting and shooting of firearms. Probably mostly collecting and shooting for target practice in a firerange or such.

  13. Mary says:

    Q3. I have to agree with everyone here, if your husbands job is not making money and costing a little, it’s time for a change and even he has to know this.

  14. BirdDog says:

    On quitting smoking, I quit an almost ten year smoking habit 15 and a half months ago. In the six to twelve months before I quit, I had cut way back. I went from smoking a pack or a pack and a half a day down to two packs a week. The last two packs of Marlboro’s I bought before I quit were over ten bucks. I think that sealed the deal that I was going to quit. I know in many areas they are much more expensive than that. And it is very possible to quit smoking without gaining weight, in fact, I’ve lost weight sine quitting.

  15. Kevin says:

    Is it just me, or did a bunch of comments on this post get deleted?

  16. AnnJo says:

    Gretchen, the costs in a “gun hobby” come in the form of ammunition, range fees and, just as in most hobbies, wanting to try something different, i.e., buy a new gun. As the saying goes, “How many guns do you need? Answer. Just one more.”
    (Actually, since I’m quite new at this hobby, I can think of at least six or seven more that I need.)

    Competitive shooting also involves membership fees and tournament fees.

    It is not a cheap hobby (a couple of hours at the range can easily cost $60 or more in fees and ammo), and someone who 27 years old and still living at home should choose something less expensive.

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