Reader Mailbag: Discarded Post Ideas

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. Bank ignores me!
2. Gold digging or thinking ahead?
3. Encouraging others to think frugally
4. Why saving, not investing?
5. Budgeting software
6. Finding my loans
7. Reordering checks
8. Interest-only loan problems
9. How early for retirement savings?
10. Gaming site

A great deal of the work that goes into The Simple Dollar is simply figuring out topics for posts.

My usual procedure is to sit down and just brainstorm. I’ll go through my notes for post ideas, brainstorm my own ideas, read through my personal journal, read through whatever books are inspiring me at the moment, and just generate a long list of ideas.

After that, I cull them. I go through each one and ask myself if there’s really a post in there. Is this something that might help someone? Is this something that’s potentially entertaining? Is there enough meat here to really make a full post?

It’s a surprisingly long process for each of these posts to go from nothing to what you read each day.

Q1: Bank ignores me!
I went through a divorce which was final this past November. My husband applied for and received a [specific mega bank] card during the marriage, and asked for a subordinate, not joint, card for me. When he started missing payments, [specific mega bank] reported this to my credit report – and yet didn’t come after me for the $$. They’re still reporting his debt on MY credit report. I’ve tried calling them and writing them to no avail. I followed their employees’ instructions to send them a letter asking for proof of signature card. I sent it certified nearly a year ago. Someone signed for it. They never responded to me. And yet they keep reporting his debt on my credit report, but not hassling me to pay it.

Any pointers on what to do? They trashed my credit rating last year over this, which caused my three cards to cut my credit lines and raise rates. I’d like to know my recourse against their actions. My ex-husband is responsible per court order for the account, but that doesn’t protect my credit report.
– Anna

I excised the name of the bank for potential libel reasons.

I would try two things at this point. The first is a call to customer service, where I keep escalating the call until I get some sort of resolution. Document the call thoroughly, including recording the names of each person you speak to and a general summary of the conversation. Keep escalating the call until you get somewhere.

Failing that, I would clearly document all interactions with the bank, then directly request the credit agencies, asking them to remove this information from your credit reports. Provide as much documentation of the situation as possible and make it clear that you’ve done everything you can to resolve this.

Q2: Gold digging or thinking ahead?
You often mention the importance of making sure your significant other shares the same financial discipline and goals as you when it comes to dating and eventually marriage. I was married but one of the reasons we divorced was due to his poor financial decisions which left our family in ruins and, sad to say, I deal with it still since he is often late with child support and has trouble keeping a job (the recession is not to blame here). As far as dating, all the guys I meet have no concern for their personal finances. Based on their present choices and future plans for their money, I run in the other direction. When is someone’s personal finances too superficial or reminiscent of golddigging in choosing a mate?

– Chely

I don’t think there’s anything wrong at all with avoiding someone who does not have control over their own finances as a specific trait. Where you might get into golddigging, though, is when you pair it with other traits, particularly a high income. If you’re looking at income as a minimum requirement to date you, that’s a completely different subject.

There isn’t all that much correlation between income level and financial sensibility. Some of the best financial people I know have a very low income, while at the same time I know several high income earners that are flaky when it comes to managing that income.

If you find yourself continually walking away from the people you met, though, you might want to consider a change of scenery when it comes to looking for people to date. Obviously, something isn’t adding up in the area you’re currently looking in.

Q3: Encouraging others to think frugally
I am a Human Resources Manager for a Fortune 500 company in Southern California. As you know, SoCal is a very expensive place to live. My company had to make a difficult decision to require employees to take some mandatory time off over the next few months. Although they were offered the choice to use vacation time or file for partial unemployment, I know that if the mandatory time goes on for more than a couple of months, many of my employees will suffer. Some have already depleted all of their vacation and unemployment benefits are not paid to 100% reimburse for lost wages.

As I consider how to best help everyone, it occurred to me that if this would have happened to me a number of years ago, I would be in the same situation as my employees….floating in the ocean without a life preserver. I want to get them into the lifeboat!

I am planning on scheduling meetings with the topics of: financial planning, how to cut back on living expenses (including couponing, reviewing home expenses, etc.), and would also like to recommend books for them to read.

My question is: what do you suggest is the best “read” for my employees? Keep in mind that many of them are two-income households with children; and, unfortunately are still living paycheck-to-paycheck. Also, do you have any other suggestions for me about what to include in my meetings?

I know that I cannot “save” anyone who doesn’t want to be saved. But, I do believe that for those who are ready to open their minds to a different frugal life-style, the information I provide might help them get through this time, as well as allow them to enjoy less debt in the future.
– Gary

Well, besides my own book? I think it would actually be a good fit for people in your case, since I focused heavily on telling my own story of recovering from, well, living paycheck-to-paycheck while in a two income household with children, which is exactly how you describe the people you’re trying to reach.

Aside from that, I’d probably point to the book that helped me the most when it came to recovering from that very situation: Your Money or Your Life by Joe Dominguez, Vicki Robin, and Monique Tilford.

My suggestion for your meetings is to start off confessionally. Tell them, flat out, what your worst financial moment was and then talk about exactly what you did to bounce back from that. Then make the point that many of the people in that room are probably somewhere near their own financial low point. You’ve got to tie it to their own lives or they’re not going to care.

Q4: Why saving, not investing?
I have noticed that much of personal financial advice is focused on only half of the financial equation: saving and budgeting. While this is clearly the first step toward financial independence, it overlooks the second half: investing.

I am curious what your take is on this. Pennies saved are important, but pennies saved in a coffee can are pennies that decrease in value, which is another form of waste. I would be very interested in what investment books you recommend, etc. for those of us looking beyond saving.
– Arnold

The biggest reason for that is that the vast majority of Americans do not have the financial resources with which to invest. Many of them live paycheck to paycheck. The ones that don’t often only have some savings to account for the difference. Some have money in an employer-sponsored retirement plan, but a shockingly high percentage do not.

To put it simply, investing doesn’t matter to the vast majority of the American public. It’s a narrow topic that appeals mostly to people that are either earning so much they can’t spend it or have a big frugal streak inside of them (a la Warren Buffett). The people reading this blog, simply by the fact that they’re reading it and engaged in their finances, are the exception rather than the rule.

If you’re looking for a good “starter” investing book, try The Bogleheads’ Guide to Investing. I consider it the best one-shot investing book out there.

Q5: Budgeting software
Do you use a budgeting software like Quicken? If you do, would you mind sharing which one you use? What are your thoughts about them?

– Amy

I have a love-hate relationship with Quicken.

It does some things incredibly well, such as providing a good overall view of your finances, categorizing your expenses and so on.

My problem with it usually crops up when I want to do some sort of analysis of my financial situation and I find that I can’t do what I want to do. At that point, I wind up using a spreadsheet, which has always been my trusty tool for things like this.

Given the amount of time it takes to get everything set up and working well (which, in my experience, has been multiple hours each time I’ve set it up), I just don’t feel I get the bang for my buck that I should with Quicken. The money and time cost is too high for what I want from it.

Q6: Finding my loans
I’m 26 years old and have a ton of student loan debt. Since I graduated college I was never able to land a great job and I defaulted on my student loans. My credit score is shot. However I have recently landed a lucrative job and am trying to take the proper steps to restore my financial situation. Everything seems to be on track except for my student loans. The problem is I have no idea where to begin. I can’t even find them. I know they are in default and have been sold to a collections agency but I don’t know who to contact to start the process of paying them back. I dont have collection agencies calling my phone. Most of them are through citi but when i log into their website it wont list them as open loans because they are defaulted. I want to do the right thing but I need some help. Any advice is much appreciated.

– Kevin

Your first step should be to call Citi and figure out where the loans currently are.

Most likely, what has happened is that they’ve sold the account to someone else at cents on the dollar. At this point, your debt is now held by another company that may have purchased a lot of debts from Citi. This is pretty common practice.

At some point, that company will contact you – they’re going to want to recoup their investment.

Your only route to speed up this process is to track them down first, and Citi is the key to that. Call them up, get a customer service rep on the phone, and track the collection agency down.

Q7: Reordering checks
In this day and age, my wife and I rarely write checks– instead using automatic e-payments, debit, and doing most banking online. However, we do have one bill which we do need to write a physical check for, plus I understand the need to have a checkbook ready in case it’s needed. My wife’s checks recently ran out, and she had to order more from our bank. This was a one-time cost of $15! I can appreciate that it costs something to produce these checks, but even $15 is an annoyance in a world where we typically only use one check a month. I suppose there’s nothing that can be done about this, is there?

– Nate

That’s a little high for buying checks (assuming you bought several books of them), but it’s not exceptionally or ridiculously high.

Remember, when you’re buying a checkbook, you’re paying for a convenience. Those checks make the process of making certain payments much easier than before. Compare it to, say, taking out a money order – checks, in terms of both convenience and price, are a much better bargain.

Since you’ve already bought the checks, there’s likely nothing that can be done. However, there are check printing businesses out there that will undercut the banks and save you at least a little bit of money.

Q8: Interest-only loan problems
While we were dating, my husband and I–both teachers and 29 years old–each bought one-bedroom condos at the height of the real estate bubble, each with interest-only mortgages. (It seemed like a great idea at the time because everyone told us we’d be able to sell them when we were ready to move out and we had no reason not to believe them. We also qualified for mortgages well above what we could reasonably afford on a teacher’s salary. But that’s placing blame on someone else’s shoulders.) Eight months later, he proposed. We tried to sell one of the condos, but by that time, the market had slowed considerably and we were unable to sell, so we decided to rent mine. The rent we collected didn’t quite cover the mortgage payment, so each month we were losing about $600, but were still able to pay off our credit card debts and pay for our wedding and honeymoon with the rent money.

A few months later, we found our we were pregnant and decided we needed more space for our growing family. With my father-in-law’s help in co-signing a loan, we bought a three-bedroom townhouse and rented out my husband’s condo. Again, the rent for that condo didn’t quite cover the mortgage, so altogether we were losing about $1000/month in mortgage payments for houses we weren’t living in. We had no money in savings and were living paycheck-to-paycheck. A year after our daughter was born, we found our we were expecting our second child and realized that we needed to be in a better place financially. Our renters moved out, we stopped paying the mortgages on our condos, and we tried to short-sell both. Our first mortgage holders did not approve the short-sale requests, and both went to foreclosure in August.

A few weeks ago, however, we started receiving calls from debt collectors on behalf of the second mortgage holders, who are trying to recoup the $50ishK loan that each place had. Our other debts include $2500 for one car loan, $13000 for a second car loan, $10000 in student loans, our townhouse mortgage ($321000) and now these two outstanding loan amounts for about $50000 each. We have nothing in our savings account, as I have missed two months of paychecks while on maternity leave with our son and we have had to use what little we had in there to pay the bills. About 7% of our paychecks automatically get deposited into a 403b retirement account.

What should we do? Try to settle the condo-debts by taking out a second trust on our townhouse as a consolidation loan? Keep ignoring the debt collection calls until we get sued or they go away? Stop contributing to our retirement accounts until we pay down some of our debts? File for bankruptcy?

Right now we’re sticking with option two until we can figure out some sort of plan of attack. Any recommendations?
– Danielle

Without knowing all of the interest rates, I can’t tell quite how bad it is, but it looks like you might be approaching a bankruptcy type of position. Both you and your husband are young teachers, which means you’re fairly low on the teacher’s income scale, and you’ve not mentioned any other form of income. You also have two young children at home who likely require some form of child care when you’re at work. Unless all of the interest rates are extremely low, it’s not a pretty picture.

I would suggest sitting down with someone you trust and going through all of the numbers in specific, including your monthly budget. Let someone else get a full glimpse of the numbers and assess where you’re at.

It may be that cutting your retirement contributions for a while can make this work – it depends heavily on the interest rates. You really need to carefully run the numbers yourself, though.

Q9: How early for retirement savings?
I’m a recent college grad, married, age 23. My husband, who graduated last year, has an entry-level job in his chosen profession and makes around $30,000 a year. He has minimal benefits and no retirement plan. I will start a job next week for $14 an hour that isn’t specifically what I trained for, but could segue into my field. This job is considered full time temporary with no benefits. The job could become full time after 6 months but I’m trying very hard to find work in my field. Our health insurance is covered by our parents plans until age 26 (thankfully!).

Because we have no retirement plans could we fund our own? We have no debt. Our cars are in great shape and we rent. We have saved about $4,000 this year. My grandfather bequeathed me $16,000 that is in a savings account right now, which is what we’d like to start a retirement account with.

If we can start some sort of retirement, which one would you recommend? How much should we put in every year? Would this change if we would get “real” jobs with benefits? Or should we just chill until our temporary jobs turn into something better and our lives are more stable? Thanks so much!
– Lindsay

I would open a Roth IRA with the investment house of your choice. For the investment within that Roth IRA account, I’d choose a target retirement fund that’s closest to the year when you turn 65 (2055, probably).

As for how much to invest, I’d just invest what you can. I’d set up an automatic investment plan and start putting in the same amount each week automatically, depending on what you can afford and what your other goals are.

The simple fact that you’re getting started this early will make things much easier as you actually approach your retirement age.

Q10: Gaming site
Last week you mentioned that you were collaborating with someone on a site about board gaming. Details?

– Erik

There really aren’t many details as of yet. A friend of mine who also enjoys board games and card games as a social activity has been long discussing getting such a site going and we’re slowly progressing from the planning stages to actually creating something.

Trust me – if it goes public, you’ll all know about it.

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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