Updated on 04.26.11

Reader Mailbag: Friendships

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. Car seats
2. Graduation and internship question
3. Condo financing questions
4. Roth IRA worries
5. End of the tunnel
6. Anxiety
7. PMI worries
8. Cost of living abroad
9. Second mortgage or renovation fund
10. Gencon?

I am eternally grateful for the friends I have in my life. They bring me so much and I often feel as though I give so little in return.

Q1: Car seats
We are thinking of moving to a one car family. Our best bet would be to keep our Prius and get rid of our Trailblazer. We have three small children, though, and can not fit all three seats that we have in the Prius. What kind of car seats do you have??We have a 4 month old still facing backward, a 2 year-old, and a 3 year-old.

– Carrie

We have a 11 month old in a rear facing seat, a three year old, and a five year old, yet we can get them all in the back of our Prius with a few inches to spaare.

They are all Gracos, though I am not sure of the model numbers on each one.

If you haven’t, try putting the rear facing one in the middle. This is the only way the arrangement works in our vehicle.

Even with five passengers, we still get about 44 miles per gallon on interstate driving, so this is a huge boon with gas prices as they are right now.

Q2: Graduation and internship question
I just graduated last month – I have about $10k saved up from my part-time job while I was in school. But I haven’t worked for about a month now. I just got an internship working for a sports team in the Chicago market which is a great opportunity doing what I love to do (media/television). However, its unpaid. They require me to work about 15 hours a week from May to Sept – not even for school credit because since I’m graduated but just for “industry experience”.

My question is: I don’t want to work for this internship all summer and burn myself out and not get a paid position. Would you recommend, after a few weeks or a month, negotiating and approaching them to give me a paid job? I’m not even concerned about making a lot of money right now, just need some cash flow.

I do freelance on the side but thats not enough. I’m trying to find a salary job that will help me with all my finances. I’m also going to have to start paying off about $40k+ in student loans in 6 months.

How would you handle this situation? Would you take the internship?
– Patrick

I’d handle this situation by doing the unpaid internship for the length of it and doing the best possible job I could. I’d also make sure I built a strong connection with people as high up the food chain as possible.

A bit of money isn’t what will be valuable for you right now. What is valuable is an entry on a resume and a stellar recommendation letter. Do everything you can to get those.

You’re going to get a lot more attention in your industry if you have a glowing letter from someone high-up in a top organization.

Q3: Condo financing questions
My mother is planning to purchase a condo in a nearby 55+ community. The condo would be for my mother (60) and my grandmother (85). The purchase price is $225,000 and the monthly fees are $320/month. Taxes will be about $3,500/year. Closing costs will be around $7,000. Moving expenses will be around $1,000. The condo comes with all appliances and my mother plans to use her current furniture so there won’t be any major purchases associated with the move. She is approved for a 30 year mortgage with a rate of 4.875% or a 15 year mortgage with a rate of 4.1% and is required to put a minimum of 25% down. She plans to stay in the condo until she can no longer live there on her own.

Both my mother and grandmother are retired. My mother receives a pension of $58,344/year before taxes or $4,862/month before taxes ($3,570/month after taxes). She also has ~$70,000 in cash that earns ~1% interest and $175,000 (worth $140,000 after taxes at withdrawal) in a Thrift Savings Plan (similar to 401K) that earns ~3% interest at this point in time. My grandmother pays her own expenses out of her social security income, but does not have much savings and does not contribute to the household. My mother and grandmother do not have any debts or credit card balances.

With consideration for the interest she is earning, interest she would pay on a mortgage, and the value of the mortgage interest tax deduction, would she be better to:
A. Wipe out all of her savings and buy the condo without a bank mortgage? I could lend her the remainder she would need to do this.
B. Pay the minimum 25% down payment and take out a mortgage on the balance to take advantage of the mortgage interest tax deduction and maintain her savings? 15 year or 30 year? With 25% down, the monthly payment on the 15 year mortgage would be $1,256.70 and on the 30 year mortgage would be $893.04.
C. Pay an intermediate down payment amount between 25-100%. 15 year or 30 year?
D. Other suggestions?

– Kelly

I would not encourage your mother to empty out her savings to pay for this place in cash. That leaves her without any sort of emergency fund, which leaves her open to all sorts of emergencies. It also maximizes her tax bill for withdrawing from the TSP all at once.

For her purposes, I’m not sure there’s a huge advantage of a 15 year mortgage over a 30 year. With a 30 year mortgage, she’ll be 90 (!) by the time it finishes up, so the likelihood is that she’ll either have passed on or not be able to live there at that time. Because of that, this is more of a personal choice. If she pays more now (a 15 year), she’s more likely to own it before she needs to tap the value for care and she also is more likely to have an asset to pass on to any children. If she pays less now, it’ll be easier to make ends meet but it’ll likely have a bit less value when it comes time for care and she’ll probably pass on less value.

My only recommendation is to not tap out her retirement savings for this. She may need that emergency fund.

Q4: Roth IRA worries
I am a young professional who just set up a Roth IRA account but now have to go about investing that money — most likely in a target fund (for 2045 or 2050). However, with all the talk on the need to raise tax revenues and the current debate over the debt ceiling, what is the likelihood this IRA is and will remain a good investment for me as a young professional? If the roth is still a good option, should I consider going for a lower target fund (like 2030 or something) to ensure a bit more stability until some of this uncertainty plays out?

– Ashley

An IRA itself isn’t an investment. It’s merely a way to move taxes around. The investment is what you choose to do with it within an IRA.

Within that IRA, you can make all sorts of hedges against the dollar if you wish, but I recommend lots of diversification. Domestic stocks, international stocks, bonds, commodities, you name it. Your specific target retirement fund might be a good choice. It depends on what it’s made up of. I’d inspect the actual contents of the target fund before investing.

I don’t think an IRA is a bad choice regardless of the future of the dollar. How you invest within that IRA is another question.

Q5: End of the tunnel?
I am a college graduate (1995) with a computer degree. I have worked odd jobs to be home with my kids… 6 kids… Half the time I have been single. I am currently working a minimum wage job. This has been my first office job, and although I don’t make much money, I love the job itself and it definitely offers me the flexibility to be able to be a “momma” and work. Three of my kids are in daycare, which SRS helps me pay, along with enough help with food stamps that I can pretty much feed the family. It seems to me, that the harder I work, the further I get behind. I have started saving change to help at least save some kind of an emergency fund. I guess the main problem is that the more I work at the moment, the less assistance I get which sets me further behind in the long run. I have read your articles for a couple of years now, but I have never seen an article about this type of situation. I have done a lot of things you have suggested and I have made things better, it just seems no matter what I do, I’m trapped, especially until my boys are out of daycare. and considering they are 8, 8 and 7 years old, it won’t be for a couple of years. My income has been reduced by $500 a month, because the boys’ dad lost his job and isn’t paying child support. I have long come to terms with the fact that I need to be able to make myself financially stable without child support for this very reason. I’ve been thinking about going back to school and get my masters in therapy… but i’m more scared of just accumulating debt that will make my situation worse. Not sure what to do, or which way to turn… any suggestions?

– Amy

If your children are that old, you may want to consider looking for other families in your area that are in a similar situation that you can share afternoon child care with. If your work schedule is flexible, perhaps you can get off a couple afternoons a week to watch your children and a few others in exchange for having your kids covered a few afternoons a week. This might actually coincide well with going back to school.

If I were you, I’d keep on the father’s back about paying child support. He may be able to get some hardship protection now, but if he’s re-employed, he should be paying support.

As for going back to school, it really depends on employment options. Can you easily gain employment with the degree you will have? Will it immediately help you earn more money? I’m not talking about promises. What do real employment rates look like? Are there lots of job openings or are they rare? Don’t go back if it’s not going to put you in position for work.

Q6: Anxiety
I get really anxious in certain situations. Have you written about this on your blog and can you give me advice (blogs, books…) on how to overcome or work with this disability. I call it a disability, because I feel I have missed so many opportunities financial and personal. It has taken sometime to even write this email, but it is safer because it is email and not face to face. I believe it affects my job (advancement) and most important my marriage. My communication style is lacking at best.

– Oscar

If anxiety is crippling you to the point that it’s difficult to send an email, you should seek professional assistance with this problem immediately. This goes far beyond typical tactics for overcoming social nervousness and into an area that’s a significant life obstruction.

Bring this up with your primary care physician in a private meeting, just you and the doctor. Ask for a recommendation not for medication but for a referral to a professional who will help you through this.

Communication skills come with practice, but it’s hard to practice if you can’t bring yourself to begin.

Q7: PMI worries
I’m a naturally frugal person, so paying private mortgage insurance drives me nuts. I want to refinance and kick PMI to the curb, but I go back and forth on if this is the wise decision (or just me being persnickety).

I’m 24 with no debt besides a FHA loan (with 29 years remaining). With careful budgeting for retirement/tithing, I could set aside enough to have the 20% paid off in 2 years. Is this a smart savings goal? On one hand, this is a large sum of money used against a relatively low-interest (5.125%) loan. I could get a higher return on the money, at my age, with other long-term investments. On the other hand, I could take a 15 year loan and end up paying about the same amount as my current payments (by having a smaller loan, going down at least 1% interest, and not paying PMI). I’d love to hear your thoughts.
– Kyla

Paying off the PMI as early as possible is probably worth it. According to my back of the envelope math, you wouldn’t be in range to get rid of the PMI until about year eleven of your mortgage without accelerated payment, ten years from now.

Your accelerated payments would not only knock down the mortgage balance (and the interest paid, earning you a 5.125% return on your money from the mortgage alone), but it’d also earn eight years’ worth of PMI as well, which can really add up.

That becomes a pretty good investment. I’d make that my goal, assuming of course that you have a good emergency fund.

Q8: Costs of moving abroad
My son, a 25 yr old (single) PhD. student in San Francisco is studying biology. His grad work is primarily research project and science writing/publishing at this point, not classes. He learned that his lab director (and thus full lab) is relocating to Germany to a University there. He is being offered moving expenses and roughly the same salary as a grad student in Germany without benefits OR the chance to get his Masters from the US and get a 40% more in salary but not be a student in Germany.
How does one compare from US to abroad such things as:
cost of living?
taxes as an ex-pat?
access to health care while abroad? can you use German services?
cost or benefits (given US dollar’s weakness) of being paid in Euros and living in Euros for the next few years?

Obviously there are non monetary issues such as distance but this seems like a great chance for him – we just want to be aware of what issues, especially as he negotiates his salary/package, what factors matter.
He is in neuroscience as a student but very tech savvy and the lab director could hire him to be their programmer/tech support as he unofficially does that now. He would be still working on his PhD but as a side job, not a full-time – a flip of how it is now for him as full time student who assists as specialized lab techie.
Aside from the actual cost of going or not right now, there is the future (ie career) costs or benefits, which are much harder to determine.

– Connie

Most of the questions you ask should be addressed to the university to which your son is considering transferring. They have ready access to such information, as I’m sure that they often accept expat students.

My suggestion, honestly, would be that he step back and take a serious evaluation of where he wants his career to go beyond this job choice. Don’t worry so much about the dollars and cents of today, but about which option opens the most doors over the long run. His PI should be able to help with this, if he/she is worth his/her salt.

The big question is if this is really a path he wants to follow.

Q9: Second mortgage or renovation fund?
I have been working on my finances using the Dave Ramsey system for the past few years. I now have cars paid off, 20k in an emergency fund (about 5 months), save ~16% in retirement, save towards the kids college (though not enough, I’m sure) and now I am at the “pay down your mortgage step”. We have a primary mortgage that is 232k that we are in the process of using the HARP program to decrease our rate from 6.125 to 5.125% which will save us ~$200 a month. We also have a second mortgage that is $36k at 7.325% (payment is $313, but I have been paying $400/month for a while). The second mortgage was done to avoid PMI when we bought. My husband and I save $1300 a month that was going into our emergency fund, but now that is funded, we have it going into our “renovation fund”. Eventually we would like to put an addition on to the house, unless at that point we have saved so much money that we may be better off trading up vs. renovating. (If it would cost more to renovate then trade up). Our house is worth $255k according to the recent appraisal we had done- so we are underwater (we bought for $305k in 2006). So my dilemma is this. Do we try to pay off the second mortgage- which if we put in the extra $ from the refi ($200) plus the $ that we are putting into the renovation fund ($1300), plus the $ we are currently paying on the loan ($400) for a total of $1900- which would get the second loan paid off in less than 2 years. Or should I use the $200 refi $, plus the $400 regular payment, plus maybe $300 of the $1300 savings money towards the second loan (total of $900/month) and then $1000 towards the “renovation account”. I am not sure if there is a benefit to paying off the second mortgage or not. If we were dead set on just renovating then I would think to pour it all into renovation. But, because we would consider moving, that’s why I am not sure if we should tackle the mortgage. We both have steady jobs, making about $80k each, and I started a home party business that is doing well and helps supplement the income for spending money and extras.

– Karen

If you’re considering trading up in the short term, I would maximize your cash on hand. You’ll need it for the expenses of that move, both in the paperwork and otherwise.

If you’re leaning toward trading up longer down the road, I’d get rid of that second mortgage so that you’re not underwater on the house and won’t have a shortfall to make up when you sell.

If you’re leaning toward staying put, I’d put at least some of the cash into a renovation fund and make the most of what you have.

In other words, the best choice depends on what you want. None of the decisions are strictly economically better than the other one, especially when considering what your other priorities in life are.

Q10: Gencon
You’ve mentioned before that you attend Gencon. I assume you’ve already signed up this year. What events are you attending?

– Rob

I mostly wander, to tell the truth. I try out a lot of demos of board games I’ve never tried in the demo room. I’ll play in a few specific events with people I already know, but we usually fill up all of the tickets for those sessions.

Much of the time, though, I’m in the open boardgaming room. In there, the organizers stand you in a queue and fit you into all kinds of board games. Someone wants to play, say, Carcassonne, so they ask people in the queue if they want to play. Once they have enough, the game starts. Since I usually go there to play a wide variety of games with a wide variety of people, this is a great place for me to be.

Although I’m not organizing any events there or anything, I’d be happy to chat and sign my books if you bump into me there.

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. Dorothy says:

    Q6 Remember, Trent is not a medical professional. Consult your doctor and, if appropriate, a professional to whom your doctor refers you. But know that taking medication for a genuine disorder is not “weakness” or “quackery” as Trent seems to imply. I wish you all the best in getting a handle on your issue — whether with talk therapy, or another therapy, or medication, or some combination.

  2. Rebecca says:

    I have never been in a Prius, but our one car is a Saturn SL1 and it is very tight in the back seat. We have 3 Radian65 car seats by Sunshine Kids. These are top rated for safety, even better than Britax. They are also the narrowest car seat on the market, and built very well. Our kids find them supper comfortable, and they can go rear facing from 5 lbs, we used it with our infant daughter to 30 lbs, and foreword up to 65 lbs, which our oldest just maxed out at age 6, but he is a very tall boy. We went with these because they were the only way we could get 3 seats installed in our one car, no others would fit. It is still a tight fit, but it works for now.

  3. Johanna says:

    Q8: This sounds like a fantastic opportunity for your son, and I hope he takes it. I’ll try to help with your questions based on my experience going from grad school in the US (Chicago) to a postdoc position in the UK (Bristol).

    As a postdoc in Bristol, I earned more than the grad students did, but I noticed that the Bristol students could afford a lot less than I could as a student in Chicago. For example, a lot of my classmates in Chicago had their own apartments, but none of the students in Bristol did. But Chicago is relatively inexpensive for a big US city – if your son is already used to San Francisco’s cost of living, I doubt that wherever he goes in Germany will be too much of a shock. To get a sense of the cost of living in the city where he’ll be in Germany, take a look at apartment listings online.

    As a US citizen living abroad, I had to file a US tax return every year and declare all the income I earned in the UK, but I didn’t have to pay taxes on any of it. In general, income earned while living abroad is exempt from US income taxes up to a certain threshold that’s a lot more than any grad student or postdoc earns. So I paid only UK taxes on my UK income.

    I was eligible to use UK health services from the first day I arrived there.

    Since your son’s salary and expenses will both be in euros, the dollar’s strength or weakness doesn’t really matter a whole lot.

  4. Interested Reader says:

    @Q6- Medication can be a great assist during therapy. I’m a firm believer in using both to help get a handle on mental health issues.

    After all, even if you are in therapy and working on ways to improve, it doesn’t help if you have a panic attack that you can’t control.

    I speak from experience as someone who has had serious anxiety issues and has had to be on medication for a long period of time. But I stopped and it’s been years since I was on it.

    Recently though, I got in a situation where there was a lot of stress and I was anxious all the time. No matter what I tried and no matter what technique I had learned, I was still having panic attacks. So I went to my doctor and told him – I think I need anti anxiety medicine just to get over this hump where my anxiety attacks were really crippling me and keeping me from doing things I needed to get done.

    He agreed with me and gave me a scrip with instructions that I could cut the tablet in half or quarters (depending on what I thought I needed). I took the medication for about two weeks and once I got over the “hump” of the immediate situation and then I didn’t need it.

    I still have anxiety and still deal with it, but it’s back to levels where I can use the techniques I learned in therapy to control.

    I’m not sure why but Trent seems to be very anti psychiatry/psychology – he’s gotten better because now he at leasts will suggest professionals for therapy which is something he didn’t before.

    You can also contact your local (or state) chapter of NAMI (National Alliance for Mental Illness) for information and support groups in your area.

  5. valleycat1 says:

    I agree with Dorothy’s comment to Oscar’s Q6. Only your physician or therapist should be deciding whether medication and/or therapy is appropriate for you. I do agree with Trent that you need to let your doctor know your anxiety is this severe, so you can get help. If going in to talk to the doctor is too intimidating, see if you can get them to give you a referral over the phone.

  6. Suzanne says:

    Q2: My husband’s career in sports and media started in the same place you are, and he’s seen many others take a similar successful path. The advice he would give (I’ve heard him repeat it many, many times), is this:

    There are tons of people in line behind you to get that internship. If it is your understanding that the internship is unpaid from May to September, that is not going to change even if you ask, and they may end up resenting you for asking. This happened to him at a local Philadelphia team, as a matter of fact.

    What you should do is bust your butt as much as you possibly can at your internship and become both visible and indispensible. Make sure everyone knows your name. Make yourself available. Hang around even when you’re not supposed to be there. Yes, it sucks to work unpaid but if this is what you want to do for a career, this face-time will pay off in the long run, I promise you. Don’t forget that there’s always another person behind you ready to work harder and longer for less and while you might think you’re awesome, you are a dime a dozen in the sports/media world. After September, stay in touch and stay on their radar no matter what you do as a job. If they are frequently reminded of your existence and your hard work/dedication, they will be more likely to think of you when a job comes up. Good luck and have fun!

  7. Jane says:

    How does a couple making $160,000 qualify for
    HARP? It doesn’t even sound like they are that underwater.

  8. SystemError says:

    Q2: Internships are a must in some industries, and media is no exception. I’m in another field where they are a necessity: public policy. Everyone has to “pay their dues” and if you ask around, you’ll find that everyone has done unpaid internships at some point of their careers. I remember having a beer with my old boss at some point and he was telling me stories of when he was an intern 20 years ago, and we found there were still similarities. I’ve gone back to grad school and I intern full time for no pay. Add in commuting costs, and I pay to work here. But as I’m ending this semester’s internship, I know i’ve got relevant experience, great recommendations and contacts, and a foot in the door. Meanwhile the savings are draining, but it’s money well spent.

    If the OP is part time intern, you can intern during the day and work nights and weekends doing something else for money. File that under “paying your dues” as well. Good luck, and if you’re interning with the Cubs, I’m sorry. :)

  9. Ann says:

    To add on to Johanna’s comment and Connie’s question, American citizens working abroad do not pay taxes to the United States government, unless they are making the equivalent of 91,000 United States Dollars or more. However, it IS still necessary to file taxes.

    Additionally, the United States has a treaty with several countries where if an American citizen is living/working in a country on that list, then the American citizen is not required to pay income taxes to the foreign country where they are living and working – up to a specific duration of time, however the American ex-pat might be required to pay taxes other than the income tax. For example, as long as you fill out the proper form to the foreign government, an American citizen living in South Korea does not pay INCOME taxes to the South Korean government, unless the American lives in Korea for longer than two years. To continue the example, if you son was moving to South Korea and making under $91,000, then he would not need to pay INCOME taxes to Korea or the USA. This is potentially a lot of money saved. So this is another thing for your son to research, maybe Germany has a similar agreement. I believe these agreements came about to assist military families, so it’s worth researching.

  10. Joanna says:

    #1 – The Combi Coccoro car seats are specifically designed to fit in a compact car 3 across. You might try those.

  11. Jessica says:

    @Q5- What about the older children- can they not watch the younger ones? Can they contribute to the household income with a paper route, lawn mowing or babysitting other children? What about the father(s) of the older children?

    I would think that you should brush up on your skills related to your degree, and get yourself out of a minimum wage job pronto.

  12. Dee says:

    Q2: Sports internship

    You should take the internship, reduce your living expenses as much as possible and, as everyone has said, work as hard as you can.

    The reason they can offer unpaid internships is because there are so many people who will take them (as #6 Suzanne said). I would absolutely NOT ask for payment. 15 hours a week leaves you plenty of time to get another job, even if it’s not related to the career.

    Networking and experience are more valuable to you than money right now. I would also get connected to a professional media organization in your town.

  13. Johanna says:

    Q4: If you’re not looking to retire for another 35-40 years, you can pretty much ignore anything you’re hearing on the news right now, at least when it comes to the stability of your retirement savings.

    Look at it this way: 35-40 years ago (the early 1970s) was also a period of some pretty serious political and economic uncertainty. What effect is that having on what the markets are doing now? Pretty much nothing. You don’t hear today’s retirees saying “Oh, if only I’d paid more attention to Watergate, I would have invested more conservatively and I’d be so much better off right now.” At least, I’ve never heard anyone say that.

    Right now, while you’re young, turmoil in the markets is your friend, because it gives you a chance to buy low (and later sell high). And you don’t even have to try to time the markets to do it – it happens automatically if you make regular, automatic deposits to your accounts. How cool is that?

  14. Johanna says:

    Q2: I agree with the others that you should either take the internship, or not, on the terms that were offered. Asking for payment before the end of the internship will just make people annoyed with you.

    I don’t know anything about the sports media field, but I’d be extremely wary about entering any field where “paying your dues” means it’s expected that you’ll work for no money and be grateful for the opportunity. If there are really so many people scrambling to do unpaid internships, what’s to keep them from just taking more and more interns, and never offering anyone a paid position? If you want to take the internship, I’d at least take it with my eyes open – try to track down some information about where the former interns are now, and where you’re likely to end up at the end of the internship term.

  15. ChrisD says:

    Q8 Move to Germany. I moved to Germany for my postdoc (as a UK citizen). The quality of living is excellent. Unless he is in one the big cities Frankfurt, Hamburg, Munich, these are more expensive, but Berlin, or Dortmund (one of the biggest towns at 600,000) or, I think, anywhere else the cost of living is great. (Basically the weather is a bit too rainy to really pull in the tourist crowd as in Italy or Spain or France, which helps keep prices down). In Dortmund I viewed 9 apartments in a week and picked a one bed apartment in a lovely (but not VERY central) neighbourhood for 450EUR/month including all bills. In Berlin you would expect to get a room in a flat share for about 300Eur/Month. In Dortmund a PhD student at the Max Planck Institute earned 1000EUR/month (after tax) and you could get a room in a student halls for 200EUR/month (for a student, considering that is a grant and not a loan I think that’s very good). Transport is ~60-70EUR/month (or much less for a student, the university does a deal for you). A nice meal out in a restaurant can be gotten for 20EUR. On Sundays you can get an all you can eat brunch (no drinks) for about 12 EUR (my favourite thing about Germany)

    Re health insurance I was with Hanse Merkur for 60EUR per month. This is a special deal for foreigners who have been in the country for less than five years. It is a backdoor way of selecting young, healthy and cheap people. However, this depends entirely on your contract which the local HR dept will tell you about. If you get wages then you pay a fixed percentage of your income (12-13%) to one of the big insurance companies. If you are paid a stipend, you avoid all taxes and pay the Hanse Merkur deal. Having health insurance is compulsory. The German admin people will make sure you do everything right.

    Re career move. Moving abroad is pretty much expected in science, and once in Europe for a PhD, it will be much easier to do a postdoc abroad, before going back for your next post-doc.

    All in all this sounds like a great opportunity that I would definitely take (well, I DID take it).

  16. New Reader says:

    Q6: Research indicates that a combination of therapy and medication works best for combating anxiety. I’d start with your doctor, ask him/her for a therapy referral, and see if your therapist agrees that medication is indicated. Your doctor may be comfortable prescribing medication, or he/she may want to refer you to a psychiatrist. Anxiety is the most common psychological problem, more common than depression even. You won’t be the first person your doctor has talked to about anxiety… work up your courage to talk to your doctor, and take it from there. Good luck.

  17. Jonathan says:

    @Dorothy (#1) – Nowhere did Trent imply that treating anxiety with medication was a “weakness” or “quackery”. He simply suggested that Oscar ask his doctor to refer him to a professional who specializes in this sort of thing. I agree with Trent 100% that it is better to see someone who can determine if therapy, medication, or a combination is the best course of action, rather than just asking a GP to prescribe medication, which happens all too often.

  18. sarah says:

    On Q6, I agree with prior commenters advice that seeking medical help (potentially both medication and therapy) is something you need to do.

    That said, if your anxiety is bad enough that you cannot ask the doctor yourself, see if you can take a trusted “safe” person(family member or friend) with you to the doctor to advocate for what you need. I know that it some anxiety can be bad enough you are unable to ask for the help you need, even if you make the appointment and get there.

  19. Carrie says:

    I’m pretty sure you have to pay on an FHA mortgage for at least 5 years before PMI will be taken off, regardless of the LTV ratio.

  20. Pamela says:

    Agree with Carrie above. Regarding Q7 – I am in almost exactly the same situation. I am almost 2 years into a 30 year FHA mortgage, with PMI. For mine, regardless of how much or how soon I pay down to below the 78% LTV (if you don’t start out below 80% LTV, sometimes you have to get below 78% before the PMI comes off), I MUST pay PMI for at least 5 years. If you have other investing options, then I would only save and/or pay off as much as needed to get to 78% LTV at the 5 year mark, if PMI is your only real concern.

    I know how you feel though. I have spent hours with amortization calculators trying to decide if the closing costs would be worth it to refinance into a 15 year, or even one of the loans at ING Direct, since they keep offering me discounted closing costs. The problem, of course, is that closing costs in Oklahoma are huge, on the order of $3500 to $5000, depending on the lender. So, I am sticking with my current mortgage for now. Good luck with that!

  21. Finance Nerd says:

    @Q4, I think Trent misunderstood what was being asked here. The concern a lot of people have is that Roths, which allow tax free distributions, will lose that status due to changes in tax policy.

    In other words, you put money in after tax, and when you retire the contributions and earnings come out tax free (according to current law).

    But some fear that Congress will see how much money is sitting in Roths and realize what a huge potential revenue source that is, and tax the earnings when the money comes out.

    I obviously can’t predict what will happen, but I don’t think this should be a huge concern. I can see the rules being changed going forward, but I have a hard time seeing them being changed retroactively.

  22. Des says:

    @Finance Nerd

    Congress might not make explicit retroactive changes to Roths, but (as an example) if they ever passed a federal sales tax in lieu of some or all of the income tax, that would effectively negate the tax savings of the Roth. Just one more reason we should all have a combination of pre- and post- tax retirement savings.

  23. Finance Nerd says:

    @ Des,

    I agree, a good diversification of sources is important.

    I was comparing Roth to Traditional in my comment, although I didn’t explicitly state that. A Federal sales tax would have the same/similar impact on a Traditional as on a Roth, I think.

  24. jim says:

    Q2 Patrick: I totally agree with Trent. Be glad you got that internship at all. Take the job, and do your best to impress them. Thats the point of such an internship. If such internships warranted pay then they wouldn’t be unpaid.

    Q3 Kelly : I’d go with the 30 year. She can keep more money in the bank for flexibilities and emergencies. The 4.8% rate is really low by historic standards. The 15 year may drain her monthly cash flow a little too much, she has no rush to pay it off faster and it won’t save her much in interest really.

    Q4 Ashley : It is not a given that taxes are going up. Especially for Low/middle income people. No politician anywhere is advocating tax hikes for low/middle income families. BUT if you still think taxes are going up in the future then that would make a Roth IRA better choice. With the Roth the idea is to pay taxes to day and not have tax liability tomorrow. So if the rates go up in the future then that makes paying today even better than paying tomorrow.

    Q5 Amy : Get dad to pay up.

    “I am a college graduate (1995) with a computer degree.” … “I’ve been thinking about going back to school and get my masters in therapy”

    I’m confused. What do you mean by “a computer degree”? DO you mean computer science or IT or something? Or do you mean online degree? Why would you go for a masters in therapy? Are there good paying jobs in that field and hows it relate to your “computer degree”?

    Q9 Karen : Pay off the 2nd mortgage. 7% is a high rate. Plus if you pay off the 2nd you’ll no longer be underwater.

  25. jim says:

    Des, A fed sales tax would have same impact on any retirement vehicle assuming you buy stuff. It wouldn’t hurt a Roth any more than a traditional IRA.

  26. jim says:

    Sorry, let me retract that last one.

    Actually Des said : “a federal sales tax in lieu of some or all of the income tax”.

    So I guess the idea is that they might get rid of income taxes and instead have a sales tax. That would in fact remove the entire benefit of Roths. I don’t think we have to worry too much about the US government abolishing income taxes though.

  27. Stacy says:

    My husband and I will be at gencon too this year. I can’t wait!

  28. Jonathan says:

    Q5 – I’m assuming by “Computer Degree” the OP is referring to some sort of IT degree. If that is the case, I would really question the logic of going into debt to get the master’s in therapy. In my experience the IT field is one of the easiest fields to land a job that allows telecommuting, which would allow her to stay at home with her kids. If she hasn’t been able to find a steady job in IT that gives her the flexibility she wants, I would seriously doubt she’ll find one with the therapy degree. Why go into debt for another degree when it seems that the first hasn’t been fully utilized yet?

  29. Nicole says:

    But Trent specifically says “not for medication” — he even felt the need to italicize it. I’m going to assume this was more to reassure Oscar, as a lot of people fear medication or think it means failure. Please do not rule it out. I have used medication myself, and it helped. I did have some side effects (I was so restless I couldn’t sleep), so I had to change medications and split the pills in half. After that, it wasn’t a problem.

  30. Amanda says:

    @11 an 8 year old is not legally allowed to watch a 7 year old.

  31. Jonathan says:

    #Nicole (#29) – Trent said “Ask for a recommendation not for medication but for a referral to a professional who will help you through this.”.

    In other words, don’t ask your GP for medication, ask him/her to refer you to a professional who specializes in this kind of thing. I’m not seeing the anti-medication bias that others are seeing. What I am seeing is the suggestion that treatment is better left to a specialist (who could prescribe medication if that is the best course of treatment).

  32. Andrew says:

    Q5– If she got some sort of IT degree in 1995 it’s pretty much worthless at this point–especially since she has never used it (her current low-wage position is her first “office job”). She is likely to be regarded as completely unskilled by IT departments. So why shouldn’t she get a degree in therapy if that’s what she wants and (BIG if) it will enable her to earn a living wage?

  33. Andrew says:

    Q2–There’s a book–very recently published, called “Intern Nation: How to Earn Nothing and Learn Little in the Brave New Economy” by Ross Perlin. Apparently the internship business is HUGE and growing–Disney alone “employs” 8000 unpaid interns. The book poses questions about how legitimate business practices move into the realm of sheer exploitation. Check out the online reviews–it sounds very interesting.

  34. Interested Reader says:

    @Jonathan – in the past Trent has been explicitly anti psychology/psychiatry to the point of advising people not to seek therapists or professional help but to just deal with the problems themselves.

    I think he has even italicized do not seek a therapist, but I can’t remember. I could try and find the mailbags but they were from last year.

    But his previous stance of advising against seeking mental health professionals for help is why I took the “not for medication” to be against medication for mental health specifically.

  35. SLCCOM says:

    Q2: It sounds like the “internship” scam is about what the university “tenure track” scam is. You get some poor schmuck to come in and work her/his hinney off for 7 years, then say, “sorry, no tenure for you!” and sucker in the next victim for the next seven years. Repeat, stir, and save money while hiring “adjunct instructors” at $1/hour to do the actual teaching.

    So, the bottom line is this: just where ARE your tuition dollars going…?

  36. kristine says:

    Andrew- you said it so much better than I could.

    One person said: “If the work warranted pay than it would give pay”. Why? Out of conscience? Why pay when people offer up labor for free, just because they buy into it that it is expected?

    Internships are now being used to cut the bottom line, and eliminate staff jobs. “Paying your dues” used to mean working late hours and getting the crappy assignments. Now it means doing the same thing, for free, at the expense of someone who used to get paid for the grunt work. Great for employers, bad for the workers. I have seen it; I have had interns.

    ALL WORK warrants pay. Otherwise call it what it is- an apprenticeship, much more similar to the system post-surfdom under monarchies, except that once you know your craft well, you are cut loose, your place taken by another free laborer. Companies used to train new employees- this shifts the training cost to the worker, even if you get a job at the end of it.

  37. kristine says:

    So true. Hubby gets paid in salary, for a whole course, with a PHD, less than what ONE student pays to be in is class. In a class of 30. Meanwhile, the Univ Pres goes to a 100 lunch everyday at the best hotel around, on the Univ dime.

    He got paid 17K to teach full time at a 2nd tier private Univ, with a raise to 25K with his new PHD. Once he went on-staff- he got a raise to 60. Univs use as many adjuncts as possible, and pay them taco bell wages. It’s obscene. And ubiquitous.

  38. SLCCOM says:

    Actually, Kristine, I figured it out one day. To teach three classes of 25 English Composition students, it actually came out to about $1/hour. Taco Bell pays a lot better, and has better food!

    I love teaching, but I refused to work for the new department chair, the Wicked Witch of the West for $1/hour.

  39. kristine says:

    Good for you! The Prof unions typically use the adjuncts as the sacrificial lambs-unseemly.

    My hubby just decided not to go for tenure-he has been treated an unimportant as he teaches military history. They want a women’s studies teacher- it is popular right now. It’s a shame- he has 2 books out, did a signing at Barnes and Noble, and writes reviews and articles for the top journal in his field. His opinion is sought out internationally, and he has a top British honor for his work, even though he is American. He is a strategy genius, and has done fellowships at West Point. All this, when he was still making 25K. Blows my mind.

    We will hopefully be done paying off his 60K in student loans before his contract is up in 2013. Where we live, private AP tutors make about 150/hour. So the best educators are giving private lessons to the incredibly wealthy, and that high college tuition goes I do not know where, but not to the teachers.

  40. Sandra says:

    I agree with others that Trent is characteristically anti-therapy/anti-drug. It is change for him to even begin to recommend a professional. For some reason, he doesn’t seem to think my doctorate in psychology/counseling is valid….but, being at stay-at-home blog writer living in the middle of Iowa makes him a valid financial writer. Interesting take on things.

  41. SLCCOM says:

    Kristine: has your husband looked at teaching at the service academies or in Officer Candidate School? He might be more appreciated there. Also, have him read the books by Eric Flint. “1632” is one where a small town in West Virginia is ripped into another universe in the middle of the 30 years’ War in Germany in 1632 in another universe. They decide to start the American Revolution 150 years early. It is full of military strategy and tactics and really delightful reads. He also looks at other eras in history.

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