Reader Mailbag: Long Weekend

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. Move in together
2. The crossover point for cars
3. Freelancer feeling desperate
4. Retirement and wedding
5. Basics of prepaid credit cards
6. Debt repayment planning
7. Teenage kids and cars
8. Zucchini bread
9. Self-conscious about hobbies
10. Child discipline

Six homecooked meals. A dance recital from not just one, but two of our children. A community festival. A parade. A grocery store trip. An air conditioner failure. A case of explosive illness from the third child.

All in a weekend’s work, I suppose. I need a nap.

Q1: Move in together
My boyfriend and I are considering moving in together, and both of us are very good budgeters. We both use a percentage-based plan where your take-home pay gets divided into categories which each have a percentage amount, e.g. housing 35%, investing 15% etc. My question is about how to account for a child support obligation he has from a prior relationship. Does that get taken off his take-home pay amount before he puts that into the budget, or does his take-home amount include the child support and then it’s part of his miscellaneous money? Under our ideal plan, we would each contribute a percentage to a joint account, but maintain some of our own money for retirement account, savings and miscellaneous money for clothes, books, video games or whatever personal purchases we might make for fun. Since he makes more money than me, he can afford for his child support to come out of there. But I am not sure whether that is fair and whether we should be counting his take-home pay as what it is before the child support gets deducted or as what it is after. What do you think? And do you have any general advice about moving in together with a yours/mine/ours money melding?

– Jill

It depends on whether or not his wages are being garnished for the child support. Most of the time, it functions much like an ordinary bill.

The fairest way to do this is to treat it as any other bill that you have to pay, alongside electricity, insurance, and the like. This is exactly how I would treat such a bill in our marriage.

My biggest advice for people who move in together is to talk about things. Communicate. Do it even if it feels awkward. You’re going to get along much better if you actually understand what each other is thinking rather than hiding thoughts and allowing them to fester.

Q2: The crossover point for cars
I have been a avid reader of your blog for a long time and now could use some impartial advice about car repairs…I have a 2006 car which has been fully paid off for three years, and has about 90K miles on it. I had planned on keeping the car for another four years or so and then purchasing another car. I take good care of the car in terms of maintaining it and keeping up its appearance, since I rely on it so much. But this year the car has needed some significant repairs (about $2,000 so far) and I have just been told that I need additional repairs (possibly another $3,000 or so) before the year is over.

My question is, when does it become less cost efficient to keep putting money into repairs vs. buying another car? I would like to think that these repairs are a one-time thing, but since the car is getting up there in terms of mileage I feel I will probably be putting more money into the car over the coming years, over and above regular maintenance. The car has a decent blue book value (about $15K) so with the current shortage of used cars I could probably get a good price for it and put that towards another car, however I’m not sure I want to take on a car payment right now. I do have some money saved that I can add to that so my payments will be lower, but not enough so I can buy a car with cash. Any advice?
– Denise

There are all kinds of “rules” for when the right moment is to trade in a car and get another one, but the best metric I’ve found is simply trusting your gut. If you have a sense that a car is no longer reliable, then you shouldn’t be sticking with it. It’s going to cause you far more headaches than it’s worth.

The key thing to remember is that the core reason you own a car is to get you from point A to point B, and if that car is no longer reliably getting you from point A to point B, then it doesn’t really have much value.

Listen to your gut on this one. You’ve driven that car for a lot of miles. Is it still reliable? The answer there will lead you to the right place.

Q3: Freelancer feeling desperate
I am an artist/wordpress website maker. i moved to California because I was feeling sad at home (Canada) and figured … I’m not sure. It didn’t work out as expected – money from Canada didn’t show up as planned, so now I’m wondering, should I get an under the table job? Or what? I have no dollars of any kind left, and have spent $600 in the last three months- there’s nothing left to cut.

I’m really talented and built my own website- I’m just not hooked up with people who need me. And i’m feeling desparate and that’s not attractive!

Anyways, would love some ideas on where to start!
– Kendra

The fact that you survived in California for three months while only spending $600 tells me either that you’re homeless and live on Alpo or you have some friends or family helping you. If neither is true, you need to start a website on frugality.

My experience has been that your work speaks for itself. If you create something good and put it out there, people will notice it.

If you’re a WordPress website maker, make some WordPress templates. Make your own website and share some of them freely and perhaps charge for others. Show off what you can really do. On your own website (which should be linked on the templates you give away), make your sales pitch for yourself. It takes time, but good things will happen if you produce quality stuff.

Q4: Retirement and wedding
I currently make 52k/yr and contribute 6% to 401k with 6% employer match, 5% to roth 401K, and max out an IRA. My company provides a bonus (profit sharing plan) March of every year. The benefit has been paid the last 10 years so it’s pretty much a guarantee. I stand to make 10% of my salary if it’s paid again this year. It’s paid as a bonus so the taxes are around 40%. We have the option of taking cash or putting 85% into 401k and taking rest (I guess at least 15% needs to be taxed). My long time boyfriend and I live together and have been talking about a potential wedding date of January 2014 (we want to get our finances in order first but that’s another conversation). I’d like to use the bonus the next two years and put it towards the wedding. Since the bonus is taxed at 40%, would it make more sense to lower contributions on 401k to 0% and throw the bonus into the 401k (my employer will match the bonus also as long as it hasn’t hit 6% for year) and save the money that would have gone to 401k towards wedding since it’s taxed at a lower rate?

– Jolie

If your 401(k) plan allows you to do this, then it makes sense to me. Just make sure that you’re allowed to do this before cutting your contributions.

More importantly, though, I’d ask myself if a wedding is something I want to dump that much money into.

If I had it to do all over again, I would have had an even simpler wedding than the one we had. Yes, it’s a big moment in your life, but it’s your moment. Share it just with the people who matter most in a simple way that reflects you and move on with life.

Q5: Basics of prepaid credit cards
I am curious to know if you can try to explain the confusing topic prepaid credit cards. I am an airline professional, who was furloughed several times after the 9-11 attacks. As a result, I defaulted on credit card payments, you know the story…you’ve heard it many times. I am now looking for a prepaid credit card that I can use for travel purposes (i.e. renting a car) I need to choose a card that will help me rebuild my credit with the lowest amount of fees and red tape. Any ideas as to which card you would choose? Any insight you could provide would be helpful.

– Rob

A prepaid credit card is one where you provide a deposit on the card before you can use it. Usually, that deposit is equal to your credit limit on the card. This is done to protect the credit card issuer from someone who has a very poor credit history.

When you sign up for such a card, you typically must pay the deposit up front. Often, it’s an amount on the order of $500. After that, it’s just like any other card, except that if you cancel the card, you get your deposit back, but if you just fail to pay the bills, they close the card and pay off your debt from your deposit.

Most prepaid cards are very straightforward and very similar. I would probably use such a card from a bank that I might be doing business with in the future on a home loan or another financial move along those lines.

Q6: Debt repayment planning
My husband and I are planning a big life change in 2-3 years where we will move from the DC Area (both working full-time jobs grossing $137k a year, paying a mortage of $2,093 a month on a $315,000 townhouse) to North Carolina where our families are. The cost of living is much lower in that area and we expect that we’ll be able to buy a house for around $150k. We were married two years ago and plan to start our family once we are settled there. Once that happens, I plan to only work part-time, or even ideally not at all.

We have a number of debts. As our lives are now, we have about $10k in savings and after paying all of our bills and debt monthly we can save about $800 a month. We would like to start putting this money towards our debt so that when we go back our obligations might be a little less. So in 24 months, we could realistically have about $19,200 extra paid towards these debts (on top of the minimum payment we are already paying monthly).

Which should we tackle first? I know the ones with the largest interest rates should be first, but is there anything else to consider? Do you have any advice about negotiating lower interest rates for some of these items that seem out of wack?
– Brianna

There really are two schools of thought on which debt to tackle first.

The one that will offer the lowest total amount for repayment is the one where you start by focusing on the highest interest debt, then move down the ladder as you pay them off.

The one that focuses on psychological self-motivation (a.k.a. the Dave Ramsey plan) tells you to pay off the debt with the smallest balance first.

They both work as long as you stick with it.

As for negotiating a lower interest rate on your credit card, it’s always worth trying as long as you’re fine with the credit holder cutting off your line of credit. They may do this if they perceive that you’re negotiating from a place where you may have difficulty paying off the debt in the future.

Q7: Teenage kids and cars
I have a combination kids/cars question for you: what will you do about transportation when your kids get old enough for part-time jobs, and later, going off to college? You have said you want to live in the country, so I assume there will be no public transportation. If your kids start after-school jobs, and later work while going to college, how will they get about? Will the bus system in the college town actually be workable for those crazy college kid work/school schedules? Would you want your daughter to ride a bus after a late waitressing shift in a college town, for example, or will you feel you have to help her get a reliable car? What if they win scholarships to different schools and can’t share rides? What if it’s actually cheaper to rent an apartment than live in a dorm (it was here), which means commuting to and from campus at all hours? What if they live at home for two years and commute to a community college? I have witnessed so many goggle-eyed parents who thought they had it planned, who suddenly find they need to provide transportation to 2 or 3 kids going in differing directions; kids who are working hard and covering as much expense as they can with their part-time paychecks. How can that be planned for, to avoid the sudden crunch of, say, two car purchases in four years, not counting mom or dad’s which might need to be replaced by then? I never see this addressed anywhere, and in rural areas, it’s a real issue.

– Joanie

Anything can be planned for if you start saving right now. If this is something that concerns you, then start saving for it.

I don’t feel that my children will need a car. I’ll buy them a bicycle if they want faster transportation in college. I did not own a car during my entire college career, though I had multiple jobs in various places around town with some of them having crazy hours. I even lived off campus for a few years. The city bus system and my bicycle handled things just fine.

At some point, you have to decide to let your children fly, even if their first flaps of their wings are difficult ones. Where do you draw the line between dependence and independence? For me, it’s shortly after they exit high school – and if they’re not ready for independence at that point, I’ve failed in my entire plan as a parent.

Q8: Zucchini bread
You’ve mentioned your zucchini bread on the blog a few times but I don’t think you’ve ever posted the recipe. Since we’re in the middle of zucchini season right now, could you post something on it? I’m knee-deep in zucchini from my CSA and need a good way to use it!

– Marc

Be warned, this isn’t a health food.

Mix together two cups of sugar, 1/2 cup of vegetable oil, and 1/2 cup of coconut milk. Add three eggs, one at a time, and mix until everything is consistent. Then, add three cups of flour, 1 teaspoon baking powder, 2 teaspoons vanilla, 1 cup chopped black walnuts, 1 teaspoon baking soda, 1 teaspoon cinnamon, 1 teaspoon ginger, 1/2 teaspoon salt, 1 teaspoon fresh lemon juice, and two cups of peeled and shredded zucchini. Take two loaf pans, coat the inside of each pan with a bit of vegetable oil, then cover that vegetable oil layer lightly in flour. Pour half of the batter in each pan. Bake at 350 F for about 55 minutes. Put the loaf pans (with the cooked bread still in them) on a wire rack for about 20 minutes, then remove the bread from the pans. It’s ready to eat!

I like my zucchini bread warm with a bit of butter or margarine on it.

Q9: Self-conscious about hobbies
One of the things I like about The Simple Dollar is that you’re unashamed of your “nerdy” hobbies, such as playing board games and reading and painting figurines.

This is something I have trouble doing. My two favorite hobbies are knitting and doll-making. I love spending my spare time doing this and I even have an extra room in my apartment devoted to these hobbies. But whenever hobbies come up in a conversation, I hide these things.

Do you have any suggestions about how to introduce a “quirky” hobby to people?
– Catelyn

I think this feeling often comes as a natural outgrowth of being introverted. My solution is to not be ashamed of it at all. If you act ashamed of your hobby, then other people will feel completely free to disregard it. You’re telling them it’s okay to think it’s nerdy because you think it’s nerdy.

I have no problem telling anyone in the world that I enjoy playing board games. It’s my hobby. So is reading and so is cooking.

I do think about ways to describe my hobbies to others in ways that will intrigue the most people, but the key thing I always do is simply make sure that I’m not ashamed of what I spend my time doing. If it’s something I’m ashamed of, why would I be doing it?

Q10: Child discipline
I truly value your opinions and was wondering if you have any recommendations for books on child discipline?

– Mike

The first time you face a rebellious toddler, parenting can seem like an absolute nightmare. I’ve been there and I know exactly what you’re going through.

The problem is that there is no recipe for managing your child that works for all children. For example, the ideas in 1-2-3 Magic worked wonderfully with my oldest son, but were practically useless with my daughter. She tended to respond better to techniques along the lines of Parent Effectiveness Training.

My advice is to not give up if a particular set of tactics seem not to work with your child. Try a different approach.

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.