Updated on 06.05.14

Reader Mailbag: More Time for Reading

Trent Hamm

I find that, whenever I get busy with things in my life, the first thing I cut out is the hour or two a day I spend reading. If I do that for a few days, I begin to intensely miss it.

Just yesterday, I was talking to a friend of mine who’s a stellar athlete. He expressed to me the exact same thing about training – if he skips a couple of days due to personal issues, he REALLY misses his daily hours in the gym.

Exercise your body, exercise your mind, I guess.

I’ve always been very financially responsible and rather frugal. I might occasionally allow myself to purchase a bottle of wine at the end of a week or a new book once a month or so, but I’ve never been a spender. I very much believe that I’d rather struggle (not that my husband and I really struggle) now and relax when I’m older.

However, the last year has brought considerable change in my attitude. In the last year, [my family has experienced several tragedies]. Due to these things, I’ve become a much more in the moment liver, than living for the future. I’ve spend quite a bit more money lately than I ever have before. I’m not spending out of control or over our means, but I’m still concerned.

I had such a tight string on my wallet for long it felt good to just buy stuff for the first couple of months. But now I’m afraid I’m going to fall into some kind of spending spiral. I would like to find a balance between incredibly frugal and lightening up a little bit. I don’t know what tomorrow is going to bring I don’t want to live entirely in the future any more. I need to enjoy the life I’m living now too. Do you have any advice?
– Dana

I edited Dana’s question a bit to eliminate some of the more personal elements, which weren’t really relevant to the issue at hand but might be embarrassing if someone she knew were to read the question.

I don’t see anything to be concerned about in your email, Dana. As long as the things you’re spending your money on in the now are things that are genuinely important to you, there’s no problem with spending money today.

Of course, you should always keep a few basic principles in mind. Even if you’re spending more than before, you should still strive to spend less than you earn – keep that as a firm cap. You should also reflect on the things you’ve spent money on to make sure that they’re bringing you genuine happiness.

From your email, you’re clearly already doing the reflecting, and it seems as though you’re spending less than you earn. All that’s happening is that your values are shifting a bit due to changes in your life – and that’s completely normal, even healthy.

We have $5800 in a money market account for savings. After a recent look at that account, I noticed that it’s returning 0.5%. Obviously, I want to improve that rate of return. I’ve contemplated a CD ladder, but CD rates at my credit union are well below the return I get on my checking account (with very simple stipulations to meet) that gets me 3%. Is there any reason to not move this money into my checking account? We have another $4000 in savings in the checking account currently and don’t have a problem with keeping the mental separation of savings vs. spending money being in the same account.
– Joseph

The entire purpose of a CD – and thus a CD ladder – is to earn rates that exceed what you can get in your checking or savings account in exchange for losing some liquidity (i.e., you can’t just remove money from a CD at will without paying a penalty).

If you’re earning more in your checking account or savings account than you can earn with a CD, then you shouldn’t have that money in a CD. It’s earning less (a negative) and you have less access to it (a negative), with no corresponding positives.

You’re doing things right.

I have been reading a while and looked around a lot on the “should I cash out my 401k to pay off debt?” question. I’m still stuck as to whether I should or should not. I have reduced my expenses, stopped using cards, have a $1,000 safety fund/savings, but still have $18,851 in credit card debt. I am not depositing in to my 403b now so i can use that to pay down debt, but at this rate, it looks like 5 years for all of it. I have a 401K from an old job valued at about $11,380 right now. I was thinking about waiting till it’s at about $12k, that way, after tax and penalty, I would have enough to pay off one card, $7791 at 19.99% ! and then snowball the other card payments from highest interest down and that would take overall two years (or less depending on refunds etc that could be applied). I’m in a better paying job now and employer is putting a tiny amount in to 403b even though i am not contributing right now. I am 32 yo, have a condo and car payment, and once credit card debt is paid off (about 500 a month), i could put a lot into savings, start an IRA, and resume 403b contributions. I guess I just want to see some more rapid progress on paying off this debt, but am I betting my future by cashing out the 401k?
– Christopher

If I were you, I would not touch the 401(k) and I would also start contributing more to the 403(b), even if it adds some time to the debt payoff.

Why? You can never get those contributions back into your retirement plan. If you take that money out of your 401(k), you have permanently hindered your retirement. The only way to approximate it is to contribute quite a lot extra to your 403(b), but that would be even later, after your debts are gone, so it would require a lot of contributions.

In fact, I would contribute to my 403(b) up to the top of the employer’s match, starting right now. Again, you can’t ever get this contribution opportunity back – it’s free money that your employer is handing you that you’re turning down right now.

Yes, your credit card debt might take a little longer, but a 20% loss on your credit card interest rate is well worth a 100% gain on your 403(b) contributions from the match.

My husband and I are trying to decide when we should start a family, he is 28 and I am 27. One of us plans to stay home with the baby so we need to be able to live off of one income. I am a registered nurse and he is a Commercial Truck driver with a class A. The issue is we have debt and need to fix our house up, our current plan we would have this done in 2 1/2 years, 3 1/2 and we could have no mortgage. We are starting to feel this is too long to wait to try to start a family. Total income 2009 $90,000, debt: CC $4500 9.8%, car $14,000 7.8%, student loan $24,000 5.5%, Mort. $42,000 6%, about $15,000 needed in home repairs. In 2009 we paid off $12,000 in CC debt and put $5,000 into our home. We both do 6% of our income to 401K, emergency savings is $2000, and I am furthering my education and we are paying cash for it. I am starting to feel that we are overly preparing to have a family. Any thoughts?
– Lindsay

I think you should move forward with your family plans when you’re sure you can make it financially after having the child. For you, this means not only adding the child costs to the equation, but it also means one of you staying home with the child.

You should spend some time planning out exactly what will happen in that case. You mention that you’re getting further education (to be a nurse practitioner, I’m guessing?) – if you’re going to be the one that stays home with the child, cut that expense right now.

It’s also worth noting that even when you decide to go forward with trying to have a child, that child won’t arrive in a stork tomorrow. Even if you conceive almost immediately, you still will have most of a year before you lose one or the other of your incomes.

My suggestion? Right now, make up a very detailed plan for how you will do things after the child is born. How much income will you have? Will you be able to cover the bills? Who will stay at home with the child? How many years will that person stay at home? Some of these questions may alter what you’re doing with your money and time right now – if you’re staying at home, for example, you may not want to invest a lot of money into furthering your education at the moment.

If it looks like you could make it with the way things are right now, then I’d start trying to conceive. If it doesn’t look possible, I’d wait a bit longer, then re-evaluate.

There’s a lot of conflicting information out there and I’m curious what you would do. When I go on vacation I often rent a car and never know what to do about insurance. I don’t own a car at home and therefore don’t have any auto insurance policy for myself. I have the option of getting non-owners auto insurance from my insurance provider for $20/month but, based on the explanation of the coverage, my understanding is that all that covers is medical and damage liability if I hit someone else. I do have a visa that could presumably provide collision and damage insurance beforehand but doesn’t cover liability for another person if I collide with them. However, I’m not ready to pay $240/year so that I have that coverage for the 2x a year I drive a car. What do you suggest I do when I rent a car? Just use my credit card coverage? Get one month of liability coverage (if that’s even an option)? I paid an arm and a leg last time I rented because my parents and boyfriend freaked me out and demanded I get it but from my research they don’t understand what sort of coverage I need either. What would you do in my situation?
– Arlene

Most likely, you won’t be able to buy that policy on a month-by-month basis. Most policies are drawn up to cover six months or a year and your monthly payments are fractions of what you owe for that policy.

My first suggestion would be to look at the insurance offered by the rental companies. Typically, such policies are redundant for people who have auto insurance themselves, but they may not be redundant for you.

I would also take a look at what exactly your credit card offers in terms of coverage. It seems that your card just offers liability coverage, so I would look at the company you typically rent from and get quotes on insurance for the passenger and rental car. This will probably be in the ballpark of $10-15 a day, so this will save you money if you rent only for short periods, but if you rent for two weeks a year, it won’t be much of a savings.

If you have a well-stocked emergency fund, you may want to consider just having liability coverage (as provided by your card) and calling it good enough. After all, if you’re not driving the rental too much, your risk of a major accident is relatively low – and that’s what we’re talking about here, risk.

I have been working as a software developer for around two years. It’s a steady job and pays fairly well and I do enjoy it at times. I find though my concentration span really holds me back from enjoying this more and from progressing in my programming ability. Sometimes I can almost do a full day doing no work. I just can’t keep focus long enough.

At first I wondered if perhaps this job just doesn’t interest me enough (i.e. perhaps lack of concentration is due to lack of enjoyment and not vice versa) but looking back this is something that has plagued me all my life and I think it really held me back at school. I even struggle reading a couple of pages of a novel (that I find interesting) without having to go back and read. my mind just starts thinking of other things even while I’m saying each word in my head!

I haven’t received any warnings about the lack of work I sometimes produce (yet) but would like to get on top of this so I don’t stay at the same level of ability all my life and narrow my future horizons.

I have recently pondered the idea of hypnotherapy but to be honest I’m a little scared of this. Do you have any suggestions to improve my concentration span?
– Ben

I’ve thankfully never really had this problem. In fact, I tend to have the opposite – when I bear down on a task, I can lose all track of time and even reach the point where I literally don’t hear people around me.

Anyway, one of my mentors once suggested a five-prong plan for maintaining concentration. He used the word FOCUS as an acronym for it. I’ve seen variations of it floating around online, but here’s how my mentor defined it.

Five more means that if you’re doing something and feel your focus wandering, always challenge yourself to do five more. Five more pages. Five more minutes of coding. Five more emails. It’s like endurance training for your mind.

Only the thing you’re working on means that you should try to look at the task you’re doing with fresh eyes if you find your mind wandering. Look at what you’re doing and ask yourself if you’re doing it well or why you’re doing it. It often refreshes the task.

Complete the little things now means that if you have a task you’re putting off, start working on it immediately. This helps with concentration because a task that’s been put off is a task that’s weighing on your mind.

Understand the details means that, instead of thinking about the big picture of the project you’re working on, you should try to break it down into the smallest detail you can, then just focus on that detail. It makes the task seem much shorter and manageable, which again helps with concentration.

Silence means that you should cut off interruptions. Unplug your phone. Close your web browser. You can even go so far as to rest your face on your hands and cup your hands around your eyes so that they function as peripheral blinders.

Good luck!

I’ve been reading The Simple Dollar for about a year now and really enjoyed the series you did a while ago on cooking. Quick question, I’ve tried Eggplant several times (never as Eggplant Parmesan) and not had much luck, however I found a recipe for Eggplant Parmesan and wondered if you’ve ever attempted to cook it at home. The particular one I found says to peel the eggplant and I’m wondering if that’s the reason all my other eggplant attempts have failed. Any thoughts?
– Shawna

You didn’t really specify what the problem was with the eggplant. For the most part, the peel makes little difference – it’s mostly a matter of personal preference, like a potato peel (I prefer them, myself). My guess is that the problem is not with the peel, but with the sweating.

Sweating? Try salting the outside of your eggplant about a half an hour before you tend to use it. Just take some table salt and rub it on the outside. When you’re ready to use it, you’ll find that the outside of the plant is now moist with some very salty and bitter water. Rub the water off and slice it.

I don’t know if that’s the solution for your problem, because I’m not entirely clear on what’s wrong with the eggplant when you cook it. I’m just assuming that the problem is bitterness.

It may also be that you simply don’t like eggplant, for which there is no real cure other than just trying it in different ways on an irregular basis.

My husband and I are in our late 20s and don’t yet have any kids but are thinking about it – we’d like to have a baby in the next year, but obviously there are no guarantees on timing. I’m currently making about $45k and my husband $75k; when we have a baby we plan on me staying home, so we’ll be losing that income.

We already have an emergency fund with 6 months of expenses in it, we’ll be paying off my student loans in May (that bill had been about $100/month), and after that we’re debt free except for our house! We currently have a budget excess of about $2500/month (give or take depending on the month) that we’ve been putting toward my student loans, and I am on the hunt for my next financial goal to knock out. The only retirement savings we have is a 401k for my husband that we started this year, putting 4% of his salary into it. Looking ahead, I think we’ll have about $20k extra to play with this year, and this is where you’re advice comes in. We are definitely going to open an IRA (undecided as to traditional vs Roth) and with the max contribution of $10k between us for the year, that leaves an unaccounted-for $10k or so.

Option 1: We only put 10% down on our house when we bought it almost two years ago, so we’re paying PMI of about $60/month. We have $16k left to get to the 80% mark where we can get rid of PMI (and potentially adjust our monthly payment to reflect the new principal). We could put the other $10k this year toward our mortgage principal and get the last bit paid down early next year, so provided we don’t have a baby and drop income in the meantime, we could be PMI-free by next year this time.
Option 2: Alternatively, since we’ll have a more limited budget when we go down to one income, we could put the $10k in savings to put into the IRA in 2011. We’ll be able to save something when we have one income, but while I’m not sure what our budget will look like with a baby, I’m almost positive we won’t have $10k a year to put toward retirement (beyond the 401k).

That’s the scoop – thoughts?? Also, input on whether to do traditional IRA vs Roth IRA would be helpful, I think. We’re in a very blessed and pretty fantastic stage of life right now, and really want to take every advantage that we can while we can.
– Marisa

As I mentioned above, the first thing you need to do before considering going ahead with a child is to make a post-baby budget. Spend some time really contemplating how your life will look at that point. Is one of you going to stay home with the child? What will child care costs be like? Do some research and find some real answers here, then figure out what things will look like financially for you. I encourage you to estimate high, because it’s going to cause a lot less problems than estimating low will.

If you make that budget and decide that things look doable but close post-baby, put that $10k into savings for now. It may wind up being a “baby emergency fund” as you find that there are lots and lots of baby expenses you didn’t consider. If you get through 2011 without a child, then contribute to the IRA.

If you make that budget and decide you’re good to go with a fair amount of room to breathe, I’d sink it into the mortgage, mostly to get you below the PMI mark, which will make breathing even easier for you.

In the two years after graduating college, I learned a fantastic lesson about living on credit cards (badidea!) and living without health insurance, and had to go through CCCS to pay off the impressive debt that I accrued– About $20k in credit cards and $10k in medical bills. During this time, I had to sign a agreement with CCCS that I would not use any credit card until my debt was paid off.

Now I’m 28 years old, single, working a job with great medical insurance, have paid off those medical and credit card bills and have not used– or even opened– a credit card since I was 22 years old. I’ve been putting aside a little money each month into an emergency fund and into retirement, but otherwise I’m basically living paycheck-to-paycheck.

Understandably, I have a mild phobia of opening and using a credit card, even though I’ve matured and learned a lot since my wild (stupid) days. However, it seems like a credit card would make my life a lot easier at times– like when I have to pay upfront for a business trip in which I will be reimbursed, or if I loan a friend money and I am scraping by at the end of the month.

Would you recommend that I open a new credit card and pay it off each month? And if so, what advice can you give me about going back into the world of credit?
– Jamie

If you’re truly living paycheck to paycheck, the first thing you need to do is either increase income or cut spending (or, ideally, both). Perhaps you need to change your living situation or your energy consumption or your food consumption (do you constantly eat out?). Maybe you can get a second job. Whatever it is, you need to be spending a bit less than you earn or you’re always in danger of getting into financial trouble when something unexpected happens – and it will happen.

If I were you in this situation, I would get an extremely focused credit card that you use for just one specific purpose so that you’re not tempted to use it outside of that context.

The idea that comes to mind for me is a credit card (Visa or Mastercard) offered through a gas station chain that you frequently use. Sign up for one of those cards, but use it ONLY for gas. The giant gas chain logo on the card should be a strong reminder of that. Then, at the end of the month, pay off the bill in full.

This simple step will allow you to re-establish your credit without opening the floodgates. Just keep that card for one purpose and one purpose alone.

I would not use it for any other purpose – don’t “pay up front for trips” with it or anything like that. Use it simply as a means of improving your credit and maybe reducing your gas costs a bit.

My husband and I own a reasonable home in Pennsylvania, and are hoping to move to Maryland to be closer to my family in the next couple of years. We also just welcomed our first child about 7 months ago. I am a full-time working mom and am growing weary of being away from my home and family 10 hours a day, but my family relies on my income (which is significantly higher than my husband’s: $56k to $38k) and my health insurance.

My question is sort of two-fold:

(1) Is it selfish of me to want to stay home and care for my family? I have done contract work in the past and could make up a great deal of my salary, but not the health insurance, which is much more expensive through my husband’s job and very limiting in its offerings.

And (2), would it be a bad idea to rent for a while once we move to Maryland in order to save money? Housing is substantially pricier there, so we were planning to build on family land, but that could take a while since my husband would do much of the building himself, while also working a full-time job.
– Jen

(1) It is not selfish of you to want to stay at home with your child. Having a child is an intensely personal and emotional thing and, for many people, staying at home is something they strongly desire simply because of the emotional attachment and quality of care that they would provide to the child. It’s your child. You love that child. Wanting to care for that child and protect it is completely normal.

(2) It is never a bad idea to rent housing, particularly if you don’t plan to live in the house for seven years or more. It’s the first years of the mortgage that are the most painful ones – most of your mortgage payment goes towards interest and the power of compound growth on your home’s value really hasn’t had time to work yet. If you can find a good deal renting, renting absolutely should be on the table.

As for the building, a close friend of mine did that (and I’ve asked him for a guest post to discuss it). It can work and it can save a lot of money, but you really need some serious passion about carpentry and plumbing and electrical work to make it happen.

Good luck.

Got any questions? Email me or leave a comment and I’ll try to answer it in a future mailbag. Please note, however, that I get many more questions than I can answer in any sort of reasonable mailbag length.

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  1. J says:

    @Dana — We keep a certain amount of money set aside as “blow money” or “family fun money”. This money can be spent however on whatever we want, and there’s no guilt or regret in spending it. We also save up for vacations and other “fun” things, in addition to the “responsible” things, as well. Maybe you need to consciously choose to spend more on fun right now. The hair-shirt frugalistas will likely not agree with me, but life is meant to be enjoyed — both today AND tomorrow. I’m not advocating that you run off and blow your retirement savings on a trip, but as long as you keep a watch on where your money is going and know what the trade-offs are, live your life as you want/need to.

  2. Hope D says:

    Ben- You could have ADD. What Trent told you “FOCUS” might help. Depending on the severity of your problem, I would talk to a Dr. There are medications that increase concentration. Of course, they should only be taken by someone who truly needs them.

  3. @Dana: Balance and moderation are key. If you’re living within (or below) your means, don’t feel guilty about the occasional splurge or pleasure purchase. We only live once, so we need to make decisions that maximize happiness throughout our entire lives — both now AND in the future. As long as you remain *mindful* of your spending — by setting priorities, and devoting your resources to what’s most important to you — I’m sure you’ll be fine. :-)

  4. Maureen says:

    I agree with J. Set aside a certain amount of money (without compromising your financial goals) for splurges and enjoy them without guilt. Remember that anticipation can be half the fun. Research and plan so you get good value from your splurges and avoid impulsive spending.

    My husband and I have always done this. It saves us from being critical of each others’ spending choices. I buy crafting supplies, he buys computer games. The mortgage gets paid and there are no bad feelings.

  5. Anna is now Raven says:

    Yes, indeed, Ben could have ADD. The condition becomes apparent in early life (as with Ben) and often/usually persists into adulthood (as with Ben). Resources: a primary care physician can make a referral to an ADD specialist. A pediatrician is even more likely to be well informed about specialists.

    Google for “adult attention deficit” for other resources, including helpful online communities. Do the FOCUS practices, as Trent suggests, but don’t stop there.

    Two good books on adult ADD are Kelly and Ramundo, “You Mean I’m Not Lazy, Stupid or Crazy?!” and Hallowell and Ratey, “Driven to Distraction.” Both cover the full gamut of ADD manifestations, so not everything applies to any one person, but they are extremely helpful if you pick and choose.

  6. Johanna says:

    If Christopher’s employer is contributing a flat amount to his 403(b) even though he’s not, I think it’s unlikely that they *also* offer a match on his contributions. At least, I’ve never heard of an employer that does both.

  7. Katie says:

    Ben, you might find mindfulness exercises and actual physical exercise help you with your concentration. These can be helpful tools for people who struggle sometimes as well as people dealing with ADD. I’m with the other posters who suggest getting screened – once you know, you can make healthy choices for yourself and learn techniques (and perhaps take meds) that will help you. GOOD LUCK!

  8. KC says:

    Jen – It wouldn’t be considered selfish to stay home with your family. In fact it might be considered unselfish. I don’t work, and I don’t have kids. My husband works some long, odd hours and it has worked out best that I not work so things get done at home. There are a lot of things we enjoy doing together that we couldn’t do if I worked, too. I don’t mind not working very much, but at times I do miss the work and of course I miss the paycheck, even though we don’t need it. But when I was working we both were considerably less happy and stressed. It just didn’t make sense in our situation, with his job and hours for me to work. So I don’t look at it as being selfish – I look at it as being unselfish because sometimes I feel as if I’m the one making the concessions. But in reality, it’s neither, we just do what is necessary to both be happy, and in your case, what’s best for your children.

  9. Sara says:

    @Dana: I always feel nervous after I make a big purchase. In January, I spent about $1200 on a big-screen TV and stand. Even though I had plenty of savings to pay for the purchase and it was not an impulse buy (I’d been considering it for 3-4 years), I felt like my spending was out of control. I think it really helps to have a budget, so you can plan in advance that it’s ok to spend some amount of money on “living in the moment,” and know that your finances will still be fine. Now that some time has passed, I can see that I’m still on track with my budget and savings because I planned for the TV purchase.

    @Lindsay: Have you considered working a weekend job after you have a baby? I’ve heard that a lot of hospitals need nurses to work weekends. I don’t know what your husband’s schedule is, but if he could be home on the weekends to take care of the baby, you could still bring in some money and be home the rest of the week.

  10. Josh says:

    To the people contemplating kids:

    Having a child will never make financial sense when you look at your budget beforehand, but you always can find a way to ‘make it work’. I think Trent even wrote about this somewhere in the archives: Kids aren’t as expensive as you think.

    Children have a funny way of re-arranging your values and priorities in a way you can’t really comprehend beforehand. For me, kids end up having much LESS impact on my budget than I could have ever expected….maybe some people are exactly right in what they expect going into parenthood. I just know that for me, reality was no where near what I expected.

    This is just my personal opinion, but I think NOT waiting is advantageous for many reasons that you can’t put a price on: Things like being a younger grandparent or higher likelihood having more years with the kids. Time is finite…losing a year w/ grandkids because I haven’t yet maxed out my Roth isn’t worth it to me.

    I’m not advocating bringing kids into the world when a person can barely support themselves, but this doesn’t seem to be the case for the person writing in. Just the fact that you are in control of your finances and considering the impact kids would have is probably a pretty good indicator that you have the capacity to handle whatever comes at you.

  11. Sharon says:

    Christopher – Please, do NOT cash out your 401(K). I did that years ago and have regretted it ever since. Trent’s right in that you’ll never get the compounded savings back. One solution might be to get part time work & use that for debt payment, I did that and it helped seeing the extra payments lower the balance. Also, is it possible to transfer that CC debt to a lower interest card or lower interest loan from a credit union? these tactics should help speed up repayment.
    Good luck!

  12. Sharon says:

    Christopher – Please do not cash out your 401K. I did that one and regretted it ever since. Trent’s right you can never get that compounded savings back. Can you do part time or overtime work and throw the extra income at the debt or, get a loan from a credit union at a lower rate and pay off the CC? Good luck!

  13. Patty says:

    If truly living paycheck to paycheck Jamie maybe shouldn’t be lending friends money. Yes, be generous and friends helping friends is awesome but only when its done properly and doesn’t strap them so much they can’t make it through the month themselves.

    Yes, having babies isn’t just about the loss of income but also a potential increase in expenses. And yes, the stork doesn’t just fly in when you say you’re ready.

  14. Johanna says:

    @Josh: I hate to break it to you, but the age at which you become a grandparent – or even whether you become a grandparent – isn’t actually up to you. It’s up to your kids. So keep in mind that any big sacrifices you make for the sake of those “priceless” years going fishing (or whatever) with the grandkids might not actually pay off.

  15. J says:

    To the people having kids, there really is no “good” time to have them. But it actually sounds like you are both in good shape. Especially the people who are 2-3 years away from no debt and no mortgage and who aren’t even 30 yet!

    Also keep in mind that when you do become pregnant, you have a while to react to the baby actually showing up — so if you have a two year plan to get something done you can actually start trying to have a kid somewhere around a year and three months.

    I’ll concur with Josh that getting pregnant and having kids does rearrange your priorities and so on in ways that those without children just don’t “get” since they haven’t been through it, no matter how you try to simulate it or plan for it. It is, of course, natural to try and make a decent home for your children, but really you can do well with very minimal equipment for a while. The baby industry will try and “sell” you on a lot of stuff, but a large portion of it is really unnecessary, and since so many people do have kids, a lot of it is readily available used.

  16. kristine says:

    Trent assumed, no idea why, that the employer offered a match on the retirement account. 403B employers typically contribute a set amount, but do not offer any further match.

    The FOCUS is helpful, but why wasn’t the man with concentration problems encouraged to see a doctor to see if the he has ADHD? It is probably overdiagnosed these days, but you never know. That seemed a no-brainer.

    Jamie- why in the world would you loan money that you cannot afford to lend? Learn to say no, for goodness sake!

  17. Steven says:


    There are those who (1) work to live, (2) work to barely stay alive, and (3) live to work.

    Most people are in (2) where they are living paycheck to paycheck, barely scraping by, if even. Many have credit card debt.

    Then you have (3), people who are consumed by their jobs, frugal to the utmost limit and saving any penny they can. What the point of making/saving so much money if you’re miserable?

    The smallest group is (1), where work is something you enjoy and/or a means to an end. It could be something they enjoy, like writing a blog for Trent, or starting your own business to give yourself more flexible hours. It’s OK to spend money on yourself. It’s your hard-earned money, and as long as you don’t over-spend, you’re allowed to treat yourself. Like #1 – J said, set aside an amount that you can “blow” without guilt and once that’s gone, you don’t spend any more on luxuries.


    I’d actually run the numbers. General advice SUCKS. There is no one answer fits all for these types of the situation. A 20% interest rate is a huge amount of interest (maybe the rest of the debt ain’t as bad, but you still have a lot of debt) and not knowing your salary, it’s hard to infer where the break even point lies between better to cash out and to just keep the money in the 401(k), if there is one. They could be right, and in your situation, it’s better to keep the money in the 401(k), but I say they could also be wrong. Run the numbers between the money from interest you’re going to lose on the CC debt (and the loss from cashing out the 401(k)) and POSSIBLE gains from the 401(k).

  18. prodgod says:

    “You can never get those contributions back into your retirement plan.”

    Doesn’t the argument of compounding interest become moot after a major market crash? I would sooner apply the above logic to the question of waiting to have children.

  19. Des says:

    Ben – I am in the same boat as you. It actually helps me to listen to music while I code. Weird, right? For any other activity, background sounds are a big distraction for me. But while coding, I find the music placates the part of my brain that wants a distraction and really helps me to focus for long periods of time. YMMV.

    Lindsey – Consider that having children becomes more difficult as you age. maybe you’ll be a fertile-Myrtle, but maybe not. If you haven’t had kids yet you just don’t know. I am your age, and DH and I have been trying for two years without success. Doc says everything is fine. If it turns out you can’t conceive, and you really want to, it can cost tens of thousands of dollars to do IUI and IVF. If you’re in a good place financially, even if not ideal, you should start trying. Like Trent said – best case scenario you will still have 9 months to save. Worst case, longer.

    @Johanna – My employer contributes 2.5% to my 401k regardless of what I do, and matches up to 4% outside of that. The 4% is what everyone gets, the 2.5% was a buy-out offer for opting out of the company pension (I was 24 at the time). I imagine the situation is quite rare, but it exists in at least one place.

  20. Johanna says:

    @Des: Well, you learn something new every day. :)

    Still, I don’t think Trent should have assumed that Christopher’s employer offers a match, since Christopher didn’t say anything about that.

  21. jim says:


    Arlene said her card covers damage but not liability. : “I do have a visa that could presumably provide collision and damage insurance beforehand but doesn’t cover liability for another person if I collide with them.”

    So her card does NOT cover liability but DOES cover collision and damage. Trent answered as if it was backwards.

    You DO NEED to have liability insurance coverage. In most states thats legal requirement to drive a car. And the potential risk of driving without liability is very high. Consider if you accidentally hit someone and they sue you for all their medical bills, that kidn of thing can hit >$100k easily. If your insurance company is quoting $240 a year for such coverage and you only rent cars a couple times a year then I’d just pay the rental car company for optional
    liability insurance coverage ($10-15/day) but decline the CDW/LDW.

    @Christopher, Definitely don’t cash out that 401k. Just take a while longer and pay down your credit card and you’ll come out ahead overall within 4-5 years.

    @Jamie, “…like when I have to pay upfront for a business trip in which I will be reimbursed,”

    Does your employer have a way for you to bill such expenses to their accounts? Can you get a corporate credit card? If you take business trips then there should be some way for them to pay for it without you effectively making short term loans to your employer.

  22. lostAnnfound says:

    Christopher – don’t do it! I second Sharon (#11), been there and done that and now I am regretting it. If I knew then what I know now, I would have gotten a part-time job (or two), sold unused things, tightened my budget as much as possible, etc. I know 20% is a high rate to pay, but try to find any way possible to accelerate paying off your debt except for cashing out your 401K.

  23. Lindsay says:

    Trent – thanks so much for answering my question! I already knew the answer but your thoughts really helped. My DH and I are going to come up with a detailed plan this week. And I am working on becoming a nurse practitioner by obtaining my bachelor then continuing for my masters. We where think I was going to stay home, currently we make about the same. But I work for a nonprofit and could earn $5-10 more an hour($10,000- $20,000 a year) elsewhere, yet my husband works for a major worldwide company and has wonderful benefits at a great price. So who will stay home is up in the air. Our plan was if I stay home to have a bachelors by the time the baby comes and work on my masters with the baby at home, to obtain my nurse practitioner license. This would mean once the baby was 3-4 my husband could take a turn being home and I would make just about what our 2 incomes are now. Either way we are going to put it all on paper this week!

    Thanks for everyones comments about preparing for kids! Recently I have attended 6 baby showers and know 3 other people who are pregnant. I was starting to get baby fever! Most of the people I know who are having babies did not really prepare for them financialy. This was causing me to think I was being “punished” for being so prepared and having to wait a little longer for a baby. But my DH and I really want to be financial set before our family starts. And thanks all for reminding me that a stork does not bring a baby, even if I get pregnant now we would still have 9 months to prepare!

    Des – that is what scares me and my DH. We know 2 couples who have been trying for about 2 years with no success. hope all goes well for you and your DH starting a family.

  24. Lindsay says:

    Sara- I currently work a special plan called “Baylor” I work 32 hours over the weekend and my work pays me for 40 hours. I work 4p-12m Friday and 8a – 8p Sat and Sun. The only issue is my husband and I do not want to pass each other by and do a baby hand off. But working part time would be a good option in bring in extra money and still stay home.

  25. jim says:

    “Doesn’t the argument of compounding interest become moot after a major market crash?”

    No, not at all.

    Compounding interest still works the same way it always has.

    An individual market crash also doesn’t change the way that stock investing works. Investing in the market is a long term investment so you should not look at individual horrible or great years as arguments against or for investing in the market.

  26. John says:

    If you had 10,000 extra hours to master any skill, which would you choose?

  27. Michelle says:

    @Ben – Get checked for ADD, ASAP. I suffered through elementary school, middle school, Jr High, High School, and College. I always wondered what was wrong with me, why couldn’t I focus?? Finally a friend who worked with ADD children told me to see my Dr. And I’ll just say, Adderall has changed my life. I finally feel like I’m actually able to do things and feel like an adult (I had some impulse control issues, in addition to an inability to focus). What Trent said will probably help, but go see your doctor. There’s no shame in getting chemical help.

  28. Shevy says:

    As for grandkids, it’s true that you can’t determine when your kids will marry and have kids, if at all. However, by having children at a younger age you increase the chances of it happening at a young enough age that you can enjoy your grandchildren, or even just be alive to see them!

    I married at 19 and had my first child by 21. My dad and my toddler son adored each other, though we lived hundreds of miles apart and they didn’t get too much time together. My dad developed cancer and died while I was pregnant with my second child. He was 52; I was 23. Fast forward over 25 years.

    I have 3 grown children, from my first marriage. Two of my children have children of their own and I have 4 grandchildren, ranging in age from 7 to newborn. I also have a 7 year old of my own from my second marriage. I’ll be retiring about the time my youngest child graduates.

    My hope is that I will be healthy and live a long life (my family tends to both extremes but very little in the middle). It is entirely possible that I will have great-grandchildren by the time I’m in my early 70s, as well as a new group of grandchildren from my youngest child!

    I have to say, though. I doubt I’ll have the energy at 70 to keep up with a whole bunch of kids! I’m already definitely slower than I was in my 20s.

  29. Cheryl says:

    Trent- great move on the cell phones. 3 of us have them at our house, Tracfones, and we spend only $20 a month total. A 60 unit card gives you 3 months of activation, so I buy us each 4 of those a year, at $20 each, which makes our yearly cell phone bill $240. Its great for me to keep in touch with my 2 teens.

    To the couples thinking about starting a family, start living on one income now. Save the rest. Try that for a while, and you’ll see how that works for you. You also have the option of the stay at home parent doing some part time work to supplement the family income as the baby gets older… things were tight when our kids were little but I have no regrets about staying home.

  30. Cindy says:

    Dana – Like you, I have been a non-spender for a long time but there are some things you just can’t pass up. When I got the chance to spend $65 and take a ride on a 1929 bi-plane, I took it! And I’d do it again! Don’t let your frugalness get in the way of LIVING!!

  31. GayleRN says:

    Lindsey, you may want to speed up your NP program, not slow it down or stop it. In Michigan the plan is to phase out masters prepared NP licensure and go to Doctoral level NPs by 2015. This adds 4 more years to the process. If you want to get it done you can be grandfathered in.

    You may also want to consider the effect of being out of the workforce on your skill set. You may find difficulty getting work after your hiatus without current work experience. It would also be easier to find an NP job with some current contacts.

    A BSN is getting to be a minimal requirement. An MSN is getting to be quite common, even among floor nurses. It does not necessarily get you a better or different job.

    For those of you who think an RN can get a job any time anywhere, those days are gone, at least for now. Most hospitals are not hiring, weekend only plans (Baylor) are gone, and I know 5 nurses who were laid off at Christmas. Recently 2 nurses at my facility were fired ostensibly for tardiness. The only nurse I had seen fired previously actually hit a patient. So figure it out.

    Stuff to think about from an old nurse.

  32. SLCCOM says:

    I don’t see any of the young parents or prospective parents talking about disability insurance coverage. Especially if you plan to quit working, you need to get an individual disability policy NOW and factor those premiums into the budget. Also make sure your life insurance coverage is sufficient and that you have individual policies.

    I also think that Lindsey is underestimating the difficulty of continuing college with a new child. I agree with accelerating the studies. You also need to consider that tuition costs are rising MUCH faster than inflation, and if your current employer pays some tuition, that is another factor.

    Also, those benefits need to factor in at least as highly as the salary. Good health insurance policies are becoming quite rare, and without good coverage (or even with it) most people are one serious illness or injury from bankruptcy. Really good health coverage is almost impossible to get on an individual basis, which makes it a no-brainer for me who keeps the job.

    About car rental insurance: You do know that besides having to pay for a new car if you total it, the rental company will also bill you for the loss of use of the car until it is fixed, or replaced, diminished value of the car after repair, and other fees that I have forgotten.

    Also, if you have a collision with a rental car and you have their insurance, if you have your own policy, your policy won’t be billed and you won’t have your premiums raised or be dropped from coverage. While your odds of being involved in a collision may be low, the financial repercussions can be huge and you need to know that you can afford ALL of them before you decide to pass.

    Cheryl, if you buy your Tracfone minutes on an annual basis, the minutes roll over, you can spend $30 or so on a double minutes for life feature and end up with over 800 units a year for around $100. Be sure to search for “Tracfone coupon code” before you make your purchase.

  33. Diane says:

    It seems crazy to spend $10,000 to save $60 per month. Also,
    it’s entirely possible that it will take more money than you think to get your loan value below 80%, given current (falling) home values. Check with your lender before you pre-pay a penny. Your cash is much more powerful when it’s in your control. Once you pay down the mortgage, for all practical purposes, the money is GONE. Remember, PMI is the price you pay for not having enough savings to put 20% down in the first place. Keep your savings now that you have it.
    I’m in the same boat. I have a company car for work, but often rent a car for personal travel. I have a Platinum Visa card that comes with rental car insurance, but the coverage could be better. I have recently discovered a program offered by American Express. Once you sign up, every time you rent a car and put it on your AMEX, the coverage automatically kicks in. It’s better coverage than the Visa route and it’s far cheaper than buying coverage through the car rental companies.

  34. @Lindsay
    I hate to be ‘Debbie Downer’ but I caution you to factor something else in, even if it’s just in a ‘what would we do’ scenario. When folks think about having kids, they think like you said – either I’ll get pregnant and the cost will raise for my family but be doable with our budget, or I won’t and I’m possibly looking at medical costs for treatments and even adoption.
    But, as a mom who can attest to the ‘oh crap’ scenario not being as rare as some might want to think, you must plan for what you’ll do if something is wrong with your kid after birth. I know – it’s like making a will or talking about end-of-life care! Horrible, right? But, I didn’t plan for it and she was born fine – right up until age 18 months (which is way-early) when we took her to the ER and she spent the weekend in the hospital. Welcome to life with type 1 diabetes.
    It’s reasons like this that make me say ‘keep the best medical coverage’! These are one type of thing folks mean when they say you make sacrifices and decisions based on your life with kids that child-less folks can’t appreciate. Those of us w/o insurance do what we must to provide medical supplies on a daily basis. I have hated needles as long as I’ve been alive, but I learned how to give my daughter daily shots.

    I didn’t mean to turn this into a soapbox, but the last thing I want for others is to be in that type of situation and be blind-sided. I wish you a healthy child, genetic or otherwise!

  35. SLCCOM says:

    #34 Melody, thank you for pointing that out. Even if there are no health issues, traumatic injuries can happen out of the blue, no matter how careful you are. Heck, you can just be driving along and have a chunk of “blue ice” fall from an airplane and hit you or your child.

    There are major advances in treating Type I diabetes, and it is actually reasonable for your daughter to expect to live long enough for a real cure.

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