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. Determining credit damage to minor
2. Unemployed with kids
3. Helping fix a credit score
4. Stupid ATM charges
5. Taxes on savings bonds
6. Millionaire good financial goal?
7. Handling housework with kids
8. Won’t give up perks
9. How specific are “next actions”?
10. Handwritten letters
There are times where you feel disrespected and misused and when you have a chance to get out of that situation, you want to throw out some of your pent-up anger and frustration.
Time and time again, the people you interacted with show up again in your life. Don’t rage at them. Don’t explode at them. Don’t do malicious things on your way out the door. Act as professional and courteous as possible.
If you burn bridges, those people will remember and that memory will come back to haunt you. It might feel good, but it will hurt over the long turn.
Q1: Determining credit damage to minor
Many years ago, my (former) son-in-law used my grandchild’s social security number to establish an account with a phone company. He then defaulted on payment to the phone company and was ultimately sent to collections for an outstanding balance. I would like to know how my daughter can determine whether or not any damage has been done to my grandchild’s credit history. Can she legally go to annualcreditreport.com and request a credit report for my grandchild to what may be there? My grandchild is still a minor.
As long as a guardian is there to help with the check, annualcreditreport.com is exactly what your grandchild should use.
Ideally, their credit report doesn’t have anything at all on it at this point. After all, this child is a minor and shouldn’t have any credit of his/her own. If there are any remnants of this identity theft, it should be really old and should be on the verge of dropping off (which should happen at the seven year mark). If this is the case, you have nothing to worry about.
If there’s current stuff, you need to track it down and figure out what’s happening. At that point, you should start studying identity theft issues in detail, because that would mean that someone out there – whether your former son-in-law or someone else – is still misusing your grandchild’s identity.
Q2: Unemployed with kids
My husband and I have been reading your site for a year now. A few months ago my husband lost his job and went on unemployment. We are struggling to make ends meet. What would you do in our shoes?
I’d use every resource I could possibly find. I’d use the local food pantry to help with my family’s food supplies. I’d cut every service I could – cable, Netflix, cell phones, and so on. I’d go to community dinners, particularly those with freewill offerings. You simply need to minimize every single dollar going out.
As soon as your husband’s unemployment insurance runs out, he should be prepared to work somewhere, even if it’s not his ideal job. It will be tough, of course.
I don’t know whether you have children or not – you didn’t clarify – but if you do, seriously rethink child care during this period. If you have child care expenses, you should be able to minimize or eliminate them during this period.
Q3: Helping fix a credit score
One way to help boost one’s credit score is this: if you have a family member or friend who is willing – and has a good credit rating – have them add you to their oldest credit card. do not issue the person a card. just add the person to your account. We have done this for our daughter who had a serious, but fortunately short term problem a couple years ago. Adding her to one of our credit cards (my husband and me) immediately raised her credit rating. She has no access to the account, was never issued a card, and probably couldn’t recall which card it is right now.
That’s a pretty good idea. If you never give the person a card, the risk to you is minimal since they never have a credit card to use or a number to use online. If you reasonably trust the person, I consider it an acceptable risk.
Of course, if you have credit problems, it can adversely affect the person whose name you added. Ideally, this won’t happen, but it is another small risk.
There’s also the question of whether the credit card company reports authorized users to the credit bureaus. After a few months, that person should check their credit report just to make sure. Otherwise, you’re adding risk for no benefit.
Q4: Stupid ATM charges
Several times over the last few months, I’ve found myself using an out-of-network ATM while traveling. I know that I’m going to get a fee for using the ATM to withdraw cash but the problem is that a lot of ATMs use confusing interfaces where they make screens look the same and use poor wording so that you end up doing things like getting your balance (and incurring a fee) when you don’t really want to. My brother says I should change banks but that seems nonsensical because they’re not the ones charging me.
There’s probably not much you can do. You can try contacting the bank that owns the ATM you used – not your own bank – and see if you can get the balance fees refunded. They probably won’t do it, but it doesn’t hurt to ask.
If your bank’s ATM network is small, it might actually be a reason to make a switch if you’re finding yourself traveling a lot. If you keep finding yourself far away from your bank’s ATMs when you need to use them, then that’s an expensive problem.
I generally just avoid ATMs as much as I can. I get plenty of cash before I travel, then I try to use my credit cards as much as I can while traveling.
Q5: Taxes on savings bonds
I cashed some $1000.00 savings bonds that I had paid $500.00 ,for many years ago. When I filed my taxes I had to pay on the full amount , which was at that time , about $1400.00. This does not seem right to me as I had already paid taxes on the original investment. Should I have only declared the $900.00 gain? The paper work seems to insist that the total amount should be taxed.
The amount that should be taxed is the amount you’ve earned.
The information you read is probably reminding you to report all of the interest earned at once if you’ve not reported it all the way along. You can report the income either way – it’s up to you – but most people tend to wait until they actually sell the bond.
You do not owe taxes on your initial investment in almost every case. That would be considered double taxation, which the government goes to pretty great lengths to avoid provided you’re doing sensible things.
If it motivates you in a strong fashion, sure.
For me at least, I’ve found that shooting for a specific number doesn’t really help motivate me at all. I like the feeling of doing better than I was doing a year ago, but shooting for a certain amount in the bank doesn’t really do it for me.
I thrive on more tangible things, like saving for our country house or saving to retire as young as possible. A certain net worth might happen as a result of those savings, of course, but the net worth amount itself doesn’t keep me motivated.
If it keeps you motivated, though, then it’s a good goal.
Q7: Handling housework with kids
I have cleaning help twice a week, which is $60 a week for about 5 hours of work. This ends up being about $3000 for the year. I dislike cleaning and I’m not very good at it. It seems like a lot of money but also feels like a good value for the money considering how much more efficient she is than I am. I read books about it and practice, and maybe some day will be able to do it, but right now with my kids so young it seems to take so much just to stay on top of daily straightening, let alone cleaning. I know you have 3 young children, so the house must get messy and dirty. How do you and Sarah handle the housework?
We don’t really worry that much about a messy house, to tell the truth. If an item is out of place, it doesn’t really send us into a panic.
During the week, we often do minimal housework, saving it for weekends when we’re not busy. We’ll save chores like vacuuming and dusting for weekends. We don’t hire people to take care of it.
It works for us.
Q8: Won’t give up perks
Whenever I read financial advice from you or from others, they always talk about giving up things like cell phones or cable television. My feeling is that if I’m working hard, what good is it if I don’t have things in my life that I enjoy?
That’s not the question. The question is whether, over the long run, you value having cable television or you value building up a livable amount in retirement. The question is whether, over the long run, you value having a smart phone with a big data plan or you value being able to quit your job much sooner than you otherwise would.
The question is whether you can find things that make good replacements for the expensive things in your life so that you can take that difference and use it to bring about the changes you want.
If you don’t want to give up a perk, that’s your choice, but by not giving it up, you’re saying that it’s the most valuable thing you could be doing with that money. Is it more valuable than walking away from a job you hate or retiring several years earlier or owning your house debt-free? It’s a value call and most people don’t look at it from a long-term perspective like that. That’s how people get into financial trouble – they don’t look at the long term impact of their short term decisions.
Q9: How specific are “next actions”?
We’ve recently been reading your series on how you adopted the GTD productivity system (which, by the way, convinced my wife to start using it, and she is loving it), and we had a question. In one of the first articles you wrote about how a typical afternoon would go, wonderfully illustrating the power of next-action based thinking. What we were wondering is: would you typically track next actions at that granular a level? For example, did you actually put “Take chicken out of the fridge”, or “Find sheet music” on your next actions list, then cross them off as you did them? We wonder since there’s obviously a bit of a trade off with tracking things in more detail versus keeping things a bit more high-level (such as just saying “practice piano”, versus “find music”). On the one hand, having those details enables much more ninja-like moment by moment work; on the other hand, I can see it getting easy to be bogged down in the minutia of everything.
For me, I’ve found the most success when I break down tasks to about the fifteen minute mark unless the task is something very clear and discrete that can’t really be broken down any more. A lot of things that make it on the to-do list are standalone things that take less than fifteen minutes, but it doesn’t make sense to break it down any more than that, like making a specific phone call.
For example, one item I might have on my list is to “write a post for The Simple Dollar.” That will take me far longer than fifteen minutes, but breaking it down any further than that doesn’t really help me in any way.
Different people will have different comfort zones for this, of course.
Q10: Handwritten letters
My sister and I have started writing handwritten letters to each other, generally clearing out our thoughts and feelings on something in detail. It’s done a lot to make us closer than ever before. Writing these letters has been nice because it forces us to slow down and collect our thoughts. It’s also pretty cheap, as it just takes a sheet of paper or two and an envelope and a stamp. I love writing them and receiving and reading them.
I adore handwritten letters. They’re a beautiful way to communicate for many of the reasons you state.
In fact, even though Sarah and I started our relationship during the electronic era, we wrote a lot of letters to each other when we were apart, for many of the reasons you stated. It gave us time to think about our feelings and really organize them sensibly.
Plus, there’s almost nothing better than receiving a handwritten letter in the mail.
When I’m struggling with writing of any kind, in fact, I’ll often write it out longhand. That process just works really well for forcing you to confront and organize your thoughts.
Got any questions? The best way to ask is to email me – trent at thesimpledollar dot com. Iíll 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 many, many questions per week, so I may not necessarily be able to answer yours.