Updated on 08.01.14

Reader Mailbag: Personal Trainer

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. Mint and privacy
2. 401(k) distribution issues
3. Small emergency fund?
4. College student planning for future
5. Helping people in need
6. Old debts
7. Finding new ideas
8. Mid-20s career crossroads
9. Tracking versus controlling
10. Publishing concerns

I met with a new personal trainer yesterday to come up with a very detailed plan for exercise over the next several months. My goal is to be in the best shape I can be in by July 1.

The first trainer I met with, early this year, seemed utterly disinterested and gave me a very standard plan which was awful. I didn’t understand half of what was in it and the trainer basically didn’t answer any calls I made to him when I had questions.

This new guy gave me what amounted to a book he had written, and then he sent me the entire thing as a Word document afterwards. Everything is explained.

Not only that, he wrote a fifteen page personal plan for me after I did a basic test with him.

I don’t really need a trainer every day to keep motivated. I just need one to occasionally make sure that I’m going in the right direction, especially at the start. I want to make sure what I’m doing is right and whether I need to change anything.

The right person makes all the difference.

Q1: Mint and privacy
Have you heard of Mint.com? I was wondering if you had, what you thought of it. To me it looks like a very good way to see your finances all sorted out, and it’s free and has a cool iPhone app to go with it.

I tried it out and provided it with info for just one credit card, immediately afterward I felt a panic ensue, wondering what I was exposing myself to and if there was any real danger in doing so. So, I changed my password on my credit card account and deleted the app. I’m sure whatever mint.com learned about my from that one transaction will be there info forever, but they won’t be able to access info in the future.

Still, I’d like to keep using it. I have friends that really get some use out of it too, but I feel pretty uneasy about it at the moment.

If you have any opinions on it I’d like to hear them!
– Kevin

Much like you, Kevin, I don’t use Mint because of privacy concerns.

Now, this is not a criticism of Mint – let’s make that clear. I have confidence that Mint is as secure as it can be and handles data with a high level of security. That’s not my concern.

My concern is that no system is perfectly secure, no matter what you do. It still comes down to human error. Every time you trust your personal information to yet another company, you’re adding a little bit more risk for identity theft to the equation.

Whenever I’m in a situation to add another company to the list of those that have my key personal data, I ask myself whether the product they’re providing is worth that additional risk. Simply put, Mint doesn’t add enough on top of the tools I already use (Excel and Quicken) to make that additional risk worthwhile for me. Other people might feel differently about that risk/reward balance.

This is not a particular concern about Mint. It’s a concern about any company that I would give my data to.

Q2: 401(k) distribution issues
My previous employer mailed me a “Participant Distribution Election” form from my 401K. I have $7,561.47 balance (100% vested). I quit this job on 5/14/2010.

I am now working independently for a local physician. I received a 1099 misc form (non-employee contribution) for the last six months of 2010. This year, I plan to pay quarterly the self-employment tax (15.99%) that I will owe for 2011.

I want to put my $7,500 in a retirement plan. Do I use traditional IRA, ROTH IRA, or SEP IRA? I can’t believe how unbelievably hard it is to open up an IRA account with my current bank.

I feel lost, what do I do?
– Marissa

I would suggest opening a traditional IRA with an investment house that wants your business. I use Vanguard for my own retirement savings.

In my opinion, if a business makes giving them your money difficult, then they must not really want your business.

So, why a traditional IRA? For starters, there are no tax implications with that change, which there would be with a Roth. For another, SEP-IRAs have a set of disadvantages that I’m not a fan of.

You might end up choosing to convert a traditional IRA to a Roth IRA at a later time, but I wouldn’t do that unless I was quite able to handle the taxes out of pocket, and I’m not sure that you are right now.

Q3: Small emergency fund?
Is there ever a situation where a smaller emergency fund is adequate? Here’s our situation: my husband and I are tenured faculty at a public institution of higher education. While finances are not great at public universities these days, our jobs are very secure; layoffs of tenured faculty have never occurred in the history of public universities in our states and even if that were to happen, there are people below us who would be laid off before us. We have short-term disability as well as long-term disability coverage. We also deposit money regularly into our savings account (outside of our emergency fund) for unexpected expenses (like a recent car problem) in addition to our emergency fund of about 10K (which would cover about 2 months of employment for both of us or 4 months for one of us). The typical recommendation is to have an emergency fund that’s equal to 6 months of living expenses, but I’m wondering if that makes sense in our situation. Right now, we put about $250 a month into our emergency account (in addition to about $200 per month into our savings for unexpected expenses), and our only outstanding debt is our mortgage and student loans. Should we continue funding our emergency fund at the same level each month or should we instead make larger payments to finish paying off my husband’s outstanding student loans (we pay ~$300 per month with a balance of approximately 25K)? Given my aversion to debt, I’d like to get rid of those student loans, but I don’t want to jeopardize our current good financial standing.

– Shannon

Assuming that these debts are low-interest (say, 8% or lower), I’d vote for the emergency fund first.

Simply put, when you’re in a situation without an emergency fund and something like a serious car breakdown occurs, you’re stuck having to cover that major expense on credit. Credit comes with a high interest rate. Murphy’s Law dictates that unfortunate things tend to happen at the worst possible time.

The only reason to be overly concerned about paying off the debts immediately is if they’re high interest debts. Even in that case, it’s good to have a $1,000 or $1,500 emergency fund first.

Q4: College student planning for future
I’m a Junior in college and work about 30 hours a week to support myself. Since I’m going to be graduating soon I’ve really wanted to start planning for the future. I have two things I’d like to do eventually- but I don’t think I can do both now. Which should I focus on?

1. I work an hourly job so my income is sporadic. If I have an exam one week I’m going to work less, therefore my paycheck is going to be less. I’ve been thinking about getting my first credit card so I can spread out payments for food, airfare, and other bigger purchases.

2. But I also want to start putting money away for an emergency fund (aka student loan repayment) so I’ve been thinking about a savings account. I’d plan to put away about $50 every two weeks in this savings account.

My worry is that if I put away $50 a week I might not be able to afford those unforeseeable expenses in the future that a credit card would be able to cover. I never have more than about $700 in my checking account at a time.

Do you think that with such a small checking account I could manage both a savings plan and a credit card?? If not, which one should I go for?
– Margie

Using a credit card to finance your life, as described in (1), is a slippery slope that causes people to wake up one morning with thousands in credit card debt. If you’re spending more than you have on hand, you’re in a dangerous place because that’s the place where unfortunate events happen – a job loss, car problems, and so on.

I would focus instead on the savings plan.

If you sign up for a credit card, which you may want to help with your credit score, I would use it for one normal purchase a month – say, gas – then pay off the bill in full at the end of the month. Nothing more, and I’d never use it in situations where I didn’t have enough cash to cover what I was charging.

Q5: Helping people in need
Almost every week, I read a reader mailbag letter from some reader of yours and feel terrible for their situation. I even want to give them money. Do you do that? How do you decide which ones to help out of the many stories that you see?

– Shane

When I first started receiving such emails, I would occasionally help out the people who wrote in with a bit of cash to solve their immediate problem.

One day, though, I discovered that someone had left a note on a messageboard stating that if they had a good enough sob story, they could write to me and I’d send them money. In other words, people were trying to make up heartbreaking stories in order to get some quick cash from me.

Since then, I’ve decided that the best way I can help is to give good answers to people and save my actual dollars for known charities and situations I could address face to face.

Q6: Old debts
I recently have gotten 2 collection agencies calling me about past due balances on a phone and elect bill I had at an apt. 6 yrs. ago. I know that in the state of TX, the statute of limitations is 4 yrs. I pulled my credit report, those 2 along w/ many other companies are already on my report. Should I pay them to get them off my credit report? Should I try to pay on any of these other amounts and get them off my credit report? I’m following you and Dave R. to get my finances in shape, but not sure if these are included as my debt.

– Lisa

If you pay those debts now, they will appear as “current” on your report, which also means that all of that information will stick around for another seven years.

In pure terms of your credit report, the best solution is to ignore these people. Is it the most ethical in terms of being honest about your debts? Of course not.

Right there is the problem with the current credit situation. Once you’re sufficiently late on a debt, it makes less sense in terms of your credit to be honest with your bills than it does to just ignore them for a while longer. That’s backwards, in my eyes.

Q7: Finding new ideas
How do you find new things to talk about all the time?

– Robert

I keep a notebook with me (a little spiral one in my hip pocket, along with a pen) at all times and whenever an idea pops into my head, I write it down immediately.

I usually end up generating more ideas than I can ever use. I throw out a lot of them because I’m not sure how to turn them into good articles.

Mostly, I just constantly look at my life from the perspective of whether or not something would make a good Simple Dollar article.

Q8: Mid 20s career crossroads
I am 26 years old, work full time, go to school full time, and still live at home with my parents. I was 3.5 years through an electrical engineering degree when I was preemptively hired to do such work. However, once I started to work and subsequently forecast the rest of my working life, I quickly realized this was not a smart idea. What I realized was that I simply had no idea what I wanted to do for work. Thus, I went back to school to finish (since it was convenient) my BS in mathematics. This gave me a degree that enabled me to be more general in my job search.

However, the wrench in that plan is that somewhere in between all of that I started to visit a semi-famous physical therapist in a city close by. This was tremendous exposure to highly talented people, in a field that I had no previous knowledge of. As you can guess, this fit absolutely perfectly into my personality and my individual abilities. The most important thing of all is that this is the first time that I am genuinely interested in a specific field of work.

Now I have come to conflicting conclusions:

1. I decided to finish my BS in Mathematics to maintain a certain level of generality. In the process I am debt free, have a 2 year old car which is paid off, and have a good amount of savings/retirement.
2. However, at the same time I have had exposure to a new field which has really sparked my interest. Going into this field would require quite a financial investment.

This is an extremely difficult decision for me (and I’m usually fairly decisive). If I follow through with #1, then I simply transition out of full time school (this summer) and into full time work in various different jobs. I would also probably move several states away (or at least attempt to). If I follow through with #2, I’d most likely have to quit my full time work to complete prerequisites and apply to graduate school (and the various financial implications that would need to be considered). Basically, my life turns in complete different directions depending on which one I choose.
– Sean

If I were you, I’d throw yourself (part time) as deep into this field as you can, working as an intern or an assistant to people who really excel in the field.

Give yourself a lot of time with this so you can figure out if it’s just a passing interest or something deep that you really want to pursue.

I would not change all of my career path based on a short-term positive encounter. Give it a bit of time and make sure that it’s the right thing for you.

It’s very financially dangerous to start career hopping (and re-training).

Q9: Tracking versus controlling
I’m struggling with balancing my requirement to track money with my requirement to control its outflow.

Basically I’m a pro money tracker – I have a spreadsheet into which I download every transaction during the month, reconcile it, categorise it, and flow it through to a monthly summary P&L and Balance sheet (yes overboard!). I like knowing what’s happening with my money.

The trouble is, this often conflicts with my requirement to control it’s outflow. This has mainly become a problem recently because we have gone down to one, part time, income so there is no longer money to buy what we want (or think we need), when we want it – we have to only spend what we have and save up to buy what we need. We have a certain amount of money to live on, and if we exceed it we eat into our home loan, which we DONT want to do. We used to be earning well and saving well, but on our current income saving is not even an option – just trying not to eat up all our past savings is what I’m aiming for. I.e. living within our CURRENT means.

The problems I’m finding are because the best way, I suspect, to only spend what you earn, is to operate largely in cash. If the cash runs out, there’s no more to spend. But the downside of this is that it’s unhelpful for tracking – on the credit card everything is itemised and I know what it’s been spent on, whereas with cash we are terrible with tracking it (and frankly, although improving is a possibility for me, it’s not for DH, he’s just not got that sort of mind). I also have lots of bank accounts for different purposes, in an attempt to control spend, like for putting aside money for annual expenses. But again the downside is that this doesn’t allow me to know what we’ve spent till I get to the end of the month and do all the numbers. There’s too many sources of spend to look at, to get a quick view of how we are going for the month. The more I try to control it through more designated bank accounts, the more complicated it gets and again the harder to know how we’re going.

My fear is, if we don’t track it, we don’t know where it goes. Even with the cash part of the system we have now, there’s always money unnaccounted for, and we have no idea what it’s been spent on. It makes it hard to set a budget.

But setting a budget is less important than keeping to it, and it’s interfering with my ability to do that. Is there a better way I can manage this?
– Susan

Automation is the key that I think you’re looking for.

If you have required parts of your budget, automate them. Set up automatic payments out of your checking account towards the bills you need to pay or towards savings accounts set aside for these specific goals. Have these automatic payments trigger on your payday – or the day after your payday – so you don’t have time to fritter away that money.

This both makes it easier to track and easier to stick with your budget and your goals.

Q10: Publishing concerns
First of all, thank you for sharing your knowledge and thoughts on all areas of life. Your recent comments on being paid to promote is what prompted me to contact you. I’m paid to write for a local monthly magazine. It’s a side job. Even though I have a column, I usually throw in photos of a local event or another short article. I also help with resources when requested as I live in the area and know people.

The last issue, my long article was split into two articles. The part that gave praise to how I saw a local company’s website as being “chock full of useful information” and related examples was fairly informative. That portion was positioned above a half page ad of said business. I’m torn – the editor can do whatever he wishes as he paid for it, but I felt the article gave an impression of paid advertising, which definitely was not the case. I feel that my reputation could be affected now as I don’t want people to think pieces I write are influenced by paid advertising. Would you say anything or is it part of doing business?
– Sam

This is a challenge for anyone who writes. Simply put, the business of presenting writing will always conflict on some level with the art of writing.

I have this same conflict myself. I usually focus on accepting ads that match my genre or, at the very least, don’t conflict with the things I’m writing about. The problem, of course, is that I end up accepting ads sometimes from the very companies that I use and write about, like ING Direct, for example. I use ING Direct and, sometimes, they buy Simple Dollar ad space.

The best thing you can do – in my opinion, at least – is to just ignore it. Write what you find to be true and don’t worry about how publishers choose to format it to make a buck. If it’s good, the genuine nature of the writing comes throguh.

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. Julia says:

    Q3: if your monthly expenses are $5,000, you many want to look at reducing items. The emergency fund is “6 months” of required spending, not “6 months” of income. If you only have a mortgage and student loans, you have a lot of funds going somewhere else that may be able to be cut and allow you to increase the emergency fund faster.

  2. Peggy says:

    To lose weight, you need to create a calorie deficit. Count your calories & utilize the online calories to figure out your RMR, BMR/calories burned. If you need motivation to continue working out, use an online exercise forum to log and ask advice (like EXRX.NET). You don’t need to spend money on a trainer.

  3. JC says:

    Trent, why don’t you do p90x? Probably quite a bit cheaper than a personal trainer. Of course, you would have to make sure you’re doing things right by comparing to the videos…

  4. Nick says:

    On the MINT.COM question, they are owned by Intuit, the same company that makes Turbotax. If you feel comfortable using Turbotax then you should feel pretty comfortable with Mint from a security standpoint.

    It is a bit worrisome to list all your account information in one place, but submitting your taxes online would allow almost any half-way decent hacker to steal your identity if they wanted to.

    I’ve used mint for about two years now without issue. Meanwhile, I’ve had privacy breaches from more traditional sources like my bank and my university during that time. Both of them were hacked because of low security.

  5. Damon says:

    @ #1 (Mint.com) –

    First and foremost, the question is flawed – if you use your online banking, you are susceptible to account hacking, just like Mint.com is! Having a SECURE password is most important – use something like http://www.safepasswd.com/ and generate secure passwords for everything. Use different passwords for each site. Look into LastPass to help keep those passwords organized. If you have unique, secure passwords for your sensitive data, there’s a much better chance of deterring hackers.

    Secondly, if someone were to hack Mint and get your account, they would have access to your accounts; not your account number, card number or pin number – just where the account is located and how much is there. That’s where secure passwords come in!

  6. valleycat1 says:

    Q9 – I suggest you & your husband work together to develop a detailed budget, based on the info you already have at your fingertips of past months’ spending. Any amounts you can’t specifically account for go under ‘misc.’ If that ‘misc’ is sufficiently large, that tell syou where you need to start paying more attention.

    To budget, you start with what your take-home income is, then subtract all required payments (loans, utilities, monthly membership fees, etc), then figure how much you have left to spend on necessities (food, gasoline or transportation) and savings. Deduct your average $ amount spent on those categories; what’s left is what you & your DH can spend on other items.

    If you husband has trouble tracking cash but doesn’t adhere to a set limit on CC spending, then his budget item would be essentially an “allowance” of x dollars in cash he doesn’t have to specifically account for.

  7. Charlotte says:

    I’m not sure you read question 3 completely. They have a $10k emergency fund and very secure jobs. Why are you telling them to save a $1000-1500 emergency fund before paying off their student loans?

  8. Jonathan says:

    Trent, I think you misread Q3. Shannon states that they already have a $10,000 emergency fund AND they put money into an “unexpected expenses” fund for things like car trouble (she didn’t specify the current balance of that fund). She’s asking if it’s okay to have an emergency fund that won’t cover 6 months of expenses given the security of their income as well as their insurance plans.

    Shannon, sure, you should feel comfortable with your current amount of savings in my opinion. The emergency fund is as much for your peace of mind as anything else. It sounds like you have that pretty well figured. That said, it sounds like your overall monthly expenses are pretty close to your monthly income, as you seem to just be saving the $450 per month that you’re putting into your emergency and unexpected funds. I’d see if there are other ways to be able to cut back expenses, and consider applying some of the savings to student loan debt and some to some sort of investment or retirement account.

  9. Tracy says:

    Q2: I’m really, really proud of Trent finally giving a decent answer on the ROTH IRA versus Traditional, instead of the old, tired line of ‘I’d do a Roth’ even when it’s clearly not best-case.

    Q3: *sigh* This is another “I didn’t read the question so my answer isn’t going to fit” – they have a 10k emergency fund, one that’s good for 2-4 months. They want to know if they should continue to increase it or to pay down debt with the money they’d otherwise contribute. Your answer was that they needed a 1-1.5k emergency fund before paying down debts…that’s NOT THE QUESTION. So frustrating.

    I’d say pay down the debt first – particularly since you’re still contributing to regular savings for the unexpected non-emergency. (Which is another part, the letter writer is basically saying emergency fund is for losing a job, they have a second savings fund for things like car trouble)

    Q4: Definitely do NOT use the credit card for the way you’re thinking. Focus on having enough money so that your savings account acts as your backup for regular expenses on months when it’s slow. I highly suggest automatic deductions over to a savings account, so that you stop even thinking of that money as even spendable unless you make an effort to transfer it back into a checking acount.

    Q9: I know at the beginning, Trent said he didn’t use Mint. But this situation of yours sounds like the sort of thing Mint (or another company similar to it) would be perfect for – being able to see all of your accounts and their activity immediately, in a single glance. I use Mint and it pulls information from 3 different savings and 2 checking accounts, plus any credit card transactions, and allows me to assign any individual transaction to a particular budget area. SO I know instantly if it’s the 15th of the month and I’ve spent over 50% of my food budget, I’ll need to be more careful the last two weeks.

    Even if you’re not comfortable with using a 3rd party, you can do it manually. Instead of waiting until the end of the month to do your itemization, instead try once a week. Set up your monthly budget and at every week do a check in and see what percent you’re at and if it’s high for how late in the month it’s at. Make sure you’ve allocated fixed expenses as well.

  10. Amanda says:

    Q9 – I think you’ve successsfully over complicated your budget. I’d decrease my number of accounts if I were you. Create a savings account for all the misc annual expenses. Your husband won’t have access to the funds until you transfer to savings and you can track the various designations in your spreadsheets vs. having to look at a dozen accounts.

  11. Pnut says:

    Q9: I was having this same problem (I think, if I understand correctly). So what I did was open a ING checking account for fixed/predictable expenses with various automatic bill payments as well as manual bill payments. At the beginning of every month I make sure the balance equals the budget, which includes mortgage, phone, gas, groceries, internet bill, etc. I use the debit card to buy gas and groceries and check the balance toward the end of the month to make sure I stay within budget. All my other bills are paid early in the month so what’s left is always gas and groceries.

    I have an ING Savings account as my king account. My paychecks are direct-deposited here. It automatically distributes my budgeted amount into the above checking account, as well as some money into my own “misc. spending” account. So what I have in my personal checking account is all for daily stuff like clothes or restaurants.

    So I do it backwards. I don’t put a set amount of money into savings, but I leave “whatever’s left” in there. I don’t watch it closely, I just know I do what I can to keep within budget.

    The only thing to watch out for is when your money is in a savings account you can only make 6 withdrawals a month or they don’t like you. So you must plan accordingly and/or make sure your personal spending account holds enough money for large un-budgeted purchase.

  12. Tracy says:

    Also @9

    The more I think about it, the more I think that maybe you’re approaching your own question backwards. You’re very focused on ‘where your money is going’- and that’s a good thing. But it’s not the question you probably need to be asking right now.

    But with your sudden decrease in income, you’re looking for ways to decrease actual spending. But your still focused on doing that by just figuring out where it’s going. And that’s too late. (In other words, it looks like you’re trying to set your budget based on what you spend, not what you can afford)

    Instead, you need to take a look at your income, deduct all your fixed expenses for the month and look at what’s left. (If you’re not on a ‘budgeted billing’ plan for things like electricity, it would be a good idea to get on one, just for streamlining your expenses)

    That is all you have to save and spend. Nothing else.

    Then you start going through and playing with the semi-fixed expenses (gas for the car, food, clothing) and allocate money into each pool. A small cash allowance can also come out of that, or you can have a small amount built in for random discretionary things. That’s the part you need to watch closely – you want to build enough flexibility in to your budget that going out for ice cream once can be handled without strain. But if you go out for ice cream every day, you need to budget that specifically.

    Once you’ve gotten to the point where you’re living on your current salary again, you may try to trim back further, and increase money into savings.

    You don’t need to know where absolutely every penny is going – you just need to make sure that all the essentials are covered with enough flexibility that you’re not having to spend from savings. And you’ll know where your money is going by default.

  13. Des says:

    RE Q9 – Knowing what you spend your money on is important, but it is less important than spending less than you make. If the options are spend more but track it vs. spend less w/o tracking, I would say go for the latter.

    If I were in your position, I would go to cash, and be meticulous about getting receipts. Throw them in your purse or pocket and have a designated location (nightstand?) to throw them at the end of the day. Yes, inputting them manually into your system will require a bit of manual work, but it sounds like something you can handle. That would give you the best of both worlds.

  14. Des says:

    Also, as a bonus, you will know EXACTLY what you spent the cash on, rather than simply where you spent it. Even MORE granular detail to scrutinize :)

  15. getagrip says:

    Q3 I think they’re in fine shape and given they continue providing to the “unexpected expense fund” they shouldn’t have any problem redirecting the other monthly money towards other debts, specifically the student loan debt.

  16. Evita says:

    Congratulations Trent on finally finding the right personal trainer !
    I find this bit of news pretty ironic after your earlier post this week entitled “It is not about having the right partner. It is about being the right partner”.

    I guess this is not always about “being” the right partner after all………

  17. Modern Saver says:

    Great post, Trent. Coincidentally, I posted a review of Mint on my site yesterday (www.modernsaver.com). I agree with your thoughts on Mint’s security and privacy. I would bet that Mint probably has better security controls than many of the institutions that we trust our financial data with on a regular basis. This is simply because they are a big target for hackers and need to avoid security incidents at all costs to continue operating. Their business model is built on trust between Mint and users, so one security incident could compromise that trust and have a devastating effect in terms of ongoing business.
    At any rate, fantastic site and keep up the good work!

  18. jessie says:

    Q8 – I think Trent is bang on about making sure that this is something you want to do before you nose-dive into it. Every job has things about it that suck, as you discovered, and you need to get a good sense of that before you make that change. However, I’m also in my mid-twenties, and if you’re like me, you’re impatient. My suggestion would be, right now, email people working in that field and ask them if you can take them out for a half-hour coffee and interview them – you’ve already got an ‘in’ with one, so start there. Find out if there are PT classess at your university and sneak into a few to get a sense of the content… also see if they offer professional development seminars and crash those. Search job postings and read the complete list of duties to see if you like them. Those are all things you can be doing right now that don’t cost money, and can hopefully help you come to a more conclusive decisions by the time grad school applications are due, and hopefully not waste a year.

  19. Amyk says:

    “Disinterested” does not mean what you think it means, Trent.

  20. Maureen says:

    Q6: I can’t believe no one has commented on both the question and the answer! First, if you want to make more money in your life you need to be integrity with money. Clearly waiting over 6 years to pay a debt you owe was your first mistake. Thinking that ignoring these people just because the statue of limitation has run out is the second. I understand the issue Trent raises about it looking current, but come on Lisa
    I would be willing to guess this person who asked the question has plenty of other blemishes on their credit report that are current.
    Pay the debt and stand in your power around money instead of ignoring your responsibility. There is a lot to be learned here if you really want to learn the lesson!

  21. Dangerman says:

    Q1: the paranoid about identity theft is really getting old. Anyone can get 100% insurance for identity theft for about $50/year.

  22. Tracy says:


    Not only that, but identity theft almost always occurs because of someone taking your information at a point of purchase or somebody falling for a scam. It’s not happening because of someone hacking into Mint, which has extremely intensive security policies in place on every level.

  23. Tammy says:

    Q#3 He is not telling them they need 1-1.5k in an emergency fund if you read his ENTIRE reply he is advising her that since her debt is low interest debt he would get the 6 months covered in the emergeny fund first, then he says the only time he would worry about paying off debts imiediately is if there high interest rate debts & then he still advises having 1000-1500 in an emergency fund first

  24. valleycat1 says:

    Q9 – you might want to check out today’s post on minting nickels, who seems to manage their finances retroactively & is now switching to a budgeted ‘adult allowance’.

  25. Tracy says:


    How do you figure? Where do you see that in his reply?

  26. Adam P says:

    @#18 Tammy

    Look, I know some of you love Trent and everything he says and hate us snarkers, but the question asked parapharsed is:

    “Is it okay for us to have a 2-4 month emergency fund instead of a 6 month EF given that we’re in very secure jobs and have another emergency fund for out of the blue expenses like car breakdowns?”

    Trent’s answer should have said “Yes, in your place that’s fine, pay off that student debt first” or “No, even in your case get the full 6 months EF first because .”

    Instead, he wrote something about how high interest debt should be paid off before any EF then a small EF should come before low interest debt like student loans are paid off. This is not bad advice, it just is not in ANY WAY WHATSOEVER answering the question asked of him.

    I can’t deduce whether he means since they have a small EF in place it’s okay to pay the debt or that they should take their $10k EF and put it on the student loans except $1k-$1500 of it or if they should fund the entire 6 months before paying down any debt because it’s low interest.


  27. Miguel says:

    “How do you figure? Where do you see that in his reply?”

    Trent response:

    “Assuming that these debts are low-interest (say, 8% or lower), I’d vote for the emergency fund first.” – is the answer to the specific question.

    The last paragraph is general advise (has can be seen by his choice of words):

    “The only reason to be overly concerned about paying off the debts immediately is IF THEY’RE HIGH INTEREST DEBTS [which is not the case]. Even in THAT CASE [not the couple’s case], it’s good to have a $1,000 or $1,500 emergency fund first.

  28. Tracy says:

    @Miguel –

    I think Adam P already just said it better than I could.

    But what you’re saying is that he posted a question, had a one sentence reply that indirectly answered the question and then spent two paragraphs talking about something only tangentially related to the question at all?

    I’m not sure if that’s better or worse than his not reading the initial question closely.

  29. Adam P says:

    Nevermind, I apologize to Trent and Tammy. (My kingdom for an edit comment button like at Get Rich Slowly).

    His answer is to pay the emergency fund to 6 months first. His reason for coming to that answer is impossible to deduce, as the reason he gave in his example doesn’t fit this couple at all, which makes it difficult.

    But he does clearly say to pay the emergency fund to 6 months worth then pay off the student loans.

    For the letter writer, I hope she doesn’t take his advice because I think it’s crap, but that’s just my opinion and Trent is the “expert”.

  30. Wendy says:

    For mint.com what concerns do you have? That someone can hack in and see your financial information? That mint would sell your information? The first is improbable the latter is openly addressed on their site.

    This NYTimes blog post covers it well:

    Do you use Facebook.com?

    Privacy comes in many forms and we should always weigh risk against benefits.

  31. Ryan says:

    Regarding Question #3, it seems that Shannon and her husband have a very sufficient emergency fund, PLUS an emergency-emergency fund. With confidence that both of their jobs are stable, it seems that they could, at the very least, take the $200 per month that they’re putting into their savings toward the student loan debt. This accomplishes two things – it puts their money to work for them by getting a guaranteed return at whatever the student loan interest rate is, and it will give Shannon piece of mind knowing that the debt is going down more quickly. Plus, they still have their $10,000 already in the emergency fund plus the $250 per month that they’ll continue to contribute.

  32. Des says:

    I think Trent’s answer to Q3 does address the question, but it is bad advice. These folks have $10k for any unexpected emergencies. The only reasons you would need more than that is for replacement income in the event of job loss, or potentially for very high medical bills.

    Paying off low(ish) interest debt and funding a huge emergency fund both have a very high psychological factor – some people can’t sleep with debt, some people can’t sleep without a large e-fund. I say once the basics are covered (meaning: very high interest debt is paid and there is some money for emergencies) then it is up to whatever helps these folks sleep better at night.

  33. Pat S. says:

    Q1: I’ve had no problems with Mint. Indeed, it helped me vastly in building and maintaing a budget, as I’m generally too busy to maintain a standard paper ledger. I’d give it a try. It’s just as secure as any online banking site.

  34. LaShawna says:

    Is is possible to complete your BS in Math and work on pre-reqs for the Physical Therapy program at the same time? I do agree an internship or more experience would be a good thing for you to do. I felt the same way when I was close to completing my degree and my boss advised me to complete my degree. Also, typically you need a Bachelor’s degree to apply to graduate school.

  35. tentaculistic says:

    Trent – “One day, though, I discovered that someone had left a note on a messageboard stating that if they had a good enough sob story, they could write to me and I’d send them money.”

    WHAT?!? That makes me so mad! What scum. Pure and simple scum. That’s make me see red.

    Trent, I’m so sorry that your generous attempts to help people in need were so thoroughly used and abused. Even worse is that those gormless thieves were not only stealing from you, but were standing on the heads of people who actually need help, but now won’t get it because of them.

    What pathetic scum. Makes me truly hope that karma actually exists.

  36. Tracy says:


    Um, what? I still think Trent answered the question incorrectly.

  37. Riki says:

    I agree that the answer to question 3 is confusing. Trent doesn’t really answer their specific question at all – in fact, he rambles on about things that don’t really apply to situation described.

    Is it good general advice? Yes. Is it relevant to the couple posing the question? Not really.

    Shannon — it looks like you’re in a fairly good position. It doesn’t seem to me that paying down the student loans more aggressively would open you up to significantly more risk, and clearly your aversion to debt means the loans are weighing on your mind. If I were in your shoes, I would work on paying down the loans.

  38. Amanda says:

    Q3. In my opinion you have a big enough emergency fund. Keep adding money to your savings account and pay off your loans as soon as possible.

    (Trent just gives his opinion so mine should be just as valid, right?!)

  39. Damon says:

    @ Q1 –

    Firstly, make SECURE, RANDOM passwords. Use something like LastPass (which can generate them) everything, and your life will be so much simpler. Lifehacker has an amazing article outlining what you should do: http://lifehacker.com/#!5785420/the-only-secure-password-is-the-one-you-cant-remember

    Secondly, you are using your bank’s website to manage your account – what’s stopping a hacker attacking that as well? Mint.com uses the same encryption that banks use, so if they can hack Mint, they can hack your bank.

    Finally, let’s say a hacker does get into your account in Mint. What’s the worst they could get? Where you have financial accounts, and how much is in each? Maybe they see you go to Starbucks too often? You aren’t giving Mint your account number, routing number or pin number. And, once you’re logged in, you’re username and password aren’t shown anyway.

    Finally, If you use SECURE, RANDOM, UNIQUE passwords for each site and manage them with LastPass, you won’t have a problem. It becomes a problem when you use “qwerty” for every site’s password – because if a hacker uses it get into one site, it’s much more likely use that password on other sites.

  40. Des says:

    @Amanda #30 –

    Yep, your opinion is just as valid ;)

  41. valleycat1 says:

    Q3 – It sounds like you’re reasonably comfortable with your emergency fund level and more concerned about the student loan. You don’t have to choose between paying into one or the other. Why not split the difference, & put a little less into the emergency fund and a little more toward the student loans? Adding just a little to a debt payment can greatly reduce how long it takes to pay it off.

  42. katie says:

    I am a physical therapist, I have been a PT for 8 years. I would not call it my dream job but there are many pros to being a PT.
    – you have many different areas where you would be qualified to work (with children – either in schools or in early intervention, in hospital, nursing home, inpatient rehab centers, home care services, outpatient clinics and sports clinics to name a few)
    -you have a job that is in very good demand
    -you have a well paying job – starting salary right out of school in the northeast you would be making mid 50k
    -flexible schedules
    -Long schooling and lots of prerequisites (all degrees are now doctorate degrees so you are looking at 6 years after your pre-requisites)
    -Health care is changing and paperwork is getting worse and worse
    -reimbursement is changing and more jobs are requiring more time for the same pay

    That being said if you are in-love with the job and the PT you have met I would suggest looking into a PTA (PT assistant ) associates degree – some schools offer a program that you can then transition to a DPT. This is a 2 year degree and starting salary in my area is low 40’s. This would give you an opportunity to be in the field with out as long as a time commitment.
    My last suggestion is that there are opportunities for tuition reimbursement/loan repayment and even scholarships if you agree to work for a company after graduation (for example the school department I work for offers full paid scholarship if you work for them for 2 years)

    Good Luck!

  43. jim says:

    Q3 Shannon : I think a $10k emergency fund that you have is fine for your situation. You’re tenured professors and you’ve got disability insurance. You’re jobs are safe as can be and you’re covered in disability. I’m not sure what other emergencies you’d need to have more money on hand for. Maybe I’m not as paranoid as some.

    Q8 Sean : I”m not clear on what Sean’s #2 option choice is. If its becoming a physical therapist and he’s very interested in that field then I’d say go for it. PT is a good job with good future and if he really wants to do that then I see no real reason not to.

  44. Bill says:

    The answer to Q5 really bummed me out, I can’t believe people would try and trick money out of a blog writer.

  45. JuliB says:

    Q5 – While I cannot donate to anyone here, I donate monthly to modestneeds.org . It’s a great organization that allows you to allocate your monthly donation among people with needs, or you can donate and have them allocate it.

  46. Um…I didn’t write this:

    “steven@hundredgoals.com @ 2:04 pm March 24th, 2011

    @Adam and @Tracy
    Which tastes worse, the crow, the humble pie, or the foot in your mouth?”

    Trent, I think we’ve got an issue here because if someone has been posting under my name and giving me a bad rep (which does seem to be the case as I tend to get a lot of negativity from people here).

    Please figure this out and correct whatever is going on. I don’t need someone using my name to post ignorant comments. Thanks.

  47. Julie says:


    I thought the post was kind of funny….

  48. Steven says:

    Maybe, but not when I’m not the author and someone’s using my ID. I have a hard enough time around here…I don’t need any extra help! ;)

  49. Joan says:

    Q#6 Old debts are just resold and resold to new collection agencies. If you pay them even a very small amount they will have it on your credit report for seven more years. In some cases the debts have even been paid off and some collection agency will still bug you to pay them again. It seems unlikely that a phone company or electric company will bother you after 6 years.

  50. Vikki says:

    Q1, I have similiar paranoid thoughts about Mint. What I loved about the ap specifically was the abilty to check in the minute before a purchase to see if it really did fit in my budget. I found a 99 cent ap called “left to spend” that I was sceptical about. It’s *exactly* what I needed. At home, I do a great job of budgeting out all my expenses and planning purchases. But when I’m out, I can’t recall if I have $20 in my “fun money” account or $35.
    how the app works is that you enter your budgeted daily amount of available cash at the start of the month. Then everytime you make a purchase, just tap in the dollars and cents. It does the math and tells you how much you have left. Stupidly simple, and nothing I couldn’t do with a piece of paper, I know. But as an iPhone person, you probably get how it’s just easier to do something like that with the phone. Anyway I love the ap and there are no privacy concerns. And because I spend a buck on it, I HAVE to use it.

  51. DOT says:

    Q3 – Well, I’m going to assume you and your husband earn about 5k a month since you stated that your 10k emergency fund would cover 2 months of “employment” for both of you.
    My advice would be first to find ways to seriously cut your spending and split the savings between the student loan and more savings. You bring home 5K a month and claim you have only a mortgage payment and a $300 per month student loan payment and then save only a total of $450 a month between savings and EF.
    Although you are not in a bad financial situation by any means, believing that saving $450 a month with your income is putting you in “good financial standing” is not correct. You should strive to save somewhere around $1000 a month.(or more)

  52. Trenton says:

    I am in a situation very similar to Shannon from Q#3.
    I am an active duty military member with 5 years remaining on my contract. I pay off my credit card every month. I fully contribute to my Roth IRA. Have $3k from an enlistment bonus in a mutual fund. My only debt is a $15k auto loan at 5.44% APR for a new car I purchased last year. I allot 5% of my pay into my emergency fund. My present emergency fund is ~$3500, about 4 months of living expenses.

    Given the security of the military and my new car, I cannot envision a car repair, losing my job, or being uncared for in a medical/disability situation.

    I have an extra $200 remaining at the end of the month that I have previously been contributing to my emergency fund in addition to my regular 5%.

    With this $200… Should I continue adding this to my emergency fund? Pay down principal on my auto loan? Add it to my mutual fund? Something different? Any advice would be appreciated.

  53. Steve in W MA says:

    #3 Steve in W MA @ 8:41 pm March 26th, 2011

    @Q6, Marge:

    ignore the collectors and don’t send them a cent.

    Keep in mind that the original company you owed the money to no longer will get the money if you pay these “bill collectors”. the orignal debt was sold off to the “bill collectors” for pennies on the dollar.

    They are currently trying to trick you to acknowledge the debt by sending in a payment. Once you do that you are on the hook to them for the whole amount.

    the really funny thing is that if you try to pay the original company the money instead (to ethically even up the score) they probably won’t accept it because their accounting system won’t be set up for it.

  54. Steve in W MA says:

    @Q9, advice on how to track your finances AND control them:

    Try YNAB.

  55. Sara says:

    Q5: I second JuliB’s suggestion for modestneeds.org. They actually check out people’s stories to make sure they’re not scamming.

    Q9: First of all, I don’t think using cash precludes tracking your spending. I use a spreadsheet to track my budget and spending, and I just enter transactions as I make them (instead of waiting until the end of the month to download transactions from my credit card and checking accounts). Can you get your husband to save his receipts and put them in a designated spot so you can enter transactions?

    Secondly, the whole point of tracking your spending should be to help you set a budget. You have already gathered a lot of useful information. Look at where you are spending your money and try to figure out where you can cut back. How much are you spending on eating out? Cable TV? Cell phones? Figure out how much you can reduce each category, set a budget, and stick to it. It looks like your household income has recently been drastically reduced, so recognize that you are going to have to cut back on your lifestyle if you don’t want to dip into your savings.

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