Reader Mailbag: Project Ideas

I have more great ideas for projects than I ever possibly have time to complete.

I have a 2004 Santa Fe which is getting to be too small for my family. We have three kids now and plan to make it 4 and 5 in the coming years. (Though not within a year or so for the next one.)

It has some minor body damage (scrapes, small dents, etc.) but still runs well. And it’s paid off.

We are thinking about getting a mini-van and trying to decide when to make the move.

Should we drive this one into the ground and then make the switch or go ahead and get a new minivan now while interest rates are still low?

We have excellent credit — probably mid- to high-700s.
– John

Drive it into the ground, then make the switch.

Of course, while you’re doing that, make payments as though you had purchased a new van. Set up an automatic transfer of $300 a month into a savings account to simulate a car payment.

If you make the current vehicle last three more years, then you have $10,000 in that savings account with which to buy your next vehicle. If you’re buying a late model used vehicle, then you’re probably paying for most of it right out of pocket – no payments, no interest rates, no anything.

We did virtually the same thing recently, and I’ll talk about that in a post in the next few days.

I am interested in using a site like Mint.com to help me keep track of where my money is going and to help me save. My boyfriend thinks that I would be potentially putting myself in a position for easy identity theft with something like that. What are your thoughts?
– Lauren

Mint, Wesabe, and such sites have absolutely stellar security practices. My concern would have nothing to do with their actual security practices at all.

My security concern would be with the fact that no point of security is perfect and the more points of security you open your information up to, the more likely there is to eventually be a failure. Assuming all security points are equal, the person with one security point open is more secure than the person with five open.

Is Mint worth opening up your personal information to another security point? For you, it might be; for me, it’s not. I strive to minimize the amount of information availability, even with reliable places. At some point, every security system fails because human beings are fallible. Mint does not offer enough value to me in order to add that additional risk.

I’m struggling with clutter, too. But in my case, it’s just me (I live by myself at the moment) – so there’s no conflict with another human about what stays/goes. I do have some pack-rat tendencies and where I don’t keep things for sentimental reasons, I seem to keep things because I always have “I may have another use for that” thoughts. I am a big arts-crafts person, and so a lot of the things I hold on to are because I can envision using them in a project – but of course there are a million more projects than I’ll ever have time for.

The second reason I’m holding on to stuff is because I think of the money that was spent and I think about how best to recoup *any* money in getting rid of stuff. This has become a BIG problem over the last 2 years because 2 years ago, I closed my retail store and everything I didn’t liquidate then came home with me. I’ve gotten rid of a lot since then, but I still have piles… and the problem is, if I’m going to do anything other than donate stuff, it’s a lot of work.

Part of me wants to just donate all of it… and be done with the clutter… but I worry that 1) the donation place won’t really find a use for it (I have doubts that it’s useful to donate anything except for clothes, good furniture and appliances) and 2) I think about the money I could have recouped – but taking photos and putting things up on craigslist and/or ebay takes a lot of time (and ebay costs money). More about #1 – I am also fairly environmentally conscious and that’s part of what fuels my thoughts where I think I could re-purpose my own stuff.

Help!?
– Adeena

The best way to think about clutter is to view the stuff you buy as a complete loss the second you buy it. It’s a sunk cost – it’s water under the bridge.

The fact that you paid $20 for a DVD three years ago does not mean it’s worth even a cent right now. It’s only worth a cent if someone’s willing to buy it. That $20 is lost.

As for donating stuff, Goodwill only takes things that they think they can sell. On top of that, you can get a receipt for all donated stuff and use it as a tax deduction in 2011, which will save you some money.

A few years ago, I begna aggressively paying down debt. I paid it all off- except one credit line (unsecured) for $17,500 Cdn. I decided it was fine to leave it unpaid as I had no savings and started putting excess cash into a retirement account.

One thing that was of crucial importance to me was buying a home. In Canada you can borrow your downpayment from you retirement plan, with a 15 yr repayment schedule. So i did that, now I have a small condo (tres small) that I bought at the bottom of the housing market slump and a mortgage for $250,000 at 3.8% (rate is fixed until June 2014, then it renews at market rates- renewal is standard for Cdn mortgages). I did $10,000 worth of renos on credit and had to pay $4000 towards new elevators for the building which I borrowed from the credit line.

I make a whack of dough in my job, and my living expenses leave a lot of excess cash. I did some careful calculations though- if I lost my job (and I work for a stock brokerage firm (not in sales), it is a high risk), I probably could only make 70% of what I am currently paid getting hired elsewhere, as I lack academic credentials that other major financial employers screen for. It turned out that for $17,000 I could get a graduate school diploma in business (the first half of an MBA).

So I went into and had my credit line approved for additional student loan funds. When school ends (next March) in a year it willconvert to a term loan with up to 10 yrs to pay it back.

I have $10,000 in a retirement account, a $250,000 mortgage and $48,000 in debt. I can pay $1200 a month to the debt with no change in expenditures. I can cut another $500 a month out if I walk to work ($80 a mo), stop buying take out (it is way too high), stop driving (I belong to a car co-op $135/mo average usage cost) and get work to pay for my cell phone. ($100/mo)

But I wonder if I should maybe try to get a second job as well. I am scared I have no savings, just credit. Would you do that if you were me? Here’s the kicker- I am trained as financial planner – as if I had anything to invest.
– Danny

If I understand this right, you’re taking night classes to get your degree while working at a well-paying job during the day. I’m not entirely sure how a second job would fit into that equation.

Your focus should be on nailing solid grades and getting that diploma so you can eventually work forward towards an MBA. It sounds like you’re happy in your career and want the degree so that you can move forward. I don’t know the specifics of your field, but I would guess that if you’re working towards this diploma, you’ll eventually work towards the MBA.

So, no, I wouldn’t get a second job. I’d nail that diploma. I’d also live cheap while I was doing this and set up some automatic transfers from your checking account so that you can get an emergency fund built up.

My younger sister is finally graduating from college (5 years, 4 schools, 3 majors). Her degree will be in Business and she likes event planning and currently works for Lowe’s with some hopes to move up to Manager. I remembered reading a book review that you said you recommended for young woman entering the business world after school but can’t seem to find it on the website.

What book or books would you recommend that I get her as a graduation present? She is already pretty frugal, babysits and cleans my Grandma’s house for some extra cash. She is a typical blond who sometimes lacks common sense.
– Ryan

I would get her two books.

First of all, I’d pick up Your Money or Your Life by Joe Dominguez and Vicki Robin. It’s simply the best money book I’ve ever read because it’s, in the end, not really about money at all. It’s about life.

Second, I’d give her Michael Masterson’s Automatic Wealth for Grads. This book does a great idea explaining the things a self-motivated person should do straight out of college to build a strong financial position for life. It’s not easy right out of the chute, but it’s well worthwhile.

I have been at my current job as a event floral designer/event planner for a year and a half and I love it–I truly enjoy what I do. The only problem is that I bring home about $23000 per year working 40 hours a week (the maximum hours allowed by my employer). This is below my income potential (I brought home about $36000 at my last job in a different industry) and I know with my skill set and experience I could earn more. However, in my industry I would have to spend a much greater percentage of my time doing the parts of my job I dislike and find exhausting in order to increase my income, and I would have to find a different company to work for, as there are no opportunities for increased pay at my current job (advancement, yes, just not more money). It is also very difficult to find jobs in this specialized industry and many colleagues are currently out of work. So, do I leave my job and find one that pays more, even though I would be giving up a job I currently love? Or do I stay with the job I love and just learn to live on very little?
– Becky

This is the eternal problem. Quite often, the parts of our job that are the most fun are the parts that don’t bring home the bacon.

Take writing. If I just sat here and wrote all day, doing nothing but creating, I wouldn’t make a dime. It’s the other activities – talking to advertisers, negotiating book deals, dealing with comment approval, and so on – that puts the food on the table. I don’t like that other stuff at all, but it’s part of the equation. I have to do it in order to be able to spend swaths of my life doing the other things I enjoy.

At some point, you have to decide what your own balance is. Usually, the more “not fun” stuff you take on, the better you get paid. The more you reject it, the less you make, but the more time you get to spend doing the things you want. There is no “answer” per se – it’s about what each individual person wants in their life.

I am not sure if you have covered this yet before, but what is your feeling about Certified Pre-Owned cars. We are looking at buying a used car and it will be our (me, wife and 2 kids) only car. I commute to work every day on bike and the car is mostly for around town and road trips. I just want to know whether you think it is worth the extra money. Thanks!
– Jim

In my book, “certified pre-owned” is basically a substitute for a trusted mechanic. If you have a mechanic that you trust, you can take a car you’re considering driving to them and they’ll effectively “certify” it for you.

What you’re buying is a seal of approval saying that the automobile appears to be in good working order. Dealerships are quite happy to sell this seal of approval because it means they make more money for not that much more work.

Most used cars on a reputable car lot aren’t going to break down the second you drive them off of the lot or else the dealer’s reputation would be in the toilet. That doesn’t mean that “certified pre-owned” isn’t worthless – it’s often a guarantee against something they missed. But you can often get an effectively similar guarantee from a trusted mechanic.

Is it worth paying a thousand or two more for? If you don’t have a good mechanic in your corner, sure.

Would you replace a 15 year old dishwasher that still works but has a lot of rust on the racks (which I’ve heard can be painted over) because you could get a great deal on it now (that won’t be available in the future) rather than waiting for it to completely breakdown?
– Suzi

I’d probably replace (or at least fix) the racks, but not the dishwasher itself. I wouldn’t want to eat off of dishes that sat and dried on a rust-covered rack.

My solution would be to run down to the local hardware or RV store, pick up some liquid electrical tape and a good wire brush, stop by the grocery store and pick up some unsweetened Kool-Aid, then go home and brush as much of the rust off of the racks as I could. I would then pour six packets of the unsweetened Kool-Aid into the soap holder in the dishwasher, run the dishwasher with nothing in it, then brush the racks again (the citric acid in the Kool-Aid will help with the rust). Then I’d coat the racks in the liquid electrical tape to give them a cleaner, dishwasher safe coating.

Of course, I’m assuming there’s been no other problems with the dishwasher than the rusty racks.

I am entering a very transitional phase in my life and I am a little lost about how to go forward. I am getting divorced, I am graduating from college next May, I’m looking into getting a Master’s degree, my car will need replacing in the next 2-3 years. I just recently completed baby step 1 of Dave Ramsey’s plan. I have a small (about $1800) credit card debt, other than that I have a HUGE pile of student loan debt. Graduate school applications and the GREs will cost almost $1000, not to mention the cost of moving across the country or even overseas next year. Should I just keep making the minimum payments on the credit card and stockpile cash? How should I handle saving for a new car? I don’t mind driving an old car as long as it is reliable, I just don’t want to ever have car payments again. A stipend for a graduate student is barely above poverty level, so is it wise for me to consider going to graduate school when I have so many financial responsibilities? I’m just feeling like there are n things to spend money on, and only n-1 amount of money coming in!
– Ellen

For one, if you go to graduate school, you’ll most likely have forbearance on the student loans. You won’t have to pay them until several months after you actually graduate. Keep that in mind.

If you’re going to graduate school, do you really need a car? I was close with several graduate students who lived in the graduate student housing at Iowa State University back in the day and virtually none of them owned a car. The ones who did rarely used it for anything at all. Is it possible for you to go carless for a few years? There would be no payments, no insurance, and no registration costs, either.

If I were you and I were passionate about the field I was in, I would focus on getting into graduate school. If I accomplished that, then I would go absolutely minimal. I’d sell everything that wouldn’t fit into a bag or two, travel to that school by plane or bus, and live in the graduate student housing that existed there. I’d just forget about the car entirely until I actually needed it.

In a couple of months I’m moving from one side of Australia to the other, to an area with a lower cost of living and I hope, a better lifestyle for myself and my daughter. Estimated relocation costs have ranged from $2,100 – $2,900, and I want to spend the next month or so selling/giving away any items that I don’t really need to minimise the amount of furniture & belongings that have to be transported.

I’ve already decided that anything that is quite bulky (other than large furniture) and hard to pack, but not overly expensive to replace, I will get rid of and buy new/secondhand after the move. For this sort of thing I’m targeting bikes, pedestal fans, very cheap bookcases etc. Then there’s items that may be due for replacement anyway, for example I’ve been having some problems with my fridge and it’s way too small for us, so I’m going to give it away and buy a secondhand one in the new city.

I’m hoping that this approach is good common sense, but I’m wary of either going overboard and ending up having to replace a lot of items that I could have moved, or of paying to move things that I might have been able to do without or replace cheaply. Do you have any ideas on how I can assess my belongings for their ‘move-worthiness’?
– Jay

Have you already purchased a place to live there? If I were you, I’d go very small when I moved. Find a very small house that has just the bare minimum amount of space.

Then, I’d sell almost everything before I left. Get rid of all of it that doesn’t have personal value. Then, when you arrive, decorate with minimal cost using Goodwill and so forth and upgrade piece by piece from there if you see a need to do so.

This will drastically reduce the cost of moving, increase the amount of money you have before you leave (because of all of the stuff you sold off), and allows you sto start from scratch and re-do your house in a realistic fashion that matches the new life you’re trying to create.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag. However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.