Updated on 09.22.10

Reader Mailbag: Reader Music Recommendations

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. Ratios and your money
2. Dealing with reality of debt
3. The “merging money” conversation
4. Credit cards or student loans
5. Long-term care now or later?
6. Long term investing books
7. Cooking brown rice
8. Retirement matching or debt repayment
9. Money principles in retirement
10. Low-cost audiobooks

After a recent mailbag in which I mentioned my most listened-to songs on my computer, several readers wrote in with musical suggestions. Two really caught my ears (and the links go to YouTube, so you can hear them): Dog Days Are Over by Florence + the Machine and Cold Shoulder by Adele.

It’s funny. When I was younger, I vastly preferred songs with male vocalists. Now, if anything, my preference has swung the other way.

In the book All Your Worth, the authors advocate that we should divide our net income as follows: 50% for must-have expenses, 30% for wants, and 20% for savings. I’m wondering: do you have a general ratio for your must-haves, wants, and savings? If yes, what is it?
– Rebekah

I really look at such strict ratios and guidelines as being much like training wheels. They teach you how to keep your money in balance, but eventually you outgrow them in a way.

In what way are they “outgrown”? Well, the reality of everyone’s life is somewhat different. We live in different places with different housing costs. We have different housing needs. We have different medical needs. Some of us have less expensive “wants.”

I like Warren’s ratio as a starting point. It encourages people to take a hard look at their “needs” and their “wants,” which is a core principle of good personal finance management. However, simply saying that 50% of your money goes towards “needs” while 30% goes towards “wants” is a bit of a stretch. Not everyone is going to be spending 50% of their money on “needs” (some may spend less, some may even spend more).

I am a 26 year old college graduate from State University. I have terrible debt because of my families inability to help with college or secure loans, they fall in that middle ground of making too much to receive federal aid and too little to put their children through college. They would have if they could. They tried to help with everything they could but nonetheless were unable to. Also I should note I refused to drop out when I could no longer afford it. I willingly entered into this and to this day I don’t think I would skip college if able to go back and keep my job at the local dealership. Definitely do some things differently, but such is life right.

So here I am barely getting by, and I am one of the lucky ones who was able to secure a good job. My student loan payment is more than my car, rent, insurance, and all utilities combined. I can’t even think about starting a family, owning a home, or supporting the family that raised me. I work all day long every week just to be able to make my payments and only charge a little each month to my credit.I have tried to consolidate and am still trying to but it has proved difficult with all my debt being private Sallie Mae loans. I believe that everyone has a war to wage on something in their life. But I can tell you I never thought mine would be student debt. Of all the things to dictate my life choices and development. Funny.
– Danny

Danny, you express the very reasons why college isn’t always the right choice for everyone. Yes, you have the experience. Yes, you have the degree. But you also have paralysis of choice and, as you said, the “war” you’re fighting with your energy is against student loans, not against anything else. I encourage people who are even considering a trade school or another alternative to college to read Danny’s story and trust their heart.

So, what can you do? The first step, I’d say, is to minimize as much as possible. Do you have a roommate? Can you move back in with your parents for a year or two to eliminate your housing cost, utility costs, and some of your food bill? Do you need a car?

These years are your “salad years.” You need to live lean so that you have a stable foundation to build something on later in your life.

This is the sad, painful truth of student loans for a lot of students. They get their degree, but they’ve sacrificed a lot of their youth for that piece of paper.

I am about to go back to school full-time for a two-year nursing program. The programs I’m applying to are at community college so financial aid will cover tuition/fees but won’t be enough to cover living expenses. Once I leave my current full-time job, I will also need to get health insurance (no school plans available at community colleges). There is a lot of financial upheaval about to happen, and I don’t know how to ask my live-in boyfriend for help. We have talked about marriage and have been together nearly three years (two of them living together). But we aren’t engaged and we keep our finances 100% separate at the moment. I’d ideally like to ask for his help covering a little more of the rent, paying a portion of my car insurance (the car is paid off and we share it’s use), and possibly helping with car maintenance costs should serious repairs be needed in the next two years.

I think he would be okay with the car costs, but the rent is a different story. In general, I hate feeling like I’m asking for “his” money to pay for “my” problems, but the reality is that my loans/debt will be his if we get married. Can you recommend some resources (online preferred) that talk about initiating this type of conversation and ways to make sure no one feels taken advantage of or hurt?
– Joanna

The first thing I would point at is an earlier article of my own, The First Money Talk: The When and How of a Conversation Every Couple Needs to Have. It covers a lot of the material you need to get straight with your partner if you’re envisioning a long-term future together.

However, the real key here is deciding whether or not this really is a long-term thing, or whether it’s just a comfortable thing for the moment that’s not permanent. If you’re not going to be together in a year, everything needs to remain separate. If you’re together for the long term, there are many advantages to merging things. That’s going to take some soul searching.

If you’ve decided that you’re in this together, I really recommend that you both read David Bach’s Smart Couples Finish Rich, which I consider to be his best book. It does a great job of addressing the very concerns you’re talking about and will do a lot to get you on the same page financially.

I just graduated from school with about 50k debt. My loans are still in grace period, to kick in within year. Anyway, I got a temp job for 4 months… and it pays enough to enable me to get some good money which I can use to:
1. pay my credit cards totally or
2. save for student loan payments (about 8 months worth)

I’m thinking to just kill the CC’s and hope that I get a job within the next few months to overlap with this one and pick up the student loans then. what do you think? Or…should I save up the money, paying only minimums on the CC’s and pay my student loans while I look for a job? My APR is nuts, like 24% on 5k…the student loan is like 6.5% on 49k. That’s really all the debt I have besides school loans.
– Nathan

Given the painful interest rates of those cards, I’d pay them off first, without question.

From what I understand, your student loans do not enter repayment for a year, at which point you’re concerned about unemployment. Many student loans allow you to place loans in forebearance for longer periods if you’re unemployed. Check with your student loans to see if this is a possibility.

If you can place your loans in forbearance during a period of unemployment, then the choice becomes simple: whack those credit cards and get rid of that monkey on your back.

My in-laws are in a position where they both need assisted living. The rent is steep, but all-inclusive (food, rent, util, etc.). They can afford the room and board from the proceeds from their pensions, and the contract ensures that the rate will not increase over time.

But, they have a long-term care policy which will pay for all of this care (daily allowed benefit is greater than the daily rent) up to a certain lifetime cap. This long-term care policy is not the best that I’ve seen. It has complicated filing and reimbursement procedures, and does not include an inflation clause so the daily benefit is exactly what it will be whether claimed now or 15 years from now.

So, the question is, use the LTC benefit now or save it in the event that one or both have to move into skilled nursing care, which would more than certainly exceed pension income. On the one hand, this is a benefit which has been purchased, so why not use it now, and save the income in an interest bearing account for future emergencies (as opposed to saving the benefit where the real value actually decreases over time due to inflation). But, again, that puts some burden on the future self, and who knows what lurks ahead.

We are so thankful that they are in a financial position to be able to afford this, and that they thought ahead enough to purchase the policy for themselves. I’m just curious to hear your thoughts on this one.
– Amy

Your entire question is a hedge on the future. Will they need skilled nursing care or won’t they? Unfortunately, you can’t predict the future when it comes to things like this.

My advice is to not put too many burdens on your future self if you can shoulder some of that burden right now. If it’s possible to pay for at least some of their care today without painfully altering your financial future, do it. That way, you spare your future self the strong possibility of having to bear the overwhelming burden of paying for skilled care.

If you can bear some of the burden today, you prevent yourself from potentially breaking your back tomorrow.

My situation: I am a 25 year old PhD student studying Aerospace Engineering. I have always valued money, and have been saving up for as long as I can remember. I make $25k a year, which although doesn’t sound like much, is nice since my education is also paid for through research fellowships. I live in a college town, so rent is relatively cheap ($450 including utilities). I don’t have any debts. I’m pretty frugal … I don’t go out to eat much (I like to cook) and I like doing free stuff (running, working out, playing ultimate frisbee).

Well, I’ve been saving up for quite a while and now have a substantial amount of money that I would like to invest. I’m not saying that I’m going to invest it all at once, but I would like to know what my options are. I know that if I keep it in my bank’s savings or CD, I just won’t get as much out of it as I can if I invest properly.

If there is one thing I’ve learned over the past 10 years, it’s that the more knowledgeable you are, the better decisions you are going to make. I also know that the most efficient way to get the best knowledge is to ask someone who is an expert in that specific area. With this in mind, I’m not asking you to give me all of the information I need via a long email. I would just like a book or two that you recommend that would greatly benefit me in my situation. I understand that there are thousands of books out there on finance and that you have not read them all, but from my understanding you have read quite a bit. :) I have heard a lot of people talk about Dave Ramsey, but from what I have heard, his books are more about getting out of debt. So, I don’t really need a book on managing my spending habits … I need a book on how to invest. I would hate to be 10/20/30 years down the line and think: “I wish I would have known how to invest 10/20/30 years ago!”.
– Miguel

My first piece of advice is to not rely heavily on the advice given in retirement planning books. Quite often, people turn to retirement planning books for long-term investing advice. However, most retirement planning advice ignores taxes, since retirement accounts are tax-sheltered. Follow the advice in those books and a lot of your profit will be eaten in short term capital gains taxes.

Instead, I’d read a good all-around investment book, like The Bogleheads’ Guide to Investing, that explains the whys as much as the hows.

After all, investing makes a lot more sense if you understand why you’re doing certain things rather than just blindly following the advice of your investment planner. (Knowing why also makes you more confident to just do it yourself.)

That brown rice in your summer meal series looks delicious! How do you prepare it to get it so light and fluffy, with the grains separate like that? When I fix brown rice it clumps together and is a gummy mess. I can hardly stand to eat it. But it looks delicious your way. Can you enlighten me?
– Tina

There are several things you could be doing wrong. Here are some pointers for cooking brown rice.

First, wash the rice thoroughly before you cook it. I recommend using a strainer. Rinse the rice thoroughly several times so that all of the starchy material on the outside of the rice is washed away. Rinse, shift the uncooked rice around, rinse again, and repeat several times before you even start.

Second, spread the rice out on a cookie sheet and bake it first. Seriously. Take the rice, spread it out on a cookie sheet, and toast it in the oven for twenty minutes at about 300 F (150 C). Use that time to get other elements of your meal ready.

Once it’s done toasting, cook according to the package directions. If you can, use filtered water. Leave the lid on while cooking – don’t check it.

That’s really all you need to do. The big thing, I think, is removing the surface starch with the initial rinse, then toasting the rice to get rid of the surface moisture before you cook it.

My wife and I are 26 and 25 respectively. I have almost $12,000 saved in four low-cost index funds in my 401k, which we absolutely will not touch until retirement. My employer matches 50% of my contributions up to 6% of my income and I’m contributing that amount regularly. We owe $15,000 on a car loan at 5.49%, scheduled to be paid off in four years (payment is $355/month). We intend to keep this car until it is no longer drivable – it’s a Toyota so that should be awhile. Our only other debt is low-interest student loans; we have no credit card debt or mortgage. We’re also happy with our emergency fund.

Here’s our dilemma. For obvious reasons, we want that car loan gone and have been paying extra towards the principal every month. Given our young age and the amount I currently have saved toward retirement, we are wondering if we should halt my contributions to the 401k temporarily and use that extra principal to pay off the car faster. I’m torn. On the one hand I understand that it’s an automatic 50% return on my money regardless of what the market does, and that the money has lots of time to compound and grow. On the other hand, for being 25 I feel that I’m already well on my way and with that much more cash flow, we could probably invest even more further down the road. Again, we don’t want to withdraw anything from the 401k or get a loan from it – just wondering whether it makes sense to halt contributions temporarily.
– Justin

Don’t sacrifice retirement savings out of a lack of patience.

It’s tempting to channel your money into debt once you begin to see the advantages of debt freedom and a better cash flow. However, in this case, your losses will be much greater if you give up that match.

Ignoring tax issues for the moment, every dollar you save in retirement is getting an extra $0.50 added to it. On top of that, at your age, you have a long time for compound interest to build both that initial dollar and that $0.50. If you put in $1,000 right now (and got $500 in matching) and invested it at a paltry 6% annualized return, you’d have $15,429 at retirement. Yes, every $1,000 you put away today adds up to that much in 40 years.

Unless you’re going to be able to invest that money into the next Google – and your car loan isn’t the next Google – you’re better off leaving that money in retirement.

I recognize that the main emphasis for your site is on money management during the working years. But I’d be very interested in your thoughts on how your principle of Spend Less Than You Earn applies to people in retirement, when pensions and social security count as part of income but also some use needs to be made of retirement savings. It doesn’t seem right that one should only spend the interest on those savings (unless one’s goal is to maximize the amount left to one’s heirs), but how do you decide how much of the savings you should access?
– Michael

The general principle I’ve seen for withdrawing money from one’s retirement account is that a person should note the balance of the account at retirement – say it’s $1,000,000 – and withdraw some percentage of that balance every year for their own use. So, if you used 4% as your rate, you’d take out $40,000 each year. Assuming your investment doesn’t earn anything – but doesn’t lose anything, either – your investment would last 25 years. If your investment earns just 2% a year, the retirement will last for 34 years. At 4%, the retirement fund lasts forever.

So how do you know what percentage to take out? Since we’re not psychic, we don’t know how long we’ll live, so it’s impossible to say how many years we’ll need. My suggestion would be to estimate the longest amount of time you think you’ll possibly live (based on family history and life expectancy calculators), then subtract your current age from that number. Take that difference and divide 100 by it, and you’ll have the percentage you should strongly consider using.

So, if I’m 65 and I think the longest I could possibly live is to age 90, I take 90 – 65, giving me 25, then I divide 100 by 25, giving me 4. I can take out 4% of my balance each year and the money should last me for the rest of my life.

I know you’re a huge book lover, so I thought you might know where one can get free downloadable audio books. I am changing careers soon, and my commute will be lengthening (public transportation is not readily available -boo!), so I want to spend my time doing something productive or enjoyable instead of listening to a mindless radio station.
– Jessica

My immediate answer to this question is LibriVox, which provides audiobooks of works already in the public domain. Some of them are very, very good.

However, I’d also strongly encourage you to take a look at some of the better podcasts out there. There are a lot of great podcasts out there that are well worth listening to. I particularly enjoy RadioLab, as well as many different NPR programs. They’re deeply informative and thought provoking.

The easiest way I’ve found to download podcasts, subscribe to ones you like, and manage the subscriptions is iTunes.

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.

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  1. Hannah says:

    I agree – podcasts are great! I commute to work as well, and having something worthwhile to listen to also makes it a little easier to get going in the morning.

  2. Kevin says:

    Your answer to Michael completely ignores inflation.

    The rule you’re referring to is called the “Safe Withdrawal Rate,” and you’ve only told half the story. Yes, you start out by taking 4% of the total starting nest egg. But then, each year after that, you take the amount you took out last year and INCREASE it by inflation. You’re no longer looking at the principal or the percent you’re taking out – you ONLY ask “How much did I take out last year, and how much was inflation last year?”

    At that rate, if your nest egg is still 60% invested and earning a market return, there’s a good chance it will last 30 years (based on past market performance).

  3. karishma says:

    Did you change something with your RSS feed? There’s no longer a link to go directly to the comments (which is the only reason I click through to the site, usually).

  4. valleycat1 says:

    Jessica – some libraries now have a free audio books download checkout service – the download expires after a designated checkout period.

  5. webgrandma says:

    Here’s a link to libraries that subscribe to a service called Overdrive: http://search.overdrive.com/

    This is the service my library uses, and their digital downloads are great. Lots of audiobooks.

  6. Dusie says:

    Re: Question 10 – Audiobooks
    Go to your public library! Many states subscribe to a site like Overdrive, where you can download audiobooks (new! popular! not just public domain!) for absolutely free using your library card. Podcasts are great, too, especially RadioLab, but your library is a great resource too.

  7. Jenna says:

    Jessica – my boyfriend uses the library for this also. However, he reserves then checks out books on cd, imports to itunes and puts them on his Ipod. It’s free and you can save them in Itunes should you decide you want to listen to them again. You could also do this with music cds at the library. Also, side note – some libraries have a great selection of dvds (many new) if you want to “rent” movies for free. Have fun, we live at our library!

  8. cv says:

    I also recommend checking out your local library for audiobook downloads. I’ve listened to a number of great ones that I got for free. Also, if your local library doesn’t have them, see if you can get a library card for a nearby city. I have three right now, since in some cities in California you only need to be a CA resident to get a card, not to live in that particular city. Then you can use the online resources from wherever you are.

    Personally I prefer getting them on CD from the library if I’m going to be listening in the car. It makes it easier to rewind, find where you left off, etc., if you don’t have built-in iPod controls in your car – otherwise I’m always messing with adapters and two sets of volume controls and things, plus making sure the iPod is charged.

    If audiobooks on CD work for you, check out PaperBackSwap. They have a bunch available, though they tend towards the mass-market fiction rather than, say, literary memoir. Audiobooks are two credits each, and you don’t have to worry about getting through things before they’re due at the library.

    I recently started listening to audiobooks, and I would advise you to try a range of book types if you haven’t listened to many before. I find that I like lighter fiction, mysteries and memoirs to listen to than I would normally read in print – good storylines make the commute fly by. Nonfiction books I love in print can sometimes lose me if I listen to them while driving.

  9. jim says:

    Amy: I don’t really see any compelling reason to not to use the insurance now. They qualify for the benefit so they should take advantage of it. Saving it for later really doesn’t benefit them as far as I can see. It will save them money today for sure. If they’re just looking at using it today versus using it tomorrow than I see no reason to not use it today.

    Justin: No do not halt your 401k contributions. Your employer matches you 50% so that is getting instant 50% free money. Don’t give up that +50% to save -5.5% interest on your car loan.

  10. JOA says:

    @Jessica – also try your public library’s website for audiobooks. I download books all the time to my MP3 player and listen while I work (fortunate that my job allows me to concentrate on two things at once). Some books aren’t available in iPod format, but most are.

  11. Michelle says:

    Amy: I agree with jim – if your in-laws are disciplined and will bank their pension, then use the insurance now. If they need nursing care later, they can use their pension savings. If they don’t need the pension savings, it can go to their heirs. Heirs won’t get long-term care insurance.

    And…Amy’s question is today’s reader mailbag that was apparantly misread. Amy was asking which option her in-laws should use; the answer discussed Amy using her money to support her in-laws. That wasn’t even mentioned in the question.

  12. prufock says:

    Comic book questions:
    I read a few series of comic books on a regular basis. Normally I spend $20-40 per month. However, in the past 2 months I haven’t bought any comics. I’m saving money, but I’m starting to feel that urge. I’ve considered reading them online, but that doesn’t support the creators.

    However, a second reason I sort of decided to stop buying them is because I don’t know what to do with them after I’ve read them. Normally I just slip them into a bag-&-board and put them in a comic box. This just seems to take up space, though, and I rarely re-read them.

    So I guess this question is two-pronged:
    1) Do you have any suggestions of how to save money on comics, other than the obvious “don’t buy them”?
    2) Do you have any suggestions about dealing with the clutter of comic books?

  13. Zann says:

    Another vote for the library for free audiobooks. I live in the Phoenix area, and they have a great Overdrive website where audiobooks can be downloaded (checked-out) for free for holders of a Phoenix-area library card. They support most iPods and MP3 players, and have a great selection (although sometimes there’s a waiting list for the latest releases). Free is good!

  14. I 2nd the library audio book suggestion. My husband has worked his through our library’s collection. All we need is our library card number and we can login and down load the audio files which expire after a certain timeframe.

  15. Jennifer says:

    The easiest way to make brown rice is to use a rice cooker. I love mine, it is digital and I can program it to have my rice ready as soon as I walk into the door at the end of the day.

  16. Andrea says:

    I actually use parboiled brown rice now and it cooks perfect everytime. It only takes 15 minutes since I only have 30 minutes to put supper on the table.

  17. marta says:

    prufock, I don’t know which comics series you read, but you can get decades worth of X-Men comics, or Spiderman, etc, on CD/DVD-ROMs. That’s an example, there are more choices available from publishers other than Marvel.

    That would solve the clutter problem and, while you still would have to spend money on comics, you’d get more bang for your buck. I *think* some creators get royalties from those (I am not sure, though, with work for hire contracts and such) and it’s more legit than getting your fix from torrent sites.

  18. 8sml says:

    @prufock: I read a lot of comic books (usually once they’ve been collected in trade paperback), and they all come from the library. I guess your ability to use that option depends on the size of your library’s collection, but mine is pretty great.

    If you have friends who read comic books, you could also set up an arrangement with them so that several people read each issue and you all take turns buying. That would reduce your cost and your clutter.

  19. Melissa says:

    @ Jessica, have you tried the library for audiobooks? My local library has downloadable books and e-files that will delete themselves after 2 weeks (or whenever it’s due) because of license issues. They also have CDs that can be checked out.

  20. Julie says:

    I just wanted to add that the grace period for student loans is usually 6 months, not one year. I graduated in January and started paying in July.

  21. Kim says:

    PLEASE get your facts right if you are going to dispense financial advice. Kevin is right – you didn’t get your facts right on the “Safe Withdrawal Rate”. While I like your column, you should really take some financial planning courses for as much financial advice that your are giving out. It is the responsible thing to do.

  22. Paul says:

    Regarding Michael’s question: Can’t you purchase a life annuity that would maintain your income until death even if it had the possibility of giving out a sum that would normally deplete your savings? That seems like a product that would be worth getting.

  23. Jaime says:

    I think college can be the right choice if you study something that you want to do, I’m going to college but I’ve never taken out a loan. I live with a roommate, and I get paid $8.50/hour, we’re able to make it because we split bills,don’t have cable,its easier if you get a roommate.

  24. Jaime says:

    I also suggest that Danny moves somewhere affordable if he can, almost every state has an affordable town and an expensive town, try to find clean, safe neighborhood that is affordable.

    I’m able to make it because I live in Omaha, NE and no I can’t have fancy stuff, but I am able to pay rent, food, and save for college. I’m debt-free (no credit card debt, no car loan, no student loans,etc).

    If Danny does have credit card debt then he needs to get rid of that ASAP.

  25. sewingirl says:

    Note to Amy about the long term care insurance : You need to sit down and do a little more math. Statistically speaking, one of your in-laws will need to enter the skilled care facility first. How will that affect their ability to pay for two housing situations at once? Will they only be able to claim half of the insurance pay-out, or do they each have their own policies? If they have to pay cash for the rest, how much will that be? How long can the other spouse stay in assisted living with the (I suspect) much larger draw for the nursing home co-pay? When the cash is gone, where will they go? If they don’t qualify as needing skilled nursing care, they can’t also go to the nursing home, unless they are indigent (no money left at all, no home and nowhere to go ). I work at an assisted living facility, and I can tell you that our residents pay about 1/2 of what your self-pay at the local nursing home is, and thats the county home, not an expensive private nursing home. Laws vary from state to state, you need to speak with a caseworker from your local Dept. of Social Services. Deciding how to pay the bills is only half the battle, you need to have a plan of action covering all the eventualities, for the future.

  26. Pete says:

    The University of South Florida provides free downloadable classic audiobooks through iTunes under the name Lit2Go (they’re also available at http://etc.usf.edu/lit2go/). The difference between that and Librivox is that USF uses a single reader for each book, rather than multiple volunteers – which I find a little disconcerting when I listen to Librivox books.

  27. SwingCheese says:

    For Amy: I don’t know the specifics of your situation, I can’t say, as both my parents and my in-laws are not in that position yet. I do know that most long term care facilities reserve a certain amount of rooms for Title 19 residents. Therefore, if the insurance and money both run out for a parent who is in long-term care, there is a good chance that they will not be kicked out on the streets, they (or you) will just have to do the paperwork to begin receiving title 19 benefits.

  28. Andrew says:

    I second the idea of getting a rice cooker. They’re not expensive, turn out perfect rice every time, and have a myriad of other cooking functions as well. You won’t regret it!

  29. Andrew says:

    Forgot to mention–“Dog Days are Over” is an AMAZING video.

  30. Vicky says:

    I know you’ve had a lot of good advice already in comments. It seems to me that you were asking if they should start taking LTC benefits now, before they actually need them, and then start banking the extra money. Since there is no inflation increase in their benefits, I believe that taking it now is an excellant suggestion. Money in the hand is worth more than potential money in the future. It may very well be that one or both of your loved ones pass away peacefully in their sleep – never needing a skilled nursing facility. Then you’ll have “saved” the future payments simply for the insurance company; they’ll never have to pay out on the policy.

  31. Vicky says:

    Nathan, If you’re still unemployed when your student loans come into repayments, you’ll need to apply for a Unemployment Deferment. If you defer your loans, the government covers the interest amounts during that period. If you opt for the Forbearance, as Trent suggested, you’ll have capitalized interest added to your loan and your payments will be higher when you go back into repayment.

  32. Vicky says:

    You’re not in terrible debt because of your parent’s inability to help you with college. You’re in terrible debt because (your words) you refused to drop out when you could no longer afford it. It would have been much wiser to take a year off and work for money to continue, or to attend part time while you worked. There are also many companies, such as mine, that will reimburse your tuition for college if you are a full time employee. Yes, college would have taken longer, but you’d still have a life. And you’d have a thankful attitude that your parents gave you a good enough start in life that you could be accepted into college and make your own way.

  33. Adam P says:

    Amy, with no inflation benefits, you should take the money now and invest what you would have paid if you didn’t get the benefits.

    If you’re paying for an expense that insurance covers now, I don’t believe its in your best interest to not take it, particularly in this case with no inflation rider.

    I strongly disagree with Trent here. Take the known benefit. One of your inlaws could die before they ever need the benefit. You’re giving up a certain benefit for a potential slightly better benefit in the future. I’m conservative so I say take the benefit now. And invest the difference in short term index bond funds with a low MER.

  34. GayleRN says:

    Amy read that policy very carefully. The fact that you think they are eligible for collecting benefits may not be what is actually covered in the legal contract. The insurance company has a vested interest in not giving you money. There may be standards related to how much and what they can and cannot do for themselves. There may be qualifications related to whether or not they can perform their activities of daily living. If they can walk, talk, bathe, toilet and feed themselves you may have a pretty tough time collecting. You may also require the assistance of your family physician in documenting the level of assistance needed. An experienced social worker can be invaluable.

    Visit an experienced elder care attorney. There may be some legal structures to put in place such as wills and trusts, and durable powers of attorney. Google Five Wishes, which is a widely accepted for health care.

  35. Amy B. says:

    To the commenters: Thanks for all the great advice on the LTC insurance. What I learned is that I sure have a lot more to learn! I’m going to continue to research (already contacted an attorney for an appointment). Thanks!

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