Reader Mailbag: School Mornings

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. Self employment and taxes
2. Macs, PCs, and frugality
3. Can’t stand frugal apartment
4. Buying a “forever” home
5. Prenatal college savings
6. A major hobby “leak”
7. Balancing hobby time
8. Investing after college
9. Earning money through social media
10. Starting over with the piano

On most days, I’m doing the job of getting the kids out of bed and getting them ready for school and preschool solo. Wake all three of them up. Get them dressed (with different levels of assistance depending on their ages). Feed them a balanced breakfast. Help them find their shoes. Help them find their backpacks. Check the weather and dress them appropriately in terms of clothes and shoes and jackets.

It’s a good hour of chaos.

I wouldn’t trade it for anything.

Q1: Self employment and taxes
I am in the process of transitioning from a full time office position to a ballroom dance teacher. Currently I pay about 50% of my day job income towards dance training locally and out of town. Since I passed my first dance teacher certification last year I have worked an average of 5 hours a week as a dance teacher and expect that to grow as I obtain increasing levels of certification and ultimately plan to quit my day job in about 2 years. This certification is required by my studio, though not all of my dance training is specifically certification related. Can I write off any of my dance training in Federal or MN state this year? What other tax variables should I consider as I plan for the future?

– Ellen

Typically, you can’t deduct expenses for education for a future job. Usually, you’re limited to expenses for education for a current job. I think that, since you’re working as a dance instructor now, you may be able to deduct some expenses for the class.

You may be eligible for some combination of the Hope tax credit and the Lifetime Learning tax credit. This IRS document will help walk you through that.

My honest suggestion? Do your taxes using a good tax software such as TurboTax or take your information to a tax preparer.

Q2: Macs, PCs, and frugality
I’ve enjoyed reading your mailbag columns from the start, but one thing has bugged me. You’ve answered several questions from people using very expensive computers without suggesting that they simply get a low-end PC. A basic PC package from a reputable manufacturer like HP will save them thousands of dollars. Why don’t you bring this up?

– Jerry

My experience has been that people often choose their computing platform (Mac, Windows, Linux) due to a number of factors, some of which include compatibility with what their office uses and what their associates use. If you’re networking computers in an office that’s primarily Macs, it can be a headache to bring in a PC.

Because this is a complicated decision, I usually encourage people to stick with the platform that they’re with for their primary computers. If everyone around you uses PCs, use a PC. If everyone around you uses a Mac, use a Mac.

In both cases, there are certainly a lot of ways to shave the expenses involved, but often the fundamental choice of platform is simply written in stone.

Q3: Can’t stand frugal apartment
My huband and I finally finished our very expensive graduate schools. Our only debt is 250,000 between two professional schools but we have good jobs that should combined pay about 200,000 yearly. We contribute about 15 percent to our 401Ks, use one salary to pay off our debt and live on the other one. We spend our 4500 a month on rent and utilities 1300, daycare 800, food 700, car w/insurance 300. The remaining 1500 goes to religious dues, gym, gas, savings, misc, and anything left at the end of the month goes back into our loans. We have 10,000 in savings and 1500 in our emergency fund.

Here is our issue: We picked our current second floor apartment (850 sq feet, 2 bed, 1 bath) to save some money. It was a frugal pre-job place which I hate and am absolutely miserable. The kitchen is tiny (and our exit/entrance), no closets, and no space for our two elderly dogs. I am pregnant with our second child so we’ll have to move again. This time I want to move into something significantly more spacious which would our rent to 1500 – 1800 without utilities. My husband and I regularly argue about our expectations for the future apartment. He wants to keep saving the extra money and is concerned about our increasing daycare expenses. I don’t think saving money like this is worth how unhappy our current living situation is making me. At what point is being frugal not worth it?
– Leona

For me, the point at which frugality isn’t worth it is when it makes your current situation less joyful than not having whatever it is you are saving for.

So, let’s say I’m trying to decide whether or not I should buy a certain book. Which would make me sadder: not having this book or not having the house in the country that Sarah and I have dreamed about? Almost always, it’s not having the house, so I can put that book back without qualms (and usually just head to the library).

I can’t say whether or not you’re in that kind of situation with your apartment. It sounds like you might be and your spouse is not. If that’s the case, you’re going to have to talk it through, perhaps with the aid of counseling.

Q4: Buying a “forever” home
A little background on us: The partner and I are 31 and 30yo, living in the SF Bay Area, and live by frugal/simple ideologies. I have a gross income of about 65K, partner is in school and studying in the art field (tuition-free, receiving some temporary govt school/living benefits). We have basically no retirement, only about 1 or 2 yrs or real credit (was anti-plastic), but absolutely zero debt. Savings are about 30k. My strategy is to put our savings into using cash to outright buy cheap land and build a cheap home in a more affordable and warmer part of the country where we want to put down new roots. This would most likely be our “forever” home. We want to go mortgage-less and to add onto the simple home as we save more money. Also, we’ll be growing our own food in earnest with the possibility of starting a small business eventually. Upon arrival, as long as I have a job in the new place, I don’t foresee any problem with continuing to generate income – that way we can start saving something for retirement and emergencies.

Question is: What do you think of this plan? Do you think this is feasible? Why or why not?
– Chris

It seems like a reasonable plan to me, especially since a friend of mine is essentially doing exactly this.

The one suggestion I might make is to consider living in a trailer or something like that on the land for the first little while. Again, I know people who have essentially done this, mostly because they were really hands-on in the building of their home. They spent the time to serve as their own general contractor and they were on site every day.

I’d just make sure that you have a big emergency fund before you dive into all of this, but it sounds like you have that covered.

Q5: Prenatal college savings
I am a married 22-year-old and graduated from college this past May. I’ve been at my job since June and make $60,000 per year. My wife makes $20,000 per year. We are expecting our first child in March. My question is basic – what are my options for setting up some kind of account to save for college for him/her? We could pretty easily put $50-$75 into something per month. We have about $4,000 in savings, so it would probably have to be a periodic deposit rather than a large, one-time deposit when he or she is born. The purpose of the account would definitely be education-related for down the road and not simply a “Happy 18th birthday, here’s $10,000” like I have seen some kids get.

– Jeff

I did this exact same thing for each of my children.

It’s simple. Just sign up for a 529 college savings plan with you as the beneficiary and start contributing. When the child is born, change the beneficiary information to the child. As long as you haven’t contributed thousands of dollars between conception and birth, there should be no tax implications to this.

You’ll probably want to look at the 529 plans offered by each state. I use College Savings Iowa, which has investments backed by Vanguard and is easy to use.

Q6: A major hobby “leak”
I have noticed that you are someone who does a lot of hobbies like painting, board games and attends conferences like Gencon. Are you familiar with the hobby Warhammer 40,000? I have noticed that this is one of my largest spending leaks and I was wondering if you had some advice on how to enjoy this hobby more cheaply. I have started ordering more things on eBay and Amazon instead of paying retail, but so far that is all.

– Jeff

My advice is to figure out what it is about this hobby that you enjoy. Do you enjoy painting the figures? Do you enjoy planning the armies? Do you enjoy the actual gameplay?

When you figure out what it is that you actually love, focus in on that and toss the rest aside.

It took me a long time to figure this out about my hobbies and when I did, they all became more enjoyable and less expensive.

Q7: Balancing hobby and spouse time
My wife and I have very different hobbies, so we often spend evenings engaged in our own individual hobbies without much time together. The problem is that when we do this a lot, we begin to feel like we’re drifting apart and not spending nearly enough time together. How do we get past this and reconnect?

– Dave

Do what Sarah and I do: set some nights as “hobby” nights and set other nights as “together” nights.

I’ll spend some nights during a given week playing games with my friends, reading a book, or painting. Sarah will spend some nights crocheting or reading. Some nights each week, though, we spend time together watching a movie or playing a game together.

For us, it’s good to have a balance of both.

Q8: Investing after college
This past May, I graduated from college with a degree in Mechanical Engineering. At the time, I didn’t have a job in hand, but I recently landed my dream job. I won’t be able to start until December-February because I have to wait for my security clearance before I can start, so in the meantime I am reffing high school, middle school, and youth football and basketball games (making $350-400/week doing something I love).

I have been following the advice on your blog by setting up a budget and planning a debt snowball once I start my full time job. I will be contributing 8% of my salary to my 401(k) right away (100% employer match for the first 4%, 50% match on the next 4%), and according to my budget, I can have all three of my loans payed off in full four years from my start date ($10,000 @ 4.16%, $20,000 @ 5%, $3,000 @ 5%. First payments aren’t due on the latter two until December and March, respectively, but I’ve knocked $5,000 combined off the principal already) by using a debt snowball. That four years increases to six if I were to move out of my moms house and get an apartment closer to work (currently an hour drive each way).

My question is this: The company I will be working for also offers a Capital Accumulation Plan (CAP) with a 100% employer match on the first 3% of my salary I contribute. Should I start contributing to this retirement plan right away as well, thus increasing the amount of time I am paying off my loans, or would the better investment be to pay my loans off first?
– Evan

I would absolutely take advantage of this right off the bat. Whenever an employer offers that much of a match, you’re essentially looking at extra salary that you should be taking advantage of.

Yes, it might increase your loan payoff time by several months, but you’re essentially getting 6% of your salary at the expense of 3%. You’re doubling your money there, and that’s something you won’t do with the debt payments.

Another option to consider, if you really don’t feel right about that, is to contribute 3% less to your 401(k) at first and move that 3% to the CAP. Then, when your debts are paid off, bump up your 401(k) to the full 8%. This way, you’re maximizing the matching funds from your employer.

Q9: Earn money through social media
I read your comment on earning money through social media. I am interested in making some money through this source. Can you please suggest some genuine websites which can offer me decent money for doing this job.

– Kevin

Usually, you’re not going to get offered a job in social media unless you can demonstrate an ability to accumulate Facebook fans and/or Twitter followers. You’ve got to show you can do this before anyone will pay you to do it.

Thus, your first step is to get involved. Create a Twitter account or a Facebook fan page for some specific interest that you have and try to stir up followers. To do that, you’ll have to learn how social media really works.

It will take time and it won’t be easy, but it’s something you can do in your spare time. If you really figure it out, though, you’ll become far more marketable than before.

Q10: Starting over with the piano
The short of it is that you have inspired me to “pick up” piano playing again. I had lessons as a kid and then any playing as an adult has been pretty spotty. Reading about your journey has inspired me to sit down again.

However, I am having a couple of problems.
1. I am not sure where to start. Short of lessons, any suggestions of books about music to buy, books to guide me?
2. Buying music anymore is problematic. When I was a teenager, there was a music store in town. Granted, that was 45 years ago. (Yah, yah, that dates me royally!) I just went to the music store in town and the music selection is really sketchy and scant. So there is always the shopping mall known as the Internet. But how to buy when I can’t look at something. Somethings are just too far above me. But I don’t want waaaaay simplified versions either. And what about books that just have “beginning” classical music and popular music? How and from where do you buy your music?

– Patricia

If you’re looking to learn from a book, I would start with something like Alfred’s Teach Yourself to Play Piano. Work through those, then move on to other Alfred books.

I particularly find value in finger exercises, as the real challenge for me is just the finger memory – intuitively knowing where my finger should go when I see a note on the page. I can figure it out, but just knowing it cold is still elusive for me.

As for finding sheet music, I recommend using Musicnotes, which is basically the music store you describe in your email, except online. The prices are pretty good, and you just print the music on your printer.

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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