Updated on 09.19.11

Reader Mailbag: School Mornings

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. 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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  1. Julie says:

    I converted to Mac in college when my 3 year old PC laptop crashed with a huge paper on it. To me, it is worth the extra couple of hundred dollars. The Mac I am on right now is 4 years old, and it runs as if I bought it a few months ago. I had an issue with the hard drive last year, so I just dropped it off at the Mac store and they fixed it within 4 days. It didn’t cost me anything since it was still under warranty. To me, it has been worth every penny since I don’t have to call an 800 number located in who knows where when I have an issue. When it came time to buy a laptop for gradschool, I bought a Macbook Pro. I enjoyed taking a computer out of the box that didn’t come preloaded with bloatware. Plus, I sold my white Macbook for several hundred a few years ago. I guess they have good resale value, too.

  2. Riki says:

    I agree with Julie — a Mac is worth every single penny. Using my macbook is like a breath of fresh air and I will never go back to a PC.

    The build quality, longevity, and overall performance of a Mac is excellent and in general a far more frugal choice than a low-end HP computer. Sometimes the frugal choice or the best choice is not necessarily the cheapest choice.

  3. EmilyP says:

    To Ellen – although internet comment boards are a terrible place to get tax advice and you’ll need to double-check everything I tell you, I have sometimes filed taxes for a hobby that sometimes earns me money. The fact that you’re teaching a class and getting paid means that you need to file taxes on that business (schedule C), whether the dance studio sends you a 1099 or W2 or nothing at all. This year, you’re earning only a little and spending quite a bit, so your business will show up as a loss, which reduces your tax burden. There are IRS rules about how many years in a row a business can show a loss (5, I think), designed to prevent people from claiming a hobby as a business. You should read up on the rules for Schedule C and make sure of what applies to you.

  4. Tom says:

    I disagree that the Mac is worth the extra hundreds of dollars, in today’s world of free online cloud storage like Dropbox, Google Docs, Amazon Cloud, etc. My $500 HP laptop is way more powerful than the comparable Mac (and by comparable, I mean the base level Macbook that is twice the cost; reminds me of the Hyundai/Kia commercial that compared their $16K sedan to the non-existant $16K Toyota Camry).
    I love Apple as a company and investor, but not as a consumer. Just my opinion, though, and I believe HP is more reliable than other available bargain brands.

  5. lurker carl says:

    Q3 – Do the math, you are barely affording your current lifestyle. With another child on the way, spending more on housing isn’t possible Find reasons to love your current apartment, $250K in student loans will drag you down for decades.

  6. Katie says:

    Tom, for me it’s not about power, it’s about reliability. Like Julie, my Mac has been going for four years without a single problem. That never happened back when I used PCs – hell, I had a Dell that basically needed major repairs every three months.

  7. Other Jonathan says:

    Lurker Carl, I think you misread Q3’s post (I did at first, with the same thought you had) – their expenses TOTAL $4,500. With a $200k salary, they’re bringing in $10k or more net each month. They’re talking about increasing their rent by $300-$600 a month. Sounds like a decent plan to me, if they can agree that it is important to their quality of life. Especially if they expect that their income will rise over time.

  8. Tracy says:

    @lurker carl

    I think I have to disagree there slightly – she said they live on one salary (the numbers she used) and put the other salary entirely for paying off debt (with a plan of putting somewhere between 50k-75k to debt payment a year)

    In which case, I think upgrading their apartment to one that fits their family a bit more is probably a good idea.

  9. Other Jonathan says:

    Q10 – There are also lots of free music sites. When I hear a song I’d like to learn, I just search for piano sheet music for that song. Sometimes I find it for free, sometimes there’s a fee. But keep in mind that all that classical music that you pay Alfred or whichever publishing company for the privilege of is in the public domain – there are no copyrights on it anymore. So search it out for free online if you can.

    Also, lots of online music stores will show you a “preview” of the first page or two of music so you can gauge the level of difficulty. There’s nothing worse than buying music and finding it’s too dumbed down to be challenging or fun to play.

  10. Steven says:

    #3) Typical lifestyle inflation. Enjoy the treadmill…

  11. mary m says:

    Q3) I don’t know how 4 people and 2 dogs could love in 850 sq feet and not go crazy. It would be worth the money for a bigger place.

  12. Diane says:

    Q8 Evan – When did “payed” become a word? With the popularity of texting, etc. it’s amusing to see this “word” pop up more and more often when the real word is shorter. PAID has four letters and is both the correct spelling and usage.

    In response to your question – do everything they offer to match and then some. Years from now when your student loans are long PAID off and forgotten, you’ll care far more about the balances in your retirement accounts. Taking even six years to pay off your loans is nothing compared to the thirty, forty, or more years you will need your retirement funds to last.

    Combined, your proposed total is only 11% of your gross income. I’d encourage you to bump the number to at least 15% now, before you take on big expenses like a house, spouse and kids. You will not feel the bite as acutely as you imagine, as the amount you divert to retirement savings will reduce your taxable income. While we’re on the subject, even though it’s not tax deductible, start a Roth now, while your earnings are low enough to qualify. You won’t be able to get these years back if your career takes off as you hope.

    As to moving out, look to rent a room as close to work as possible. The money you save on gas alone should cover the rent. Your commute equals 40 hours a month. You could ref more or get another part-time job instead of commuting and really attack your loan balances.

    Good for you for asking the right questions at the right time. Do this correctly and you’ll set yourself up for a lifetime of financial success.

  13. Riki says:

    My comment has gone to moderation. Frustrating.

    For #3 — you just need to calculate backwards. Decide on a repayment term for your student loans, calculate what the monthly payment needs to be, and then work backwards to figure out how much you can afford to spend on rent.

    Living in a miserable situation isn’t good for your kids or your marriage. Compromise is essential here and you can tell your husband I said so!

  14. Johanna says:

    I have a comment in moderation too. Also frustrating.

    Anyway, for Q10: Whatever else you do, I encourage you to try learning to play by ear. My first instrument was the piano too, and I think it almost hindered my development as a musician by encouraging me to focus too much on the dots on the page, when I should have been concentrating on listening to myself.

    Printed music has its place – most classical pieces are just too complicated to play by ear (unless you’re Mozart). But with many popular songs, especially ones that weren’t written with piano accompaniments, there’s no reason you can’t learn to play them yourself, just by listening.

  15. Katie says:

    Q3 – I don’t think you’re in as bad a situation as most commenters are applying. My guess is that the monthly payments for $250,000 in student loans – depending on interest rates – are probably about $3000 on a ten year repayment plan, no? Significantly less than what you’re paying now? You might not pay them off as quickly as you have been if you divert more money to housing but taking ten or fifteen years to pay off your student loans instead of seven or eight is hardly crazy or fiscally irresponsible either.

  16. Courtney20 says:

    @ Stephen #10 – I don’t think you know what “lifestyle inflation” means. It certainly doesn’t mean needing/wanting more space when adding a new member of the family when you’re currently spending less than a third of your gross monthly salary.

  17. First Step says:

    Although you enjoy the chaos in the morning, your children may prefer a calmer transition for everyone. Having a good start to the day will become even more important as they get older.

    We confirm the next day’s weather and everyone’s schedule before the kids go to bed each night. Some days my older daughter has to dress in business attire for class presentations, bring performance clothes for chorus or wear her volleyball jersey. Reviewing the calendar the night before allows everyone to choose and lay out the appropriate clothes, and there are no surprises in the morning.

    My husband and kids have to be out the door at 7am, and the kids pack up all of their school/sports/music gear the night before. It helps so much to have everything laid out, especially when someone oversleeps. We’ve been doing this routine since preschool. My kids are 15 and 13, and mornings usually start off on a good note.

  18. Des says:

    Q3 – I don’t think the house is making you unhappy – you are making yourself unhappy. There are plenty of people that would consider 850sf a dream (anyone here live in Manhattan?). If you compare yourself to your spendthrift peers (or to TV families) you will create discontentment in yourself. Discontentment is an expensive luxury.

    I do think this is lifestyle inflation – she was fine living there while she made less money, but now that she makes more she wants a nicer place. Classic lifestyle inflation.

    Or, maybe I’m biased because our family of 4 (plus 2 dogs and 3 cats) lives in a house smaller than her apartment. Yes, it is small. No, it is not ideal. Yes, we could afford more. It is a temporary sacrifice we make to get ourselves on a more secure financial footing.

    With $250k in student loans that is more than their combined annual salaries. At a minimum, they should pay this down (preferably off) before inflating their lifestyle.

  19. jim says:

    Q1 : Talk to a CPA. The training cost should probably be deductible since its a job related expense that is not reimbursed by your employer. Your dance training won’t qualify for the Hope or lifetime learning credits unless its through an educational program at a qualified university and it doesn’t sound like you’re going to a college or similar.

    Q3 : Yes you should get a bigger apartment. You make $200k a year. Its ok to spend a few hundred more a month on bigger living space. From the sounds of it you’re probably putting $50k or so into the student loans and over half your after tax income is going into savings or debt reduction. Thats more than adequate. You’ll have those loans paid off in 5-6 years. Spending another $500 or so per month on housing will only delay that another year maybe.

    Q4 Chris: I’m not sure that building any new housing is going to be particularly cheap nowadays compared to buying existing housing. I’d look at buying a foreclosure or something since there are lots of bargains out there. You could then later remodel or upgrade that building.

    Q6 Jeff : I haven’t played in a while but… WH40K is expensive. Buying used stuff on ebay is a good idea. If you aren’t already doing it then I’d recommend you split up factions with your friends/fellow players. One guy buys Eldar, one guy buys Dwarf, one guy buys marines, etc. Otherwise just set a budget for the game and stick to it. The only other way to go is to stop upgrading everytime they come out with new stuff and stick to a certain level of rules and armies. In otherwords… stop buying new stuff just cause they come out with new stuff. You don’t have to buy the latest stuff just to have it. Of course I know its fun and compelling to get the latest greatest neat figures, but that costs money. You might also agree with your friends to stick to a certain smaller army size. If you only play 500 or 1000 point armies then you don’t need to be buying every figure in the world.

    Q7 Dave : You said : “The problem is that when we do this a lot, we begin to feel like we’re drifting apart …” Sorry to be flip about it but have you thought about not doing it so much? I mean seriously, if spending too much time on your hobbies is causing you to drift a part then stop spending so much time on your hobbies. Limit it. Alot no more than 1 hour a night for hobbies and make sure to spend 1 hour a night with ‘together time’ or whatever. Again I don’t want to trivialize the problem but sometimes the best answer is simply “don’t do that”.

  20. jim says:

    Q8 Evan : Absolutely take advantage of that free money from your employer. Paying down student loans will save you a few % a year. The total interest you would pay on the loans for the entire repayment period will not equal the 100% return your employer is offering you. For example for the $3000 loan at 5% you’d pay just under $500 in interest over 10 years. If you put $3000 into your employers CAP and get 100% match then they’re giving you $3000. Clearly losing that $3000 is not worth it just to save up to $500 in interest costs.

  21. Laurie says:

    Question #3 – how about finding a new 3 Bedroom place that is slightly bigger but not so much more expensive? Sometimes it isn’t the amount of space, but the particular space.

    I once lived in a 2 br 1100 sq foot apartment that was the worst place I ever lived – and I lived in other places that were MUCH smaller (including Manhattan “closets”). Sometime it is the flow, or the lighting or just the ambiance.

    I would also really sit down and figure out what about the current place sits “wrongly” with you. If it is that there is too much clutter, it is time to go through room by room eliminate/donate and buy organizations supplies – you’d be amazed what some $100 closet systems will do for your spaces (and they can be taken down and with you when you do move!)

    Do you dislike the neighborhood? Your neighbors? Do you feel safe? Is the space not clean? Why are you so unhappy there? It doesn’t make any sense to move if you can’t answer these questions, because you may end up just as unhappy in the new place and spending more money to boot. (i.e. if you’re taking your clutter or poor housecleaning with you!)

    Consider a “budget” rental that meets your needs better – or better yet, check out rental houses! As a landlord I can tell you that rents are at very competetive rates for houses (at least in our area) because of a glut of apts in the market. Landlords LOVE two high income professionals who aren’t going to have trouble making the rent as tenants.

  22. Larabara says:

    To Leona’s husband @ Q3: Happy wife = happy life.

  23. jim says:

    I have to strongly disagree with the other commenters who think that getting an apartment larger than 850 sq. ft. while making $200k a year is some sort of lifestyle inflation, abhorrent luxury of a discontent spendthrift. Their $200k income is in the top few percent of the richest nation in the world and their current living quarters are less than half the size of an average American home. They’re already putting over 50% of their take home pay into saving and debt reduction.

    Being frugal at the expensive of being “absolutely miserable” is what I’d call being a cheapskate. Its a bad idea. And yes we do have to believe her when she says she is miserable rather than just scoffing at it and saying she shouldn’t be miserable.

  24. jim says:

    #21 Laurie’s advice : I agree with what Laurie says, its important to look at exactly why you’re unhappy with the current place before upgrading.

  25. Amy P says:

    “Sometimes it isn’t the amount of space, but the particular space.”

    Yes, indeed.

    I’d also recommend thinking long and hard about the kids’ future schools and where you want to live during the long years they are going to be spending in K-12.

  26. Steven says:

    It’s not that I disagree with the larger apartment, but the attitude that comes along with it. Before they were making money, it was just fine. Now they’re earning more, and suddenly it’s not good enough. Guess what? That attitude is going to be pervasive throughout their life. Upgrade the apartment, now they need new furniture. Upgrade the furniture, boy, a new flatscreen TV should would be nice, wouldn’t it? Etc, etc, etc.

    And I’d hesitate to make my decisions in life based on “the Average American.” But that’s just me, and my opinion. It’s not the upgrading of the apartment that’s the issue here, but the attitude about it. Figure out, like others have said, WHY you don’t like it, fix that, and go from there.

  27. Katie says:

    Steven, what makes you think she didn’t hate it back when they were students and not earning any money? She might have been miserable then too and just not had any choice. Not to mention, adding another child does significantly change the living space calculus.

  28. lurker carl says:

    Yeah, I misunderstood the verbage and punctuation for their monthly expenses.

    Information is missing; like monthly payment on student loans, exact figures for each income, total net income, husband’s full reasoning for not moving. The income guess-timate leads me to believe the jobs are new and hubby is their CFO. I’m also thinking hubby wants to significantly pay down debt and build up cash savings. $250K is an enormous debt load without tangeble assets to sell or the ability to discharge in bankruptcy.

    FWIW, my parents raised six of us in a 500 sq ft house without electricity or running water. Their apartment is luxurious by comparison.

  29. Baley says:

    I’d sure like to have the problem that Leona has! Mine is more along the lines of, Okay, we have the cheapest possible rent for our area, can’t afford a bigger/nicer one, can barely pay bills, and won’t be able to pay student loans when they come off of deferment. :( However, we live in a much cheaper area as I have 1100 square feet for a much much smaller rent payment! We wouldn’t be very comfortable with our one baby, let alone a second, in a less than 900 sq foot house. And we are working toward better paying jobs and paying off debt, but it’s not pretty and we don’t even dream of ever making $200,000 a year! We’d feel rich making $60,000!!

  30. Dan says:

    Q3, you evil rich people better be careful if your incomes go up you will be called a millionaire and taxed as such. You wouldn’t want to be accused of not paying your “fair share” (which of course nobody can say what that amount is). Congratulations on your success thus far, keeping working hard and paying down your loans and hopefully some day you will be able to sit back and enjoy the fruits of your labor (as long as the gov’t doesn’t take it all first).

  31. JS says:

    Q3: We live in a 825 square foot, 2 bedroom/1 bath apartment, and I could see it getting cramped with 2 adults, 2 kids and 2 dogs, especially if you need office space in your home. However, you’re talking about increasing your rent by almost 50%, which makes me wonder if you plan on not only getting a bigger place, but a more luxurious one. In that case, I would go for the space upgrade but forgo the luxury until you make a bigger dent in the loans.

    Q6: My husband and I play both 40K and Fantasy, and it IS expensive. I agree with #19 Jim, especially on the upgrading. Also, we’ve found it’s easier to find savings on everything besides the models. The Games Workshop brand supplies are good but expensive. Watch for sales and good prices on painting and modeling supplies- Amazon has good prices on super glue and we find Michaels has a good selection and coupons every week. Look in unconventional places- we buy aquarium decorations to use as terrain and bought foam bricks from an upholstery store to store our models in. Try to build things on your own- my husband has built several pieces of terrain and some markers for very little money.

  32. jim says:

    Like JS said, I also always bought paint and other accessories elsewhere. e.g. Paint is paint, you don’t need the Games Workshop brand name with its 200% profit markup on your paint. I also used to make my own terrain and tables and such from scratch. That was fun (for me at least) and cheap.

  33. jim says:

    Steven, I don’t see any attitude problem from Leona. She says she hates her tiny apartment and wants a bigger one. That is not a sign of being on a slippery slope to financial ruin. She used no language that sounds like she is really a spendthrift or otherwise wanting to inflate their lifestyle. They can clearly afford a bigger place if they want one and people buying things they can clearly afford is not reason for harsh criticsm.

  34. jim says:

    Lurker Carl said : “The income guess-timate leads me to believe the jobs are new and hubby is their CFO.”

    Huh? I’m guessing the jobs are new since she said they finally graduated and that the current apartment was ‘pre-job’ selection. I don’t know what you mean about the hubby being the CFO though?? Are you saying that since she used the word ‘about’ when saying they make ‘about $200k’ that that must mean he’s in charge of the money? I’m probably misunderstanding you..

  35. S01 says:

    Q6 Bit of a war gamer myself although as Trent said I looked at what I actually enjoyed about war gaming and oddly it had nothing to do with actually playing the game I really enjoy building terrain and painting the miniatures but as it turned out not so much on the gaming side. Saying that I do occasionally still play but I’ve avoided W40k fantasy and sci-fi like the plague. There are numerous generic rules systems that you can buy on RPG now for 10-30 dollars that provide in some cases a far superior rule set plus you can transfer over your entire inventory of miniatures and use them even making the useless miniatures usable by specing them up differently. This also allows you to use other lines of miniatures some of which are very nice sculpts (Reaper, Rackham, Privateer press, Shadowforge + a bucketload of independent guys)

    If you just want to try something out for free have a look at wargames unlimited they have sci-fi rule set, fantasy rules set and a Space rule set I’ve tried the fantasy and sci-fi and they play well. They even have pre-speced armies for some w40k army lists so the time investment is basically learn the rules and give the game a shot.

    Have Fun :)

  36. Steven says:

    Maybe my attitude is a direct result of my having been reading The Overspent American & The Overworked American recently. Like I said, this is my interpretation, and being that they are both fresh out of school and into jobs where they’re suddenly making a lot of money, I do think they’re on their way towards lifestyle inflation. Today it’s a larger apartment, tomorrow, who knows? This is all speculation as I obviously don’t know them personally, but having read the two books I mentioned above, I might be hyper-sensitive to these things. *shrugs*

  37. Becky says:

    #8. When we graduated 3 years ago I encouraged my boyfriend to start paying off his loans as quickly as possible. Now that we are looking at expenses like weddings and houses, we regret not having the extra money we put into debt payments. Even though we plan on buying a house we can afford on one income, we are seeing that we need to wait at least another year or two before we can afford a house with 20% down and save to have a modest wedding. While young and needing “start-up” costs, it may be wise to have some balance to paying down loans, especially if they are at 5% or less. Being debt free is a good feeling, but so is having money in the bank. (Especially when you have potential big lump sum payments needed in the future.)

  38. Telephus44 says:

    I also think Q3 should go for the bigger apartment. Depending on where they live, $300-$500 for a lot more space isn’t unreasonable. Leona says she’s only looking for a lot more spacious, not granite counter tops. In my own personal experience – we lived in a small apartment when my son was born. By the time he was walking, and DH was working at home and needed a home office it got really cramped. Our family life and marriage suffered to the point of going to counseling (and considering divorce before that). I have to tell you that after we bought a house, things got a LOT better. We only got another 500 square feet but having that extra bedroom for another office, and DS having his own room instead of the crib in the living room was a huge help in restoring our sanity and family harmony. They clearly have enough money to afford it – and let’s face it, isn’t quality of life worth more than money?

  39. Brittany says:

    Agreed with all the commenters who think Q# should upgrade the apartment, although I agree that you should figure out exactly what it is about it that makes you unhappy.

    Also, although I definitely agree that “lifestyle inflation” can be a financially dangerous slippery slope, I don’t understand why it’s always a bad thing in moderation. What is the point of earning more money if you don’t actually *use* the money (or plan to use the money) to improve your life quality (or the life quality of others)?

    While paying my way through college, I lived in a crappy, falling apart apartment over the summers–the window seals were literally rotting away, the oven didn’t work, the circuit in the kitchen blew if you turned on more than one appliance, the fire marshal gave my landlord multiple fire code violations every year… you get the picture. Why did I live there? Because it was dirt cheap. I paid $125/month for rent. Living dirt cheap kept me within my means and helped me squirrel away money for the future.

    Could I live in an equally crappy place now for significantly less than what I’m paying? Sure. Do I? No. When I got my first (minimally paying) big-girl job, I opted for an apartment in a safer neighborhood. It’s barebones and has it’s share of problems, but it’s in more or less okay condition. Now that I’ve gotten a new job that doubled my income, will I be staying here after my lease is up? No. I’m looking for a place that’s a little nicer, with better insulation and fewer unfixed maintenance issues.

    Seriously, I’m absurdly cheap as a person, but I really don’t get the point of toughing it out in a crappy situation when you’re poor so you can get to the place where you… stay in the crappy situation once you’re earning more. Can you explain that rationale?

  40. Brittany says:

    Also, they’re living on half their salary! I also live on half my salary, and it’s my general rule that it’s /okay/ to spend the half not going into savings, even if I’m not being as frugal as possible. By this logic, as my salary increases, so does my disposable income (just not as much). So… yeah, it’s lifestyle inflation, but I fail to see how it’s financially unsound.

  41. Courtney20 says:

    Brittany – More importantly, they’re living on half their salary AFTER saving for retirement.

    My other comment got randomly modded…

  42. SwingCheese says:

    Brittany – I agree with you. My husband and I have “upgraded” with each move ever since we moved in together when I started graduate school. Now we’re both graduated, we have started a family, we have an extra adult (my father-in-law) living with us, and our apartments have gradually gotten larger to accommodate our needs. We’re currently renting a house that’s about 900 sf, and we’re saving up to purchase our first home in a couple of years. We’re planning on this being our “forever” home, and it will most likely be larger than this rental. I understand the concept of lifestyle inflation, but to expect someone to remain at a graduate student level of living even after one has begun to establish a career and family is a little much. Could Q3’s move to a larger apartment lead to all sorts of lifestyle inflation, to the point where her family is struggling to make ends meet and doesn’t really have financial freedom? Sure it could. But that outcome is not a forgone conclusion from her desire to want a larger than 850 sf apt. in which to live with her family of four. Her wants are neither unreasonable nor unattainable, given their income.

  43. Kelly says:

    #3 I agree that she should upgrade the apartment. Especially with another child on the way it isn’t worth being miserable. Maybe there is something else that can be cut out in addition to debt repayment that would make her husband feel better about the higher expense. Also, I think it is awesome they’re saving 15% but could they do 14% or something until they adjusted to the more expensive apartment?

  44. Charles Cohn says:

    When I was a kid in the 1930s, we lived in Illinois and took vacations in Wisconsin. In many of the smaller towns in Wisconsin, I frequently saw houses that were nothing but basements covered over with tarpaper, with a stairwell leading down. Apparently the family lived in the basement and hoped to save up enough money to finish the house at some future time.

    This seemed like an excellent frugal approach, but I don’t see it being done any more. Is it against the law now?

  45. Courtney20 says:

    Depends on the basement I guess. There are fire codes regarding having a safe egress other than back through the house, and we know a lot more about mold allergies than we did in the 1930s.

  46. Brittany says:

    Kelly–they’re saving way more than 15%– 15% is just for retirement. Some quick estimates of their tax liability shows their monthly, post-tax income to be somewhere around $14,250. They’re currently living on $4500–which she says includes miscellaneous savings. (Well, they’re aggressively paying down student loans, so I guess they aren’t ‘saving’ all of it, but they aren’t /spending/ it, either.)

    Assuming 5% interest and that they’re putting all the non-tax, non-retirement, non-living money on student loans which she mentions (about $7600 by my rough calculations), it will take them 36 months to pay off the student loans. If they pay an extra $500 towards the apartment, reducing their student loan payment to $7100 a month, it will take 39 months to pay off the debt. There’s only a 3 month difference! (With slightly difference numbers, this number will vary a bit–but the point is the difference in debt payments is measured in months, not years.)

    Get the nicer apartment, Leona. I can’t imagine a situation where I’d willingly stay miserable for years over a 3 month difference (and, as previously mentioned, I’m a massive cheapskate).

    This is also assuming their incomes don’t rise over the next two years. While you should obviously never gamble on an income raise in the future, if it happens, it can wipe out that 3 month difference.


    Q3 – This can only be decided between Leona and her husband.
    The old rent ($1300) includes utilities and the new rent ($1500 – 1800) does not include utilities. The difference in utilities may be as large or larger than the difference in rent. Also, daycare expenses can be expected to double as their number of customers double.
    Rather than a $300 increase in expenses, it appears that expenses will most likely increase in the $1200 – $1500 dollar range.

  48. Courtney20 says:

    #48 – their daycare expenses are going to double regardless of whether or not they get the new apartment. I don’t think it’s fair to lump that into the equation (if they couldn’t afford the bigger place after the increase in daycare that would be another thing – but again, they are currently living on less than half of their income).

  49. Laura L says:

    I would encourage you to spend a few months with a piano teacher. There are things a teacher can give you that you wouldn’t always pick up alone. Since you have already played piano, you will be amazed at how quickly it will come back. And having to go for weekly lessons from a teacher will give you a structure that will really help–especially when it comes to practicing! Happy playing!

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