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. Free shipping and handling question
2. Hopeless debt
3. Handling real estate windfall
4. Friends convince me to spend
5. Package internet deals
6. Reporting tax cheat
7. Federal budget and housing
8. Jug of water
9. Why not credit unions?
10. Self-improvement versus self-loathing
For me, spring allergies usually affect my eyes the most. I usually get a bit of redeye along with a lot of watery eyes and blinking.
The best solution I’ve found for spring allergies that affect the eyes are long, hot showers. I turn the water up to the upper end of my tolerance and spend quite a long time in there. It helps better than almost anything else I’ve tried.
If spring allergies affect your eyes, give this a shot.
Q1: Free shipping and handling question
when i buy online, i like to take advantage of free S&H. to do that, often i must purchase one or two items to cross the $ threshold for the free S&H. i am willing to do that because i will often purchase one or two items that way that i will stash in my gift closet to have on hand. it’s an easy way to have gift items on hand and to save overall. i’d rather spend the money on a real thing than postage. is this worth it?
If you’re sure that the gift will actually be enjoyed by the recipient, this makes complete sense to me. In fact, I often do this myself.
I usually find that having some good ideas floating around for gifts for people close to you really helps with this. I keep notes going that list items that I have observed my children or my wife or my parents having an interest in so that, if I’m in this situation, I can just order them.
The problem comes in when you try to “push” this too much and order things that don’t make for good gift ideas. If that’s the case, I’d rather just pay the shipping.
Q2: Hopeless debt
My husband and I currently owe about ten times our annual salaries in debt. Much of that is in student loans, which basically seem impossible to get rid of. What can we do to have some semblance of a life that isn’t just indentured servitude?
Honestly, I feel that large amounts of student loans amount to the same thing as the old practice of indentured servitude.
How do you get out of it? Make it your overarching personal goal to get rid of that debt. That is your focus. Get a second job. Sell stuff you don’t use. Find anything and everything to earn a bit more money and throw every dime of that extra money at the debt. Whittle it down.
If you haven’t consolidated your student loan debt, that’s usually a very good way to cut down the monthly payments, which means you can throw more each month at the balance.
I am selling a townhouse where I was living in heart of my city. (It’s in escrow) I realized I wasn’t really an inner city resident after a year. I will net around $70K if the current deal goes through. I am in my mid-fifties, divorced, employed as an adjunct at a community college and have a fairly low income. I also own a house that used to be my residence but has been a rental property for the past 5 years. I owe approximately $84K on that house and it’s worth around $150K. I have a positive cash flow with it.
I moved in with a friend and, at this point, only pay half of the living expenses (under $300/month). I may live here a long or short time, it remains to be seen. I don’t have any money saved for retirement and had thought my rental property (which will be paid off in 15 years at my current re-payment rate — a bi-weekly plan where I pay an extra $100/month in addition to my regular payment) would generate retirement income or be a “free” place to live.
So far, with this real estate profit, I plan to pay off debt — around $2,100 left on a 10+ year old car that I bought used, plus $3,000 credit card debt…and put $6,000 in the bank as my emergency fund. That leaves me with approximately $59K.
Should I pay my rental/retirement house down? Or should I buy another small house in a more suitable area to live eventually if this living arrangement doesn’t work out? Or should I put it in the bank as money to fund my retirement? (I would have to put it into some sort of ironclad account or I’m afraid I’d get tempted to dip into it).
I’d pay down the rental house. If you find yourself in a situation where you want to live elsewhere, then examine your options at that point. You may find that a small apartment is the right answer for you, for example.
If you do end up needing equity from that home for some reason, you could sell it or take out a home equity loan. That could mean forfeiting the asset you planned to base your retirement on, but it’s often hard to predict what our future path holds for us.
I don’t think you’ll ever regret owing less on that house.
Q4: Friends convince me to spend
At the start of the year, I decided to get serious about my money and I have seen a little success. My big challenge is that whenever I see my friends they always want me to spend money. They’ll suggest something expensive to do like clothes shopping or going out on the town and if I balk, they’ll bug me about it until I give in. Short of dumping most of my friends, I don’t know how to break out of this.
Start seeking out other friends. Don’t dump your old ones, but just start looking for other people to hang out with.
What do you enjoy doing that doesn’t cost much money? Make a list of those things, then try to think of ways where you could meet other enthusiasts of those things in the community.
You may find yourself building new friendships that reflect your adjusted values. If that’s the case, it’s perfectly fine to change up your social circle a little.
Q5: Package internet deals
My bill runs around $140 per month for AT&T phone, Uverse Internet, and Direct TV (one step above the very basics so I can watch Fox News, etc. So, my question is this: I see these advertisements like Vonage on TV and so would love to save money (Saving $ is why I read your messages) on the phone bill, but I have no idea how to get high speed internet without being an AT&T landline phone customer. ANY TRICKS TO FINDING A WAY TO HAVE THE INTERNET AND DIRECT TV WITHOUT THE HIGH COST OF AT&T PHONE?
It depends entirely on where you live. Different services are available in different areas with different packages available.
One strategy you might want to consider is contacting the satellite TV providers directly and see what kind of relationships they have in your area. Give a call to both Dish Network and DirecTV and see what they have.
You might also want to ask around in your community to find out what services others are using. Most people will gladly help a neighbor find a better deal.
Q6: Reporting tax cheat
Each year my neighbor tells me about all of the “tax loopholes” and other things he does to avoid paying much income tax. It really irritates me that he’s getting away with paying little while everyone else pays more. I have considered reporting him to the IRS.
First of all, you don’t know whether your neighbor is just telling tall tales or not. You have no evidence of that person’s actions.
Second of all, the actions they’re describing might actually be legal ones and they’ve simply invested the time and effort to find any and all legal tax credits and loopholes that apply to them.
This really isn’t worth reporting. Of course, I’m one of those people with the philosophy that if someone isn’t causing direct injury to me or my family, I’m just going to let them be.
Q7: Federal budget and housing
I am in the middle of searching house, found the one we love and about to make an offer. But some close friends are saying “deep budget cut” might effect the housing market. What do you think? Is it going to go down again? Is it going to affect the interest rate? Thanks.
I don’t think interest rates are ever going to get significantly lower than they are right now. For mortgage lenders to make much money at all, they really can’t go down much more.
As with the big housing bubble last decade, I think individual markets will have very big differences. Some will go up like a rocket, some will stay steady, and others will drop a bit or go up just a bit. You really have to study your local area and see what the trend is.
For most of the country, I think right now is a perfectly reasonable time to buy a home.
Q8: Jug of water
I’ve started keeping a bunch of water at my desk to drink during the day. I keep it icy cold. Whenever I feel hungry or thirsty, I drink a big glass of it. I think it’s helping with weight control (except my weight went up quite a bit when I first started – about six pounds in the first week – but then it’s dropped about two pounds a week).
Anyway, I’m trying to figure out how much money this is actually saving me. How would you even begin to figure that out?
The best approach you can take is to compare your “before” and “after” food spending. The problem is that you likely don’t have a good example of “before” with which to figure this out.
If you can, go back and examine your food spending for previous months, then compare them to a month spent with your water routine. That’s probably the best way to see the results of this change.
You can probably tell mostly by seeing how your lunch routine has changed. Do you skip lunch now (or eat a smaller one)? What about dinner? If you’re eating less at those meals, you’re saving money in the long run.
Q9: Why not credit unions?
I work for a credit union consulting firm. Honestly though, why would anyone not choose a credit union? Credit unions are based on 7 cooperative principles that promote the health of the member over making money. When banks stopped lending during the recession, credit unions continued to do so. Since credit unions are cooperatives and members are part-owners, it makes sense that they put members over profit. With virtual branching technology being what it is today, even credit unions with fewer branches can operate just as well as a big bank…or even ING (now capital 1).
I’m a longtime reader of your site, and I always thought you were pro-credit union. I actually hadn’t heard of a credit union before I read TSD. I was just curious what you would think.
I am completely fine with credit unions and I often suggest people try them out, particularly if they’re in a mediocre credit situation.
However, the differences between credit unions and normal banks were much more pronounced twenty or thirty years ago than they are now. Credit unions have copied a lot of practices of ordinary banks because, frankly, they make sense.
My experience has been that the advantages of credit unions really varies from union to union. Some unions are much better, while others are essentially identical. It never hurts to shop around.
Q10: Self-improvement versus self-loathing
Whenever I read your articles about improving myself, I get all excited and try something new and then a week later I fail at it and I end up hating myself because of it. Why does self-improvement turn into self-loathing so often?
A self-improvement project that ends up failing isn’t necessarily a failure. It’s only a failure if you give up entirely on making that change in your life without real reasons for doing so.
Many self-improvement plans fail for various reasons. That’s fine – it’s part of self-improvement. What you need to do after a failure is look at the failure and figure out why it happened. Why did it fail?
If you can take away some reasons for the failure, you can use them to build the next plan – one that’s more likely to be successful.
Remember, even a small step in the right direction is a huge success if it’s sustainable.
Got any questions? The best way to ask is to email me – trent at thesimpledollar dot com. 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 many, many questions per week, so I may not necessarily be able to answer yours.