Reader Mailbag: That Old Familiar Song

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. SAHM finding work again
2. Spouse’s collection habits
3. Prenup concerns
4. Prenup concerns, part two
5. Anger management?
6. Thinking about value of money
7. Paying down a credit card
8. Replacing household items
9. Evaluating my budget
10. Planning a big move

When I was in late elementary school, I went through a two year phase where I listened to little else but the music of Prince. This was at a time in my life when I was first discovering girls, appreciating music, and really beginning to figure out my own ideas and thoughts for the first time in my life.

Every once in a while, I’ll pull out one of those mid-1980s Prince albums, like Sign ‘O’ the Times or Parade, and I’ll listen to the whole thing. In fact, as I type this I’m listening to Sign ‘O’ the Times from beginning to end, and I can still sing along to the vast majority of it.

There’s something about the music that is just intensely nostalgic for me. I find myself remembering old friends that I haven’t seen since the early nineties. I’ll remember countless afternoons where I would be laying on my bed, reading a book and listening to “Kiss” or “Raspberry Beret.”

Some things can just transport you to another time, awakening memories that you hadn’t considered in years. That’s an amazing thing to me.

Q1: SAHM finding work again
I’m a SAHM (stay at home mom) and know that in 2-3 years when my youngest goes off to kindergarten, I’m going to have to get a job (provided I don’t have any more). I didn’t have a career before. I got a BA in Communications, which is just so generalized I unfortunately feel it’s worthless. I worked as a hotel front desk person for a couple of years (didn’t care for it) and then for an after school program and summer camp for several years. When I go back to work, I won’t be able to do the later because I want to be home after school with my daughter. I don’t really have any contacts with anyone I’ve worked for anymore, so I’m afraid with no references or recent experience, I won’t be able to get a decent job. I don’t have any idea what I would or even could do for work after all this time. Do you have any suggestions?

– Jill

The challenge for you is that you don’t have any marketable skills right now aside from your stint as a stay-at-home mother. In all likelihood, you’re going to be looking at an entry-level position when you return to the workforce. You might be in retail or something similar.

That’s not a bad thing. Approaching a retail job with seriousness and work ethic means you’ll outshine the people around you and have the potential to earn raises and promotions to manager. Alternatively, it could mean that you have the job flexibility to do things like pick up a sick child from school or chaperone a school field trip or be home on a snow day.

Another option, of course, is to return to school and earn a degree in an area that could lead into a different career path. This is a harder path, of course, but it does have long-term financial rewards. Plus, while your child is in elementary school, you’ll have some flexibility because you’re in school.

You do have options. Don’t feel that things are hopeless.

Q2: Spouse’s collection habits
My husband collects Blu-Rays and DVDs. At first, I didn’t mind the collecting that much since he was mostly keeping it under control, but lately he seems to be incredibly focused on finishing out certain “sets” of movies and television series. If he gets one season of a series, you can bet he’ll get the rest of them. The same thing is true with certain writers and directors like David Fincher.

I have this sinking feeling that he’s starting to accumulate debt to buy all of these things. He’s getting them far faster than we can watch them. Any advice?
– Jenny

You can’t make people change things that they don’t want to change. Sitting someone down and telling them that they’re going to change doesn’t do much of anything at all and, depending on how you do it, it can create real conflict.

A better route is to simply sit down and look at your long-term goals and your progress toward them. If you don’t have long-term goals, start setting them. Look at your whole financial picture while doing this. The real key is to show how the behavior of today ties to the success or failure of tomorrow. This is what worked for Sarah and myself.

For my hobbies, I have a monthly allowance. I cap my hobby spending at a certain amount each month, as does Sarah. Everything outside of food and shared utilities falls under hobbies. When I realize that I only have a certain number of dollars to spend, it makes me be a bit careful, but I also know I can spend that “allowance” without any stress at all.

Q3: Prenup concerns
I am getting married soon and am considering having a conversation with my fiance about a prenup. I love him with all my heart and truly believe that we will grow old together. However, I have experiences quite a bit of tragedy in my life and realize that if we are dealt a certain hand of cards, we may not be able to survive it. In my head, those ‘cards’ I am referring to are awful, terrible, unspeakable things like the murder of a family member, house-fires resulting in the death of a future child, etc. I hate to be devil’s advocate and consider such awful circumstances, but I have seen marriages crumble because of similar situations and know that life doesn’t always work out like you plan.

We have no money to speak of (though we are working on it), so protecting cash is not the issue. The issue is this : My family has a large farm that we have worked very hard to keep it whole and protected. My parent’s generation did a wonderful job of creating a sustainable structure that should theoretically maintain the farm’s integrity without bankrupting anyone as it is passed down (in the most basic sense, it is a corporation). However, my family is extremely large and it is inevitable that there will be discussions about the farm’s future regarding sale or development at some point in our lives. I will need to be involved in these conversations with my future husband, but if our marriage has ended, I would like to be sure there are no complications with the votes/rights within the corporation. We are very open about our money and I feel comfortable bringing it up (well, as comfortable as an awkward prenup conversation can be). Alternatively, I don’t want him to resent me for this for the rest of his life, so if he says he doesn’t want one I will let it lie. Given these streamlined facts, do you think that I should approach the subject with my fiance?
– Andrea

My suggestion would be that the family does not bequeath spouses of children any voting rights within the corporation. When voting issues come up, the direct descendents vote and receive all proceeds, at which point it is their decision as to what to do with it.

If you want to write up a prenupital agreement that protects such rights, then I would consult a lawyer. This is always the step one should take in such situations. I would consult a lawyer about any prenup. However, I can’t imagine that he would have any rights to money earned from that family farm if you’re divorced.

Andrea has a follow-up question on prenups that deserves its own answer.

Q4: Prenup concerns, part two
If I choose to ask his thoughts on a prenup, I would like to have some facts going in to the conversation. First, what types of lawyers would be the best for prenups? How much should I expect to pay for that document? Are there any safe online services that could provide the documentation I need that are free or inexpensive? Is there a prenup that could be designed exclusively to protect my family’s property and no other financial aspects of our lives?

– Andrea

I would start with a lawyer specializing in family practice. They should be able to handle a basic prenup, and if they can’t (due to some complexities that I’m not seeing here), they’ll point you to a lawyer that can.

The “going rate” for such a document varies a lot depending on your location. Your best bet is to ask for quotes, but I would tend to lean more toward using a trusted lawyer than using the cheapest one.

If you want to create it yourself, services such as LegalZoom can help you with it. It can certainly do the job you’re looking for.

Q5: Anger management?
I love playing basketball. I’m on a team in a local free rec league and it’s a great way to keep in shape and have fun.

My problem comes from anger management. I get really into the game and then when little things don’t go right I get really angry. I start shouting and I’ll punch the wall. Sometimes, I feel like I carry this anger over into other aspects of my life.

You’ve mentioned that you’ve played competitive sports and competitive games before. How do you handle the anger when things don’t go right?
– Jeff

Whenever something doesn’t go well for my team, I usually assume it’s because of my own mistakes. I don’t really blame teammates. I just assume that if I had adequately carried my part, we would be winning, not losing.

Instead, I try really hard to review where I made mistakes. If I lose a game, I don’t hesitate to ask the winner if he noticed any big mistakes I made. I then try to focus on correcting those specific mistakes.

I will say that I only apply this to situations where I want to improve and get better at a specific activity. If it’s just something I’m trying with friends and don’t want to engage as something to build skill at, I just blow off a loss and don’t worry about it.

Q6: Thinking about value of money
I am hoping you can help me figure out the most logical answer to our problem. Our dream is to own and manage our own Bed and Breakfast. Our youngest child will graduate from high school in seven years, after which we plan to sell our home and purchase a B&B in the mountains somewhere. We now have $250 available in our monthly budget that we would like to start investing in our dream but cannot figure out the best investment method.

Our first option is to deposit the money in our savings account. The account earns .80% interest but it is adjustable. The bank hasn’t adjusted it in the last year but it was earning 5.0% when I opened the account many years ago. There is no way to know if it will go back up or continue to go down. This is where our emergency fund is, insurance deductibles and other short term savings such as summer vacation and new vehicle. The balance fluctuates but averages around $25,000 so there is a decent balance on which the interest will be compounded.

Our second option is to open a CD at a local credit union. The 3 year CD is paying 1.0% and allows us to make a monthly deposit. We only incur penalties if we withdraw before it matures. We can hope to get the 1% or better when we renew in 3 years but we don’t have to worry about the rate going down during the next 3 years.

Our third option is to make a payment to the principle of our mortgage each month. We are paying 4.25% interest with no PMI and an outstanding loan balance of $245,000. We recently purchased the house because it will serve our needs into retirement if necessary. Due to medical issues, there is a possibility that we may not be able to pursue our dream. We choose to live life like we can while preparing for the worst. I am vaguely familiar with the Time Value of Money concept but am not sure how to figure out what the value of our investment is for our third option.

We have worked hard to get to a stable place where the $250 is available and want to reward ourselves by actively investing in our future dream. We tried evaluating on the emotional aspect of each but came out pretty even. I should mention that we prefer a more conservative investment approach with this money. We are still youngish and have opted for a riskier investment strategy with our retirement funds. This is a compromise. How can I mathematically figure out which is the best option for us?
– Julia

Of those three options, the best return you’ll get over the next several years is in extra payments on your home mortgage. The other options just won’t come close to that until interest rates rebound, and I honestly don’t see that happening in the next two or three years.

There are a few caveats, though. I would keep enough cash in a savings account to use as an emergency fund, which you already seem to have. I would also spend some time rethinking your choices if rates do begin to rebound and you see savings accounts and CDs begin to approach your home mortgage rate.

If you have a nice emergency fund in your savings account (and assuming other things are taken care of, like retirement savings), I’d start knocking down that mortgage.

Q7: Paying down a credit card
I have a question about finishing out the remainder of a credit card balance, and keeping it at $0. A year ago, my husband and I, who had been living together for several years but just recently married, took a long hard look at our joint debt, took a big breath, and started tackling it. We have a joint credit card that we have used for a few of our monthly bills, as well as trips and splurges…that we also charged a few large wedding-related costs to. We have it almost paid off, but then we took a long weekend trip and we have a few big expenses coming up in the next few months (mostly airfare to see family), and I am afraid it is going to sit there at 90% paid for the next year! Meanwhile, I really want to check this stupid thing off the to-do list and move on to other financial goals (building more savings, tackling smaller balances on the credit cards we don’t use for new expenses).

Actually, re-reading this, I think I can guess the best strategy: stop using the card. Right? We could use our checking account to pay for all of the monthly bills and stop charging things on this. I think I just need someone to tell me that we can do this. We have a decent steady income, and paying down the balance has been manageable, we have enough to eat and can pay our utilities, it just feels interminable at times. It is this last bit of the balance that is killing me — it won’t go away!
– Kelly

You pretty much hit the best strategy right on the head. If you want the card to get paid off, stop using the card.

When you mention “trips and splurges,” though, that sets off another warning bell. If you have a lot of trips and splurges in your life, that means you’re likely overspending. Cut back on the trips and splurges and you’ll find that getting rid of that credit card debt is a lot easier.

Note that I didn’t say eliminate trips and splurges. The key is to cut back so that you have a balance between both the splurges you like and the financial freedom you desire.

Q8: Replacing household items
How do you decide when to replace common household items like hairbrushes? My wife and I haven’t really found the same page on this yet. She tends to replace things way before I would.

– John

I don’t really have an objection to replacing a common household item that you use every day if it’s beginning to show wear.

The hairbrush is a great example of this. My hair is very short, as is the hair of my youngest son. We don’t use hairbrushes. My oldest son’s hair is a bit longer, so he does use a hairbrush a bit, but most of the brush use in our house comes from my wife and my daughter.

Now, I’ve never had long hair and so I don’t have a sense as to what wear means on a brush. I would guess that if a few of the bristles are broken, that might be time to replace it, but I don’t know that for certain. I trust my wife, who uses it far more than I do.

In other words, I think that the person who should judge when an item needs replacing is the person who uses it the most. If someone else thinks that item needs to be replaced, they should check with the primary user.

Q9: Evaluating my budget
Would you mind reviewing my monthly budget and offering your feedback? I obsess over this budget so much, and I’d like to know where I stand.

I net $3450/month (after taxes, health insurance, and my 401K deduction).

Here is the breakdown –

29% ($1000) – Emergency fund
25% ($860) – Rent (includes heat and hot water)
19% ($640) – Food, gas, other essentials
10% ($340) – Gym memberships (rock climbing, Brazilian Jiu-Jitsu, Crossfit, regular gym)
12% ($417) – Roth IRA
5% ($193) – Car insurance, electric bill, tolls, medication, cell phone, random expenses

Could you give me an idea of how I am doing? (Note that between my 401K and my Roth IRA, I am able to save 15% of my pre-tax income.) I realize my gym memberships are a lot of money per month, but it is what I am passionate about (and as a result, I don’t have cable, the internet, go out to eat, shop regularly … I did try to cut out other things!).
– Sally

Other than the gym membership being pretty high, the rest all seems reasonable.

I would suggest that when your emergency fund savings reach three or four months of your living expenses, you start channeling that money into something else, like a Roth IRA.

For the gym memberships, I’d look carefully at which ones you’re actually using frequently. If you use them all multiple times a week, then you’re getting value from them. If one of them is supplanting another one, I’d cut the one that’s getting used less. I would think that the regular gym and the Crossfit might overlap a bit, for example.

Q10: Planning a big move
I am taking all my savings and moving a thousand miles from my hometown. The cost of living is cheaper and more jobs in the area. As I have been unemployed here at home almost a year now. Any suggestions on how to maximize my dollar once I get settled?

– Angie

The suggestions I would have are endless. It really comes down to how you live your life. Let’s say, though, that I had to trim it down to three of them.

First, I’d try to live close to where I work. If you can avoid buying a car, then you’re going to be saving hundreds per month (car insurance, car payments, maintenance, license plates).

Second, I’d try to establish a social network that doesn’t revolve around spending. A good way to do this is to look for pre-existing groups that revolve around an interest of yours that isn’t tied to spending money in any way, like a volunteer group or a book club tied to the local library.

Finally, I’d establish a routine of preparing my own food right off the bat. Pledge to not eat out or get take-out the first month or two you’re in the town. That way, the routine of picking up food doesn’t become an established one for you and you’ll save a lot of money on food.

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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