Updated on 12.18.11

Reader Mailbag: The Big Christmas Run-Up

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. Retiring at age 50
2. Return to work or not?
3. Handling an inheritance
4. Christmas games
5. Money and relationships
6. Housing predicament
7. Pie options
8. 40/30/30 question
9. Wanting frugal gifts
10. Sleep remedies

The days leading up to Christmas are always filled with excitement and energy. There are tons of little things to remember, checklists to fulfill, items to wrap and prepare, and last-minute emergencies to handle.

I’m actually thankful that Christmas comes just a little bit after the shortest day of the year (December 21). It gives us something to occupy our minds when the days are grey and very short.

Q1: Retiring at age 50
I’m 31 and I have a goal of retiring at 50. Like any other goal, I have a realistic plan to make it happen, and metrics to track my progress.

We’re a family of 5 and our monthly expenses are about $8k/month. I figure when the kids leave the house, it’ll be around $5/month (in today’s dollars).

Our current retirement savings are in the low 6-digits. 401k and Roth IRA, invested in Vanguard’s Target Retirement 2040 Fund. I add about $25k per year, depending on how much I can bring in. The IRA is maxed out, and the 401k is funded well beyond my employer-match level.

My question is what investment strategies/products should I use to “bridge the gap” of about 15 years between when I retire and when I’m able to draw out of my 401k and Roth IRA? (I’m able to draw the principal out of the IRA at any time, right?)
– Cael

Yes, you can withdraw your contributions from your Roth IRA at any time.. That’s certainly one possibility for bridging that gap.

It’s also important to note that you can begin making “retirement” withdrawals from your Roth IRA at age 59 1/2, assuming you’ve had the IRA for five years or more (which you will have). This shortens the “gap” that you’re trying to cross.

If I were you, I’d probably keep saving along the same path that you’re on without changing much at all. If you do reach a point where you think you can make the leap into retirement before a traditional retirement age, then I’d rely on Roth IRA contributions to bridge that gap.

Q2: Return to work or not?
Here’s our situation: our first child, a girl, was born with a rare bone marrow disease. I did not return to my work as an administrative assistant to take her to her many, many doctor appointments. We decided a year and a half ago to try to have a sibling, through in-vitro fertilization, who is a donor match for our daughter in case she needs a transplant (not a likely scenario for her since she’s stable on drug treatments, but certainly a possibility). Insurance did not cover most of it. I am now pregnant and due in April. The enormous medical bills, even with the help of family, have left us with about $12,000 in debt and monthly payments we can’t quite cover on my husband’s salary. It seems like we’re slipping behind, not cutting down the debt. We still allow ourselves very small luxuries (a Christmas present or two, an occasional evening out, even a two-day vacation this Christmas). Do we cut these out entirely, or should I look for work?? I don’t want to leave a small infant with a nanny but hate paying the interest on all this debt. I think the stress of our debt is making me a less fun parent anyway. There is no guarantee I can find a job in this climate, but at least it would help a little towards dragging us out of this mess we’re in. Or should we just try to get by, paying just the interest, on our debt for a year until I consider my son old enough to be left at daycare (much cheaper than a nanny)?

– Ellen

Unless you get a job that pays quite well, you’ll be losing money on a nanny for your child. You’ll have to make substantially more than you’d be paying a full time nanny to make that work.

Most people in your situation – a situation not too different than the one we were in not that long ago – usually wind up using some form of daycare for their child. Our experience with our daycare was overwhelmingly positive, but I would highly recommend spending plenty of time finding the right one before putting your child in.

One way to do this is to set yourself a “deadline” for when you plan to enroll the child, then start shopping for one now. Many of the good daycares have a waiting list to get in, so you’ll probably want to get on some of those lists.

Q3: Handling an inheritance
When my father passed away last year, we found out that he had name me, not my mother, as the beneficiary to his IRA. I have a choice of small annual payments until retirement (I’m 37) or taking out all the money now and assume the tax hit. I know that he worked hard at building up the value of the account so that, if he should pass, my mother and I could pay off the mortgage on the house we own jointly and live in. We currently owe approximately $96,000 and his account, before I get hit with both federal and state taxes, is $105,000. After taxes, we expect what’s left from my father’s retirement account to be less than what we owe and will still have a couple year’s worth of payments left to go.

The house is a split level with no bathroom on the main floor. My mother is 70, and we expect her not to be able to navigate stairs by the end of the next decade (as it is now she gets winded sometimes due to her asthema). Putting on an main floor addition of a master bedroom suite would make the house more comfortable for her. We’ve gotten some rough quotes, and such an addition would be between $70,000 and $100,000. Also, there are some other repairs and improvements which need to be done on the house. For example the roof will need to be replaced within the next 5 years, and some of the insullation needs to be replaced as well.

Here’s my question(s):
Where should I invest this money my father left us?
Should we follow his wishes and put it all into the mortgage, and have only a few more years of payments, as opposed to over 20 years? (this would delay paying for any major repairs and/or additions for quite some time).
Should we pay to have an addition put on and make the house more comfortable and practical for her in the later years of her retirement, and take the risk that the addition could cost more than the money we have in hand? (and still have over 20 years of mortgage payments)
Or should we use the money to take care of those major repairs, and put any remaining money towards the mortgage?

I’ve asked friends, family and co-workers what they would do and the responses are all across the board, each with seemingly good rational.

What would you do if you were me?
– Jill

If your father wanted you to put it into the mortgage and you’re sure of his wishes, you should follow them.

The question for me really is whether or not that was really the spirit or intent of his wishes. He wanted the money put into the mortgage, but why did he want that? What you should do with that money is fulfill the why part of the question, and that will probably take some soul-searching.

My guess, based on your story here and similar stories I’ve heard, would be that he wanted comfort and security for his wife and thought you were the best person to ensure that. If that’s the case, you should do what will make your mother’s life the best down the road. Adding a room like this will likely increase the value of the home significantly, so when you do eventually sell it, you’ll be able to pay off the mortgage and have some left over.

Q4: Christmas games
In past years, our family has had Christmas at my mom and dad’s house. This year, we made a family decision to have me and my wife start hosting Christmas to take some stress off of my parents.

One of our family’s traditions is to play some board and card games in the afternoon on Christmas day. We usually play Monopoly or Risk or bridge. We have a deck of cards, but no other games. I thought it might be fun to have some different games to play with my family instead of these old classics. I know you play a lot of these games. Any suggestions?
– Randall

One interesting option might be to pick up a copy of Risk Legacy. This takes Risk and adds some interesting twists to it in that you actually customize the game as you play it. For the first fifteen games, everyone who plays it is involved with actually modifying the game through small gameplay changes, the naming of continents, and other such things. It’s really fun – my wife and I are playing this with a group of our friends right now. This would take the classic feel of Risk and add a new twist to it.

There are a handful of really great games that I recommend to almost every family: Ticket to Ride, Carcassonne, and Settlers of Catan immediately come to mind.

Honestly, you might want to also just have copies of the classics, too. Games are really about socializing, and well-played games have a lot of nostalgia to them, which is a wonderful socializing spur. You can often get these classics at thrift stores for a dollar or two, though I suggest buying two copies just so you can be sure you have all of the pieces.

Q5: Money and relationships
You always seem to have similar goals to the ones I aspire to in life. And you seem to have found a perfect soul mate for this. I am French and live abroad, though I aspire to come back soon and start a life there, and a family. I am just over 30 now, and really envy people who found a perfect match at 23, have a mortgage and other financial goals together with a spouse, like fixing up a house or investing towards financial freedom. I sometime feel like when I save money or plan financial things it would be so much easier to be a couple.

I own two properties, and they rent nicely. I do freelance writing for a living but have come to a point where I do not need that income to live. My dream is to find someone like minded and be able to dedicate all this freedom to raising children, I am even considering homeschooling, and other activities that would be a real perk to a man who wants to invest in his career, like fixing up the house, optimizing meals, and so forth, so we could easily live on one income and have a happy family.

I have been on relationships before who lasted anything from a few months to a few years but every time I felt like the financial agreement would fail us and ended the relationship. Any advice on that? I read that every relationship success, whether business, family, friends, or love, was based on a sound economic agreement. Yet I have a hard time when I start dating someone putting the finances on the table to see if we are bound to have a future.

It is taboo over here, or when I say I dream of being a housewife and raising my children they look at me like a 50s wannabe wife or like I want to take advantage of their income to live for free (I am very independent, financially from my parents since I am 17, graduated debt free with grants, have about 200K net worth before turning 30, and able to maintain myself without incurring any debt, pay my credit card and loans in full each month and so on). I have thought about turning to church to find a christian man since those values are important, but not being very religious myself I am afraid we would have disagreements on that topic.

What are your thoughts?
– Susan

I don’t think finances need to be on the table at the start of a relationship. However, when a relationship becomes serious enough that both parties are entertaining thoughts of joining their lives together, then finances should be brought up.

Communication is always the key. If you’ve communicated a lot with this other person and you feel your relationship is strong, bring up how you feel and talk it through. That’s always the best approach in a relationship.

As for looking for someone who would respect you in the housewife role, you’re right that a Christian church might be a good place to start. However, if you’re finding that dating someone of a particular religion is going to bring up other problems, you probably shouldn’t seek someone there. Seek out groups that match your values in some ways, then look for individuals in those groups that match your values in other ways. It’s all about the filtering, and it takes time.

Q6: Housing predicament
My wife and I currently live in condo that we have a mortgage on. We purchased 4 years ago, rate is 5%. We purchased for $140,000 and have about $135,000 remaining on the mortgage. When we purchased the condo we took the $7,500 housing grant that we have to pay back over a 15 year time period or when you sell the house. The stipulation is if you do not make a profit then you don’t have to pay this back. We have already paid back $1,000 of this. The purchase price is adjusted for any improvements or commissions you have paid in the process. We put in more than $10,000 of improvements so if we were to sell for anything over $143,500 we wouldn’t have to pay back any of the remaining grant. We could also choose to rent, which is what I would do if we didn’t take out the grant, but if we were to do this we would have to pay the remaining balance of the grant back at that time since it is no longer our primary residence. This was the $7,500 home buyer credit, not the $8,000 that you don’t have to repay and can rent after 3 years.

So our current situation, my wife and I are both 27 have no debt (no credit card, no student loans) besides our mortgage and 2 car loans. Car 1 – 1 year remaining $250/month, Car 2 – 2 year remaining $350/month. We make a combined $115,000/year. We currently put about $1,000 a month in retirement (+ company match) and have a combined $40,000 currently saved in our retirement. We also have $10,000 in our savings for a future down payment on our house. We are expecting our first baby in February and at that time my wife will take off 12 weeks of work, she will get 50% pay during this time. I am going to lower my retirement to just the company match during this time period to make sure we have enough money, although I think we should be fine and and will increase the retirement once she goes back to work. We will be incurring day-care costs once she goes back to work of roughly $800 per month.

Here is our delimna. We have our condo currently listed at $144,000 however we may only be able to get $135K or even less for it, which after commissions would barely break even on our mortgage and could possibly even take a little loss. We want to continue to save and build our savings account up to around $15K before we buy our new place. For us to do this we can’t really afford to lose that much when we go sell. The condo we are living at will probably be too small once the baby gets to about a year old so we are looking at houses in our area at around $200-$250K, (I realize we wouldn’t have 20% down but this is what we are wanting for now). We also want to take advantage of the lower interest rates that are currently in affect right now (I personally believe they will be low until 2013).

Looking back I now realize we should have probably just rented 4 years ago but hindsight is 20/20. Anyway, I guess our options are stay in the condo until we can get a buyer that is willing to give us a decent offer, take a loss on our condo and not have as much to put in a downpayment, or pay out the remaining grant and rent out the condo ourselves until the market turns around in our area (this would also lower our down payment).

It is frustrating because I feel like we are responsible with our money and didn’t necessarily do anything incorrect yet we may end up losing money on this decision to buy our first place, however I realize this is just the times we are living in and going forward I will think more indepth of our decisions. Any advice would be greatly appreciated.
– Jim

You didn’t do anything incorrectly other than not prophetically predict what the housing market was going to do. You made a move based on the information you had at the time and you’re largely responsible with your money. Don’t be frustrated with yourself.

If I were in your shoes, I would stay put for the time being and make it work with the child for as long as you possibly can. Sarah and I shared a very tiny apartment with our first child until he was almost 2 and our second was on the verge of arriving. If it weren’t for that second child, we might still be living there.

This will allow you to not only save for the down payment for the house you want to buy, but will also allow you to get more and more above water on your condo. Even if you don’t time the market perfectly, if it begins to rebound, your condo will also go up in value, meaning the rebound won’t hurt you as badly as you might think.

Q7: Pie options
Is it less expensive to make your own pies or to buy them from a good baker? I don’t like to buy some of the cheaper pies because they taste artificial but there are several bakeries around here that make good pies.

– Linda

Sarah and I have made quite a few pies over the years. My experience has been that a truly great homemade pie takes about two hours of work and uses between $10 and $15 in ingredients, assuming you have very little of the ingredients on hand. A simpler homemade pie – one with a pre-made crust – can be done in much less time, but isn’t quite as good.

So, how does that compare to pies that you might purchase? There’s a bakery here that sells pies that are roughly as good as the pies we can make with a pre-made crust for about $15. There’s one bakery that supposedly sells mind-blowing pies (though I’ve never tried them) for about $20.

You’ll save money by making it yourself, but not enough to make it worth the time unless you really enjoy the process of making pies. I actually do if I’m in the right mood.

Q8: 40/30/30 question
I have a question about the 40/30/30 rule you spoke of in November of last year. You say it basically means you should spend 40% of your income on basic bills, 30% on saving for the future and 30% on enjoying life. But how do you do the math? For instance, if I save $16,500 through my 401(k) at work, that’s money that I never see in my bank account, but it is money that’s going towards saving for the future. So do I just take my net bi-weekly pay, annualize it, add $16.5k to the total, divide by 12 months and then use the 40/30/30 formula on that number to figure out my monthly ‘budget’?

– Regina

That’s what I would suggest doing. I would simply ignore taxes entirely. If I used pre-tax money for savings, I’d just count that normally.

It’s important to remember with things like 40/30/30 that they’re just guidelines to get you moving in a healthy direction. They’re not absolute rules that work perfectly in all possible situations. Almost all personal finance advice is just like that – everyone’s specific situation is different.

If you’re putting $16,500 into your 401(k), you’re probably doing really well with your finances. Keep it up.

Q9: Wanting frugal gifts
I was just wondering if you could give some advice, it’s only a small problem, barely a problem really but I thought you might have an idea that I haven’t thought of. With Christmas coming up presents have been a topic of conversation here and there. My mum has always bought one or two big things for me for Christmas and then a few little stocking fillers (I’m an only child so she always goes a little overboard). The stocking fillers always used to be useful things, socks, underwear, occasionally toiletries. I always loved this, I went through a stage of about four years where I didn’t have to buy my own underwear because I always got new ones at Christmas!

Of late though she’s been buying more trinket type things that don’t have any use. It’s not that I mind her buying things like that, it’s more that I feel bad that she’s spending money on something that is just going to get (eventually) thrown out because I have no use for them. I think she’s doing this because I’ve become more frugal over the past few years and she thinks I’m depriving myself, when the truth is I just laugh at the prices they put on things that have (in my mind) no value. Any ideas on how I could suggest to her that I much prefer the socks and undies route? I’ve tried commenting how awesome it was when she was doing the socks and underwear thing but that didn’t work.

As I said, it’s not a huge problem, it’s not that I mind that much getting those sort of things, I know that the thought is there, it’s more that I feel bad that she’s essentially wasting her money.
– Lauren

I think the key is communication, but I wouldn’t do it right in the face of the Christmas season.

Accept whatever you get this year, then have a conversation about this in April or in June or in September. Sit down with your mon and simply say that you actually do not want a lot of those “trinket”-type things. Reinforce it by simply not commenting on or even gently deriding the materialistic things you don’t value outside of the context of gift-giving.

The key is to make sure that you’re not bashing your mother’s gifts. The purpose of this isn’t to hurt her feelings but to make sure she understands what you actually value. Tell her what you value and make it clear to her through your actions.

Q10: Sleep remedies
You almost always seem to have great frugal ideas for life’s problems. My big challenge as of late is insomnia. I often can’t get to sleep until one or two in the morning and when I have to get up at six, I’m exhausted. Do you ever get like this and if you do, how do you deal with it?

– Evan

Whenever I’m having a hard time sleeping, I do two things.

First, I exercise a lot in the morning. Not in the afternoon or evening. The morning. I do something around the house that requires a lot of exertion or I’ll go on a brisk walk or jog for a long while or I’ll go on a bike ride. The key is to really wear myself out in the morning so the endorphins and other responses wear off before bedtime, leaving me with physical exhaustion.

My other tactic is my old standby of warm milk with nutmeg. I just take some milk, heat it until it’s warm (bordering on hot), and sprinkle several dashes of nutmeg on top. This puts me to sleep really well, for some reason.

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. Misha says:

    My previous comment got stuck in moderation…

    Ellen @ Q2 – I don’t know what state you live in, but if you’re in the US, contact your state health department and find out about their program for children with special health care needs. These are income-based programs for helping cover medical expenses for children with chronic conditions. The medical and financial eligibility requirements vary from state to state but this would very much be worth looking into.

  2. Kevin says:

    Q2 reminds me why I chose never to have kids.

    Q3 should absolutely NOT do the addition! That’s a ridiculous amount of money to blow just to make the house livable for his mother. There are plenty of houses out there for sale right now that are already ideal for his mother (main-floor master suite). He should put all of the money into the mortgage, pay off the current house ASAP while it still meets his mother’s needs, then sell it and move her into a house better suited to her health (or, more likely, an elder-care residence). Why would you blow $100,000 on an addition for a home she’s only going to be in for a few more years? That would eat the entire inheritance, and still leave her with the original mortgage (which still had 20 years left on it!)

  3. Kevin says:

    Oops, just noticed Q3 is a “she,” not a “he.” My apologies to Jill, please switch the male pronouns in my previous comment to females.

  4. Jackowick says:

    Q2 I think people really really really need to read this example. While I understand there are reasons why people want to have kids, especially in this case where they can maybe find a donor match, I see innumerable couples driven into financial dire straits over not planning properly for children and the costs. A few months ago I read about a woman who was going broke but “had” to have 4 kids to feel fufilled. It’s not about you, children require you to be selfless, and giving them the proper resources to be happy is a huge sacrifice.

    Now before you misread this and boo me off, this specific situation is a really huge sacrifice to literally attempt to save the life of a child and I applaud the high risk/high reward stakes.

    My advice is to look at the job possibilities and remember that ANY positive cash outcome is better monetarily. A part time job that is 75% cannibalized by sitter or daycare costs is still extra income.

    Remember to keep your relationship with your spouse strong and intact. You have to compartmentalize money discussions and make sure this does not affect you, so I see those little luxuries like a 2 day vacation as being much cheaper than the costs of marriage counseling or worse down the road. ENJOY and treasure that time.

    A parent also has to have humility. Don’t be afraid to pursue a local charity or event to help recover costs. Even a “beef and beer” event could raise a few hundred dollars to help punch those bills, and you may even be able to pick up a sympathetic cheap sitter or job networking opportunity.

    I don’t want to have children, but I sympathize deeply with your issue. Keep your spirits up, love your spouse and children, and keep your focus and you will succeed.

  5. Johanna says:

    Q1: You can tap your retirement accounts (not just the contributions) before you’re 59 1/2, provided you set up a series of substantially equal periodic payments. No gap-bridging required.

    But from the numbers you give, I’m skeptical that you can make retirement at age 50 work. It sounds like you’ve run the numbers, but what kind of return are you expecting to get on your investments?

  6. Johanna says:

    Q3: What about getting a stair lift to carry your mother up and down the stairs? From a quick web search, it looks like they go for just a couple of thousand dollars. Even if that’s not an option, it looks like there are other things you might look into (like a home elevator) to keep your house livable for your mother without spending the entire $100k.

  7. Amy says:

    Another approach for Lauren might be to let her mother know that she’s saving for some specific goal, and so it would be most helpful if any gifts were practical in nature (socks, underwear) as that will give Lauren more freedom to save towards her goal. What the goal is doesn’t really matter — vacation, future car down payment, house down payment, etc. To me this is slightly more tactful than just saying “I don’t like trinkets” — although truly there’s nothing wrong with saying that either. Lauren’s comfort zone will help her decide! ;-)

  8. Johanna says:

    Q9: You give Christmas presents to your mother, too, right? What I’d recommend is to make a point of asking her what *she’d* like for Christmas. If she focuses on the big things, say, “And what would you like in your stocking?” If she tries to get out of answering (“Oh, I want it to be a surprise!”), say “I just want to make sure I’m not wasting my money on things you’re not going to like.”

    Hopefully, she’ll then get the hint and ask you what you’d like. If she doesn’t, go ahead and tell her anyway.

  9. Andrew says:

    Trent–now that you have more time could please edit the mailbag questions down a little? Q. 5, 6, and 9 in particular are way too long–with Q. 5 taking the gasbag award . The essence of each of these questions could have been conveyed in a sentence or two.

  10. Baley says:

    Re: Q2: There are other options besides working away from home to earn extra income. It sounds like your children need you at home, yet you need to help contribute to the family finances, too! You may already do this, but couponing could help with some of it. A great option is to join a home-based business like the Pampered Chef. This is the perfect kind of job for a stay at home mom bc the times when you’re away from home are generally in the evenings (when hubby or grandma can watch the kids) and you can control how much income you make. You don’t have to be an entrepreneur either! If I were you I’d try to figure out how to make money from home. Look up Barefoot Books, Usborne books, Mary Kay, Pampered Chef, Avon, etc. and figure out which one most closely matches your interests. You can make significant income doing 2 Pampered Chef parties a week (which is only going to take about 15 hours of work total each week). Good luck!

  11. Kacie says:

    I agree with #10 Baley that Q2 should look for some ways to earn money from home.

    Couponing and reducing household expenses to the minimum is a good way to start.

    Selling unwanted items on Ebay or craigslist can help, creating items for a small store on Etsy…

    What about even getting a newspaper route? The baby could come along in the car. I’m not sure how much they pay and if it would even be profitable when you take gas into consideration, but it’s still something.

    Some of the “home-based businesses” such as Mary Kay are actually horrible money pits, when you have to buy inventory and make purchases to stay active. Be very careful with those MLM businesses, though maybe some exist where you don’t have to put in any money yourself.

  12. Becca says:

    #4. I prefer a puzzle on holidays rather than games. People of different skill levels can all participate. People can join in for a few minutes, or for a few hours. I find puzzles to be great ice breakers. The major issue is to have a place where they can be laid out for a long period of time, other than your dining table. I pick up a few interesting ones during yard sale season, but now you can find them at thrift stores. I look for ones with interesting scenes… as opposed to a landscape with a huge amount of boring sky. On Thanksgiving we did one that was a collection of vintage pocket watches.

    #7. Homemade pies are much cheaper than buying. If you have garden produce a pie can be made for just a dollar or so. Since this is a thrift website, we presume everyone keeps basic ingredients on hand to cook from scratch; you don’t need to buy a whole can of Crisco every time you make a pie. The hands-on time to make a pie is not two hours, but much less. However, it depends on how you use your time. I never make a single crust at a time. If making a quiche, for example, I make extra pie shells and freeze them for future use. As for cost, that depends on what you make. If good pie apples are $1 each, you’ll spend $5 in apples just to make an apple pie. I make apple pies only when I have a cheap source of apples, like drops from local orchards. If you don’t have cheap or free garden produce, then find recipes that are inexpensive to make. A lemon meringue pie, made with lemon-juice concentrate, is very good, very cheap and very impressive. Like any new frugal activity, pie making takes some practice before you get good at it and build up speed. Just work as close to scratch as possible, and you can keep costs down. So avoid ready-made crusts and ready-made filling. I also rarely use my oven for just one pie. If I am not baking more than one at a time, I bake my pie when I am otherwise using my oven. I am making pies this Christmas for the guys in my family, so I have a very inexpensive gift for them. On other occasions I offer to bring pies to pot-luck gatherings, as pies are a cheaper contribution for me than a salad or main dish.

  13. valleycat1 says:

    Q7 – I think Trent’s estimate of $10/pie for homemade is totally off, unless you’re buying all the ingredients just to make one pie. You’ll use only a small portion of one container of flour, sugar, spices, for example. I’d say it comes down to the time you have available & your experience baking. If we had a great local bakery I’d probably just buy our favorite there – one less thing to cook!

    If you haven’t made a pie crust from scratch before, be prepared for the first attempts to possibly not turn out so good. And meringue topping can be tricky – I usually go with a flavored real whipped cream topping instead.

    That said, I’ve found that if I make pies while my family’s out of the house, they can’t tell whether I’ve made the crust myself or used the refrigerated crust disks (& a couple of those family members are really obsessive about pie crust quality). But even buying the dough ready made doesn’t bring the cost up to $10 per pie.

  14. Jonathan says:

    Q2 – “You didn’t do anything incorrectly other than not prophetically predict what the housing market was going to do.”

    Trent makes it sound like making a bad investment isn’t the fault of the investor. This surprises me, since Trent normally seems more of a proponent of taking responsibility for one’s actions. I hope he isn’t starting to accept the victim mentality mindset that so many people have adopted because of the current economy.

    Aside from that initial statement I agree with Trent’s advice to Jim. Stay in the condo for as long as you can make it work. This should give you time to save additional funds for a down-payment on another home, while at the same time, hopefully, allowing your existing home to increase in value.

  15. valleycat1 says:

    Q10 – Another way to train your body to fall asleep earlier is to establish a nice quiet routine leading up to whatever bedtime you want to establish. Do whatever works for you to wind down from the day’s activities & transition to sleep. And set that bed time to be the same time every night, at least while you’re getting the habit entrenched (no later nights because it’s the weekend, for example).

  16. Becca says:

    #7. Actually a meringue is not hard. The eggs whites need to be room temperature, and the bowl and beaters have to be very clean. The egg whites should have no trace of yolks in it. I break eggs in a separate bowl, in case the yolk breaks when I am separating it. So egg whites, a little cream of tarter and a little sugar. Just beat until pretty stiff. It should hold a “curl” or “spike” when you pull the beater out of the meringue. If you beat too long, it’s okay, but it will not do that nice spike thing.

    Most (all?) store-bought crusts are sort of mealy, with no nice flakiness. If homemade crusts have this same mealy texture, you have over-mixed your crust. This is why you can’t make a good pie crust in a food processor. The final dough mixture should have pieces about the size of a marble, no smaller than peas. These pieces of shortening coated with flour, when flattened, form the flakes in the crust. I use the Fannie Farmer recipe. It helps to chill ingredients, especially if your kitchen is warm.

  17. Johanna says:

    What is going on in Q8? The “40/30/30 plan” described in the linked post has nothing to do with budgeting.

  18. Baley says:

    #2: Just as a follow-up FYI: Pampered Chef doesn’t require you to have any inventory (it’s not encouraged, actually).

  19. tentaculistic says:

    Q10 – I too struggle with sleep issues. From my experience:
    1) I agree with Trent on the milk (I drink it cold, and it still works) and exercise (especially swimming!).
    2) Do not go with alcohol, that will help you sleep in the short-term, but you’ll wake up soon and not be able to get back to sleep.
    3) The best thing ever is guided meditation, it knocks you out! I downloaded some from Amazon. My favorite is Bonnie Groessel “Take a Mini Mental Vacation”… I don’t know that I have ever been awake by the end.
    4) Get a sound machine. It’s soothing, and evens out background noise so you don’t wake up with a new sound. I used to have one with waves, now I have one with different categories for different purposes (awake but relaxed, unwind, sleep). I think the sleep one uses delta waves – it sounds funny but is very hypnotic.
    5) Last of all, my sleep therapist (yes, I know – I did say that I had major sleep problems, right?) said several things:
    a – beds are only for sex and sleep so no t.v.s, laptops, etc;
    b – a warm shower 1-2 hours before bed is a good signal for sleep since it gives a temp spike and then decline;
    c – write down jangling thoughts especially to-do items, to get them out of the head;
    d – put down the laptop and t.v. 1 hour before bed, to let your brain slow down. You wouldn’t gallop a horse and then right away put it in a stall (unless you wanted to kill it), so why treat your brain that way? Be kind to yourself.

    Hope that helps!

  20. TLS says:

    Q10 – I second valleycat1’s recommendation for a relaxing bedtime routine. You might also try taking melatonin 20 minutes before you go to bed. I have had good luck with this.

  21. Joanna says:

    I second the sound machine advice. We got one for our baby & they are fabulous. Just try staying awake with the sound of the ocean (or whatever you like) in the background!

  22. AnnJo says:

    Cael @Q1,

    Maybe I misunderstood your question but if your current savings are $250,000 and you add $25,000 a year, you must be assuming a very high rate of return if you expect to retire at 50 with an after-tax income of $50,000. I urge you to take advantage of some retirement planning site, which most brokerage houses have so probably Vanguard does, and run your numbers, because they don’t add up.

    @Q3, Jill, having asked all your friends, family and co-workers, did it not occur to you to ask an accountant? There may be (or have been – you might have passed some deadline) options for early withdrawal without tax penalties, possibly by disclaiming the IRA back to your mother and letting her withdraw it. Be that as it may, I would strongly urge against using it for a major remodel, for the reasons others have stated.

  23. jim says:

    Q1 Cael – Like Johanna said you can do Substantially Equal Periodic Payments. Also known as 72(t) distributions. 72t’s can be a little complicated but theres info online to figure it. Might be best to consult a tax accountant at retirement when you actually do set it up to make sure you’re doing it right and avoid the 10% penalty. With today’s #’s a 72t will let you draw out about 3.7% annually at age 50 with no penalty. However this does lock you into a long term withdrawal schedule and changing that withdraw rate will subject you to the penalty.
    Are you doing Roth IRA for you and your spouse? If not then I’d consider doing so. Note that the Roth contributions would only support 2-4 years of your expected expenses.

    Q2 Ellen – Its unlikely that a admin job will really pay for a nanny after taxes etc. I would look into doing some sort of work from home at least part time. Be careful as there are a lot of scammy work from home sites on the web. You could also find a part time side business you run youreself like selling items on ebay or making crafts for etsy or whatever works for you.

    Q3 Jill – I also like Johannas suggestion for getting a stair lift instead. Or what about moving to a house that better suits you & your mothers needs? Spending $70-$100k to improve a house is a lot. You might do better moving to a house better suited to you.

    Q5 Susan – I’m not entirely sure if you live in USA or not. I’m assuming you are in USA… Consider a dating site like eharmony. They can do a decent job of matching personalities. LOTS of people meet online now and such sites work well and are efficient. Don’t be afraid to ask about someones financial attitudes on a date. Nothing wrong with simply asking someone if they consider themself to be frugal or not. Or ask them about their plans in 5 or 10 years. There are many men out there who are not going to be turned off by a woman who wants to stay at home with the kids.

    Q6 Jim – Where is all your money going? You make $115k and have relatively low debt for that income. Seems to me you should be able to save $1000-$2000 a month with that kind of income. Maybe were missing a detail about where you spent a lot in the past to pay off student loan or something. However you may be best served cutting your spending and saving more.

    Q7 I priced the cost of apple pie ingredients with premade crust at about $7 total. $2 pie crust, $4 in apples and $1 other. Thats not shopping around. Depends on the pie you make of course. Maybe Trent was figuring on a pie with more expensive berries or something.

  24. Tamara says:

    Incidentally I read an article today about single and stay at home moms working as phone sex operators, making between $10-50k a year. You can do it from your home computer supposedly. I kind of wish I’d known about that when I was unemployed for 8 months a couple years back, I wouldn’t have minded doing it, I can fake heavy breathing!

    As far as going to sleep I highly recommend a sleep mask. Even the slightest bit of light (like your alarm clock or a standby light on the tv or something) can affect melatonin production and prevent you from getting to sleep. I also use a fan for the white noise.

  25. Brittany says:

    Agreed about the pie–$10 seems really steep, provided you have any baking essentials on hand (which, I’m going to assume you do, if you’re the kind of cook who wants to make a pie, which, while not hard, is not Level 1 either). I make a pie about monthly and tend to spend more like $5, assuming fractional calculations for supplies (the rest of which I’d use in other baking).

    And I second Jim’s suggestion of online dating for you, Q5. Let statistical matching find you someone with a similar set of virtues and future plans, and then let the romance come afterwards, rather than getting caught up in romance only to belatedly realize there is no shared future vision.

  26. CNP76 says:

    Ok I know most of those sleep recommendations work for most folks, alas I am not one fo them. I have gone to bed at the same time, I have had a “sleep routine”, I have avoided caffeine, I have played those ridiculous sounds of the ocean cds (frankly it keeps me awake) oh and I have a fan. Nothing works but sleeping meds. And I have been this way for about 15 years now. My advice: talk to a doctor not a guy on the internet.

  27. Sara says:

    I was reading on your 40/30/30 rule of thumb for spending money and I felt I was definitely behind on the retirement savings. However, I’m saving to buy a property for investing (renting out). I live in a big city, downtown and I was planning on buying a small condo in a new building close to everything. Even with the recent housing market crash my city was not affected and since it is downtown chances are it will not.

    I know if I put 20% down I could rent it out for enough to cover the mortgage payments AND condo fees – and likely have some left that I was planning on putting towards the mortgage. I know there might be, on the long run costs on maintenance/remodeling the place etc, but it is still worth it and I’d be able to “buy a place paying only 20-25% of it’s real value” (not considering the actual value going up with time). I consider this an investment I will be able to count on towards my retirement. Is this a misconception and I should not trust this will count towards my retirement or is this rationale a valid one?
    I’d like your opinion on that. Thanks

  28. jim says:

    Sara, Buying real estate as an investment can certainly be considered a valid way to save towards retirement. However you should keep in mind that being a landlord is just as much a part time job as an investment. A single unit shouldn’t be a lot of work but there are demands on your time. Also make sure you have a realistic picture of the potential costs and make sure you have enough cash flow and savings to handle everything. Consider how easily you’d handle it if a tenant stopped paying rent and you had to pay to evict them and then they damaged the property? That kind of thing easily run set you back thousand dollars in lost rent and damages. I”m a landlord and I think it can be a great investment but you have to be aware of what you’re getting into and prepared for it.

  29. deRuiter says:

    Q3, Don’t blow the inheritance on a major additon. Either sell and move to a house with better layou, or tuck in a downstairs Bath and let Mom stay on one level, replace roof and pay off as much mortgage as possible with balance of the inheritance, thereby shortening the number of years on mortgage considerably. From your Father’s wishes, he DIDN’T want you to blow it and be stuck with 20 year mortgage, he wanted to see house all or mostly paid off to end mortgage payments.
    Q2. Get part time job evenings and weekends when husband is home to do child care. Waitress, sell in a shop, deliver pizzas, anything part time so you have no child care money to pay. Better to let husband bond with child evenings and weekends while you earn money at low overhead job.

  30. Kevin says:


    Alright, we get it already, you’re a Pampered Chef rep. Good for you. Now please quit spamming the comments with your stupid MLM pyramid scam garbage. The last thing financially-strapped people need is to get sucked into a top-heavy rip-off MLM pyramid scam.

  31. Baley says:

    Um, Kevin, that’s pretty rude. I wasn’t spamming. Also, why in the world would I spam about joining the Pampered Chef? I don’t get anything out of it. It was just a suggestion. And it really works for people. The worst that can happen is you’re out $180 bucks for some really good kitchen stuff (that’s worth a lot more) and make no money. But that’s it. So, I’m sorry I offended you (apparently pretty badly), but I really wish you wouldn’t be so rude about it. A LOT of people find it a good way to make some income on the side. I don’t really see how it’s a scam. reps make 20% (minimum) off of all their sales. And congratulations on causing me to make yet another “spamming” contribution to the comments. I had to stand up for myself.

  32. Johanna says:

    Sara, where exactly have you been reading about this supposed “40/30/30 rule of thumb for spending money”? The linked post has nothing to do with spending money. Am I the only person who’s seeing this?

  33. Kevin says:

    @Baley: I’ve had some VERY bad experiences with MLM scams, and I’m extremely cynical of anyone who has a “suggestion” for a “business opportunity.” I’m so sick of acquaintances who pretend to be interested in a conversation just long enough for them to bring up whatever MLM they’ve bought into. I’m not a “warm market” for you to “work.” I’m a person.

  34. Baley says:

    Kevin, I did a little bit of research into MLM scams and Pampered Chef does not fall into that category. The definition of an MLM scheme is when the business model relies on getting more distributors under you rather than selling products, mainly. With PC, the focus of the business is on selling real, quality products to people OUTSIDE of the organization, making the income based on direct sales, rather than on recruiting. I understand your disgust with MLM schemes (such as Amway), but that’s simply not the case with PC. Yes, there are some bonuses for having consultants under you, but the business is still run off of sales. And I don’t “work” people; I have home shows and if somebody wants the benefits of joining PC, they’re welcome to. I don’t ever have to recruit anybody to make money. Mostly the home shows are about selling the kitchen gadgets (and I happen to LOVE all my PC stuff – it’s a very high quality product). Anyway, it’s very low-risk and it’s not a scam. But you obviously haven’t researched PC, and I understand since you’ve been burned before. And like I said, I obviously get no benefit out of mentioning this on here. I just want to clarify for people.

  35. jim says:

    shhh…nobody tell Johanna about the secret 40/30/30 information.

  36. jim says:

    Kevin, Pampered Chef is more akin to Avon or Mary Kay. Quite legit and not a rip off pyramid scheme. Berkshire Hathaway bought Pampered Chef and I kinda doubt they’d buy a rip of scam pyramid… don’t you? If Baley were pushing a MLM scam then there would be some link to her referral site or invitation to contact her so she could cash in on suckers she lures in. I certainly understand your warryness about MLM scams but I don’t think Pampered Chef qualifies.

  37. valleycat1 says:

    Q4 – Christmas games. The recommendations depend in part on the generational spread & temperment of those you want to involve. My grandmother was always willing to play word games (Scrabble, Boggle, etc.) & usually won hands-down. We kids enjoy sitting around the table playing a relatively mindless card game, which allows enough mental space to chat & catch up with each other. The grandkids enjoy some of the newer games as well as the old classic kids games.

    With a deck of cards, buy a Hoyle’s guide & learn a few new games. Many of them, as well as some of the classic board games, are good for a mix of generations. Our family also used to play Tripoli a lot, as it accommodates as many people as you have available to play.

    And, if you have anyone who’s really competitive or cutthroat at games – especially if you have others who just play for the fun of it – Risk and Monopoly are not good choices – at least for the holiday season! In my experience, Risk would usually end up with someone quitting & bad feelings all around because the others have ruthlessly ganged up on them to wipe them out.

  38. Kevin says:

    The problem I have with MLM drones is that they won’t shut up about it. It’s all they ever want to talk about, and it’s incredibly annoying.

    Believe it or not, I actually own a couple Pampered Chef items. They’re nice. But, like everything else sold through MLM’s, they were very overpriced. They had to be, because there were a dozen brainwashed lemmings chaining up the pyramid getting paid.

    All MLM’s are scams. They just are. The only people who ever make money on MLMs are the people at the top. And guess what. You’re nowhere near the top. You will never, ever, EVER make enough money to support yourself through an MLM. And I’m not talking specifically to Baley, I mean ANYONE.

    Now, that in itself is not actually so bad. If MLMs were upfront about that, I could live with them. However, that’s not how they operate. That kind of honesty isn’t what packs ’em into the conference room of the Best Western on a Saturday morning. No, the fake-Rolex wearing cheerleaders doling out the free coffee at those venues would have you believe you’re going to be the next Donald Trump by signing all your friends up for a 10-year old videophone, or grossly overpriced whole life insurance, or makeup. It’s the lying, the deception, and the shameless FAKEness that pervades MLMs that I find so incredibly disgusting. It encourages people to take advantage of their own friends and family, just to make a pittance of a commission (while their “upline” feasts on the lion’s share).

    Gah, this stuff really gets me worked up. I despise all MLMs with a passion. They’re disgusting, deceitful, scammy cults that manipulate people like pawns, just to make a buck. I wish they were illegal.

  39. Johanna says:

    Kevin, do you even read comments other than your own?

  40. Kevin says:

    I read all of ’em but yours. ;)

  41. Johanna says:

    That would explain a lot, I guess.

  42. David says:

    A paradox: if Kevin does not read Johanna’s comments, how could he reply to comment 39?

    Of course, if comments were to travel faster than light it would be possible to reply to a comment before having read it. But this would create a far more dangerous paradox if, having replied to a comment, one were subsequently to decide not to read it (see “Experiment”, by Fredric Brown).

    Moreover, it would imply that Johanna’s comments lacked mass, and no one would go so far as to suggest that.

  43. Temi says:

    Q3 – You should be able to take the money you inherit out of the IRA over a period of years. If you take it out all in one year it will likely result in paying a higher marginal tax rate on the income. If you do a trustee to trustee transfer to a beneficiary IRA, you would have small required minimum distributions each year, but you are free to take out more than that each year to put toward the mortgage or renovation. I know this wasn’t your primary question, but it sounded like you may have misunderstood your options. If you are going to take the whole amount out over a relatively short period of time, it would almost certainly benefit you to spread it over at least two tax years.

  44. SLCCOM says:

    Before putting one penny beyond ordinary maintenance into your mother’s house, get several real estate agents to weigh in. You never want the fanciest, most expensive house in the neighborhood. That is a sure way to blow your Dad’s money. I second the stair lift idea; it will solve a lot of problems inexpensively. Check Craigslist for used ones, but even when purchased new, it is way cheaper than moving.

    Before getting involved in things like Pampered Chef, stop and consider the economy in your area. Unless people are doing a whole lot better there than they are here, they won’t be buying expensive kitchen gadgets. They probably will still be buying Mary Kay or Avon, though, since the majority of working women wear makeup. You can also make a lot of former friends out of your current friends with many of these programs. Carefully consider your marketing plan, and DON’T hit up your friends and relatives. I have a niece by marriage whom I dislike anyhow, and she got into selling some absurdly overpriced “healthy” cooking mixes. Let me just say that this didn’t endear her to me any more.

    When calculating the costs of returning to work, please don’t forget to factor in that if you are out of the workforce for many years, getting back in will be a serious challenge. Life is unpredictable, and bad things can happen. You really need to be prepared to support yourself and your children. Kids with disabilities can get help, and you should talk to your local developmentally disabled children agency. If the child has osteogenesis imperfecta, the Shriner’s Hospitals can help. If it is some other bone marrow disease, St. Jude’s may be helpful. Shriner’s hospitals and St. Jude’s will work with your financially, and do cutting edge research in illnesses.

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