Updated on 03.30.11

Reader Mailbag: Time for Games

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. Removing credit card users
2. Making your own shoes
3. Clothing budget for teenage girl
4. Board games for two
5. Too tenacious on debt repayment?
6. Getting child out of nest
7. Car opportunities
8. Blogging mistakes to avoid
9. Financially responsible versus happy
10. Medical school question

Many people ask me how I find time to play so many board games.

Each Wednesday evening, I get together with a small group of friends for the sole purpose of playing board games and chatting. We usually play for three or four hours.

About every third Saturday, Sarah and I get together with a few others for a dinner party that’s usually prefaced and followed by board games and card games.

About once or twice a week, Sarah and I will play board games against each other in the evenings.

Board games and card games with friends are a big – and pretty inexpensive – part of my normal social routine.

Q1: Removing credit card users
I have a question regarding an issue I am having with a credit card and the company (it is a PNC Bank VISA). I am fairly young (27) and I have had this card since 2006, it is the oldest credit card that I have and oldest credit I have aside from student loans (which are long paid off). Additionally, I do not have any debt but I do have a few credit cards that I use regularly and pay off every month.

I recently broke up with my boyfriend of 3 years. During the time that we were dating I added him to the credit card as an authorized signer for various reasons that made sense at the time. Now we have broken up and I have been trying to remove him from the account. First I filled out the form online to remove him from the card and was told I had to fill out a form and mail it in. After doing that, I received a response saying that they could not remove him from the account because they could not verify his address.

I called customer service today to ask about it and was told that he could not be removed for credit score reasons, but they were pretty vague about what that meant. First it seemed they were saying that his being on the account was keeping his credit score up and for that reason he couldn’t be removed. Then I was told that he couldn’t be removed because they want him because then both of us are responsible for paying the bill. This card is seldom used, has never carried a balance, and has always been paid by me. And he is unemployed and disabled (has been for some time) and has no money and must have a terrible credit history/score. The customer service rep said that the only thing I can do is to cancel the card and apply for a new one.

I am confused as to why this sort of situation would even exist. It was my card first, I have always paid it, and now they are telling me I cannot remove him. He has cut up his card, but as far as I know still has access to the account information online and if he has the numbers saved somewhere he could in theory rack up a significant bill, that I would have to pay. Have you heard of this sort of thing happening? What should I do here? I don’t want to cancel this card since I have had it for a long time and it has a very high limit, so it would mess up the length of my credit history and also my credit:debt ratio. Are there any steps that I might be able to take that could make it possible for him to be removed from the card? Or is cancellation my only option?
– Erin

My guess is that the credit card company in question here changed their standards for who to issue a card to since you initially applied for the card. Under the revised standards, both of you would be needed to keep the card.

My guess is that if you cancelled the card and applied for a new one, you probably wouldn’t get the same card or same rate you currently have.

My suggestion would probably be to get a card from a different company, then cancel this one. Of course, if this is the oldest card on your credit history, you may have a downward bump on your credit score right after you cancel it (since you will have shortened the length of your credit history), but you should recover over time. I know I would be very uncomfortable having a card out there with an ex on it as an authorized user that I couldn’t remove.

Q2: Making your own shoes
A couple of years ago I bought a cheap pair of shoes from a Chinese shop. They were surprisingly resilient and comfortable, and lasted me about half a year after which I glued them and they lasted about a year before the in-soles got too worn out to wear comfortably. I then put them aside for a long time having bought some in-soles to replace the the old ones.

Last month I got back to fixing them, and this is the total cost breakdown (although originally in local cost, converted to US$):

Original shoe price: +/- $ 8.00
Price rubber glue: +/- % $ 1.50
Price in-soles: +/- $ 4.00
Pair home-made slippers made of car tyre for sole: +/- $ 7.00
Price rubber glue (a long time had passed): +/- $ 1.50
Price cheap pillowcase (to replace back end): $ 1.00
Seamstress – sewing old in-soles to new, sewing up back end: +/- $ 8.00
Cobbler – stitching soles to shoes: +/- $ 7.00

Now this wasn’t all at one time. First I glued the soles to the shoes, then in-soles were too worn away, as I stated before. Then with the help of a seamstress I fixed the shoes (she stitched the old in-soles to the bottom of the new ones and stitched a piece of the pillow case to the back end of each shoe) and glued the in-soles and the soles back on. The soles soon came off again and I waited until I got paid again to get the soles stitched back to the shoes. All told, it cost me three times as much to keep an old pair of shoes going than it would have been to get a new pair.

I don’t regret it, as I got a lesson from that, these orthopaedic in-soles make the shoe much more comfortable than when they were brand new, the car-tyre sole and the cobbler’s stitching means they will last for a good while longer than they did the first time, plus I have a one-of-a-kind pair of Frankensteinian shoes. But I can’t help but think that maybe it might have been better to get a new pair of shoes for say, about $ 35.00. By the way I later bought another pair of shoes, same make, same price, different type and it’s almost annoying how long they’ve lasted, much longer than the first pair.
– Des

My understanding – and your story matches with that – is that if you’re buying a relatively low-end shoe, it’s less expensive to just buy one than to assemble it yourself or have a cobbler do it. However, that situation gets a little less clear with very high-end shoes (the kind of shoes that, honestly, I’ve never owned).

As for why one was poorly made and why another was well made, my guess would be it’s the difference between workers or, possibly, a demand on that shoe factory to improve standards. It is very hard to tell which one it is.

In the future, unless you’re going for a very high-end shoe that a cobbler may assemble for you, I would just buy one off the rack.

Q3: Clothing budget for teenage girls
Any suggestions on how to structure a clothing budget for a teenage girl? Not the dollar amount, but what it should cover, how it should be doled out, etc,? I want my daughter to learn how to budget and spend wisely. She is actually very careful and does not have a lot of clothing, but she needs to learn how to manage money and shop wisely. When I was her age my mother gave me a certain amount of money, and then insisted I spend it on my winter coat (of her choosing). Should I cover underwear, socks, a pair of everyday shoes, her winter coat, and then give her money to budget to buy the rest? Or should she have to budget for it all herself? I am worried that might be too much to manage all at once. Also, if I give her a monthly allowance she might not have enough for all the things she needs when the weather changes. (She is still growing.)

– Rhee

My honest opinion is that you should set an overall budget for her and require only that she buy the minimum amount of underwear and socks that she’ll need (and maybe a few other simple rules regarding tasteful clothes).

I would probably do this seasonally with a growing child, revisiting the issue each season. Buying clothes when a teenager is in their growth spurt can be difficult.

I would also suggest that you start off by thrift shopping with her. Don’t start at the high-end shops. Go thrifting to start this process off and let her discover that there certainly is “cute” stuff to be found in such places.

Q4: Board games for two
My husband and I, sadly, don’t have friends yet. We just moved to a new state and are busy job-hunting (hubby), and starting a new business (me). We love to play Scrabble and chess, but they’re getting old. I have Ticket to Ride already; can you suggest others that we might like?

– Lisa

If you like chess, I would suggest trying go, Hive, or Arimaa. All are excellent abstract games; Arimaa is absolutely wonderful and can be played with the chess set you already have, and go can actually be played with two pieces of paper.

Two player games that my wife and I have enjoyed over the years (that are a little less abstract than the ones above) include Dominion, Pandemic, Carcassonne, Mr. Jack, and Lost Cities.

Check each of these out. I think you’ll find at least one that you’ll like.

Q5: Too tenacious on debt repayment?
I’m age 25 and have spent most of my adult life struggling to go to school and to survive largely on my own. I racked up credit card, student loan, and private loan debt to the tune of about $57k in order to scrape by. I’ve finally graduated with a Bachelor’s degree at age 25 and now have a steady job where I make $51k per year.

I’ve been here about 7 months and I’ve been following an aggressive debt repayment plan going by interest rate. I’m down to about $42k. (I recently got a used vehicle for $9,000 so that’s part of the 57k.) I put as much money as possible into my debt every month and predict I’ll have everything paid off by May of next year.

When I say I put as much money as possible, I mean as much money as possible to the expense of everything else. I am so tenaciously paying it down I have elected to pay nothing to my 401k and I have even declined health insurance from my employer, all for the sake of having more money to pay that debt down with.

So I have no retirement savings, no emergency fund, no health insurance, all for the sake of paying down my mountain of debt. I have very little to worry about in terms of liability – I live very cheaply, I have no kids, I am in great health and don’t engage in any risky behaviors, I live 4 miles from my employer so the car breaking down is not a huge concern, I rent so no house repair emergencies, and my job is a government contract so it’s likely I won’t lose it. I’ve been growing slightly more worried as the months go by that I don’t have 401k or emergency savings, but I thought I’d get your opinion on it.
– Amanda

The declining of health insurance is a bad move. I would get your health insurance reinstated as soon as possible. If you have a health crisis, you will need it.

Now, what about the retirement savings?

First, I would build up an emergency fund. Cut back on your debt payments to the bare minimum for a bit until you have $1,000 in cash savings.

Next, I’d look at the debts I still had and focus on the high interest ones first – the ones with an interest rate above 10%. Get those all paid off.

Once that’s done, I would kick off the retirement savings, contributing 10% pre-tax to my 401(k).

After that, I’d build up the emergency fund a little more – up to about two months of living expenses – and then focus on the remaining debts.

You have enthusiasm for debt repayment and that’s excellent. Keep it up – just give yourself a bit of a safety net first.

Q6: Getting child out of nest
I am the parent and my son has been living at home with me for the last year. I cannot keep doing this…I have no savings and I am not making it on what I recieve from SSD and VA benefits. He seems to have no interest in looking for work out there, but most here there are really no good or fair jobs for felons, which he is one. He has a GF with 3 kids by him. I am not sure I want to do this anymore…I would love to buy him a cheap car so he can go out without having to use mine. As well as the gas I put in it. Is there a way to maybe have his GF help support him? He can’t live with her because of his felony-the landlord does not want him there. I see no way out of this. If you do, could you please tell me?

– Sarah

You’re really in a bind here. The punishment felons go through doesn’t end when they get out of jail. It is very difficult to find great employment once you leave prison unless you have some spectacular skills that can overcome the felony.

The worrisome element here is your son’s unwillingness to help himself. You’re going to have to decide if you’re willing to actually give him the boot or not.

If you aren’t, be prepared to live in this situation over the long term. If you are, sit down with him and start setting up a timeline for him to leave. Take every step you personally can to make it happen.

Q7: Car opportunities
My question involves getting a car. I am 27 but in deep financial debt. I had my identity stolen by a family member when I was 18, but did not realize until I was 20. This means that my relative had 2 years to rack up over $10,000 in credit card debt before I found out. I have worked hard and have the balance down to $1,500. I have my own credit card debt of $7,500 that I am on a payment plan for and have no credit cards at all because I don’t trust myself with them. I am also on payment plans to repay my student loans from college ($168/month).

I worked as a teacher right out of college, but I was a private school teacher, which means that my salary was no where near the public school salary (even though a public school salary is still not what it should be for the amount of work teachers do). My first year of teaching, I made $20,000 before taxes and had no benefits, but I was living with family and paid menial rent. I made a move to Virginia and made $29,000, still with no benefits, for two years, but had a $900 apartment, utilities not included, on top of food, gas, etc. Needless to say, neither job allowed for much wiggle room in saving, especially since I had a $3,000 hospital visit my second year in Virginia.

I am now a secretary at a church. I make $17/hour (no benefits) and have an all-inclusive rent of $700 very close to my place of work. I have also begun tutoring with a local company. I have 6 students and tutor about 12 hours a week at a range of $21-$25 an hour. The company does not take taxes out of my paycheck, so I created a separate savings account and take 30% off each tutoring paycheck and put it in the new savings account as a “tax fund”. The tutoring job requires constant travel, usually to 3 different homes an evening. I have a 2000 Ford Focus, fully paid for, but it is not always very reliable. Since October, I have had to use practically all of my emergency fun to pay for repairs when it broke down (about $2,000 all together). The car is only worth about $500 and when I took it to the shop last week, the technician told me that I would have to make another repair around $700.

I am tired of spending the money I work my butt off on this car instead of lowering my debt. I have a friend who works at a car dealership who says I can get a newer used car for a monthly payment of around $150 (with a high interest rate because my credit is shot) with a dealer warranty. I have about $2,000 I can put down on the car initially and I believe that the monthly price fits in my budget if I cut costs in other areas. Would you advise this plan or am I being a complete idiot?
– Jennifer

First of all, your story at the start about identity theft is, quite simply, frightening. Any relative who would do that is a pretty poor example of family.

As for the car question, it certainly sounds like you’ve reached the point in your car’s lifecycle where the repair bills are adding up to more than the car is worth. That’s usually the time to move on to a new car.

If you’re currently spending much more than $150 a month in repair bills on average – and it only takes a few big bills to get there – then you’re probably better off switching cars. Get what you can for your old car, then switch. You’ll be money ahead.

Q8: Blogging mistakes to avoid
I’m starting a blog on dating and relationship issues. What are some pitfalls to avoid?

– Kelly

There are lots of mistakes that every blogger will make along the way. I’ll point to three that I particularly wish I had figured out before I started.

First, figure out what your “privacy line” is. What aspects of your life are you going to talk about, and which ones are off limits? What about the life of your spouse? Your friends? Your children? Sometimes there are situations in your life that are difficult to explain without crossing that line, and what I’ve found after a few mistakes is that you’re better off avoiding anything that comes close to it.

Second, figure out your policy for reader privacy. It sounds like you’ll be giving advice to readers. Figure out how you’ll handle their privacy. What will you do if they change their mind after the article is posted? How will you explain your solution to the readers of the article if you have to change it later? Not having a good policy on this caused me a lot of trouble a few times, causing readers to leave the site at least once.

Third, just avoid controversy that isn’t directly in your topic area. If you’re writing about a controversial topic that’s all about relationships, great. It’s just not worth it. At one time, I believed talking about my thoughts on specific issues would create a greater understanding between myself and my readers. Instead, I just drove them away. It’s just not worth it.

If I understood these three things before I started, I would have avoided almost all of the worst mistakes I’ve ever made on the site. Learning is all about messing up sometimes.

Q9: Financially responsible versus happy
I’m female, 56, single, have owned my own company for almost 30 years, make a gross income of $60k/year (gross) on average. I never know from one year to another how much work I will have, but the workload has been consistent all these years. Some years I have made 80k. I work out of my home.

I have no debt. Because of some financial issues in the past, I now have only $125k in online “high-yield” savings and $10k in a Roth. I live in a state that has no state income tax and my yearly expenses (including federal taxes) are $45,000.

I was diagnosed with breast cancer three years ago and had surgery and treatment. I am more anxious than ever to have a good quality of life, which I do not have here. I moved to this state a few years ago to save money and to live near my son, but he has taken a job in another state. I am completely bored here and have no real friends and now no family. I don’t like the cold, the snow, and the environment here. If I move to be near my son, which he wants me to do, my healthcare premium will double, I will have state tax, and there will be other expenses I don’t have here. On average, my monthly expenses would increase about $700/month, not including state tax. I would be much, much happier elsewhere, but then I’d have financial anxiety and also wouldn’t be able to save as much money every month. I worry about cancer recurring, I worry about not having enough money in savings, and yet I also worry about wasting my life here in a place where I have no life.

Considering what I consider my bleak financial picture for my age, would you recommend that I bite the bullet and stay in a place where I’m not happy living but am able to save money (and travel to see my son), or make the move? I am able to save about $15k/year here, but every single day I am miserable, although I do find comfort in the thought of being financially responsible. But is it responsible to save money but be miserable?
– Valerie

My first question is how much your company is worth. Is it something you will be able to sell when you’re unable to continue working? Do you have assets with value tied to this business?

The more your business is worth, the less urgent this question is. I can’t tell from the email what that business asset you’re holding is worth.

If I were you, I’d move. I can tell by your description that you’re not living in the lowest possible place in terms of cost of living, and I can also tell that you’re not happy where you are at. You should either go all-in on the saving and move to a place where you’re truly minimizing your costs or move to where you’re happy.

Unfortunately, I can’t tell you which one to do. I would encourage you to calculate your net worth as well as the worth of your business and see where you’re at overall.

Q10: Medical school question
I am 21 and will be starting medical school this fall after working for a year. I will have saved about $12,000 at ING. My question is this: should I open an index fund (with maybe $1000) or use all the money toward medical school? Basically, do the benefits of an extra 7 years (med school + residency) outweigh the debt I am going to accrue through private loans?

– Eve

An index fund is not a secure place to put your money over a seven year period. It is too volatile over that period. You have a strong likelihood of losing money over that time frame.

If I were in your shoes, I’d minimize the debt that I came out of school with rather than bothering with an index fund. An extra $1,000 invested in your first year of medical school reduces that first year debt by $1,000. That’s six years of interest on that $1,000 saved before you even get out of medical school.

If everything else is in place to succeed in school, minimize your debt.

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. Courtney20 says:

    The situation in (and answer to) Q1 are both absolutely ridiculous.

    Bankrate says: “If your credit card company is a national bank, you should file a complaint with the Office of the Comptroller of the Currency about the company’s unwillingness to remove an authorized user from the account. Since you’re required to accept the financial consequences arising from having an authorized user on the account, your ability to remove someone other than your spouse from the account as an authorized user shouldn’t be restricted by the credit card company.”

    Ehow suggests having the authorized user call the credit card company and ask to be removed from the account.

    I wouldn’t cancel the card. But I might think long and hard about getting a second card for regular use, instead of giving money to a company that acted in this fashion.

  2. Johanna says:

    Q3, Rhee: When you say your daughter does not have a lot of clothes, is that because clothes (having a lot, having “cute” and trendy ones, etc.) are not that important to her? Not every teenage girl loves fashion. If your daughter doesn’t, then maybe having her buy her own clothes is not the best way to get her thinking about making wise spending decisions.

    My parents bought most of my clothes for me until I was past 20, and I think I turned out fine (financially, anyway). I think that if I’d had to buy clothes with my own money at age 13, I would have bought four or five cheap sweatshirts and worn them all year, because I’ve always tended to err on the side of spending too little rather than too much.

    Whatever you decide to do, I think the key is to give your daughter guidance in whatever decisions you want her to make. Help her explore the consequences that she might not be seeing right away (“If you only have five pairs of socks, what are you going to do when we go on vacation for a week?”) – don’t set her up to make bad decisions just so she can “learn a lesson.”

  3. Vivianne says:

    @ Q 2: Good supportive shoes are worth paying for (hammertoes, bunions, plantar fasciitis, chronic misalignment leading to knee, hip and back problems), and well made shoes last longer. I have not found quality shoes for much less than $30 a pair; generally more like $50 but they last a couple years, and my feet don’t hurt! I LOVED my $3 “China Flats” when I was 15, but I couldn’t wear them now.

  4. RichC says:

    Med School Question: The best advice is to keep your medical school borrowing as low as possible in the earliest years. Be sure you keep an emergency fund, but don’t over borrow just because the money is made available. You may think the most difficult time will be those first two years of med school, BUT unless you keep your finances under control, the most difficult will be when you start to pay back your loans. REMEMBER, you will be continuing your required training as a low paid, heavily worked resident and possible fellowship doc after graduation. Loans will need to be paid back at that time and interest is capitalized even if you enroll in a reduced payment plan. If you are a serious about understanding this, request a copy of the AAMC Education Debt Manager booklet before you start borrowing rather then the usual after graduation.

  5. lurker carl says:

    Regarding the comment to Q7 about identity theft via a family member, most cases are by family, friends and acquaintances. Those folks already know or can easily acquire the information needed to start spending money in your name without your knowledge.

  6. Courtney20 says:

    @ lurker carl – also, I think somewhere on the order of 90% of identity thefts by family/friends go unreported. But without a police report, the victim has no recourse…which sounds like the case in Q7, since Jennifer says she has worked hard to get the balance down to $1500.

  7. valleycat1 says:

    Jennifer Q7 – be sure that deal your friend knows about is for purchasing a good used car, not leasing something new. I also suggest running the numbers to see what the impact of paying more down upfront vs. paying less has on the actual payments. You might be better off hanging on to that $2K. And, check with a credit union or your bank regarding a car loan & compare with the dealer’s offer.

  8. Andrew says:

    Q9–Choose to be happy. The worst regrets in life are for opportunities not taken.

  9. Joanna says:

    @ Q3 My mother gave me a monthly clothing allowance because she hated going shopping. I used that allowance to get all of my clothing from age 13 to college with a few exceptions: my parents bought me winter clothes as Christmas gifts, my mom took me shopping for bras and underwear and would buy multi-packs of socks (I bought my own “fun” socks), and they gave me a little extra to buy formal dresses for prom, etc. (I still had to contribute some of my own money). This worked for me because I enjoyed shopping for clothing. If your daughter has no interest in clothes, find something else that does engage her. My mom also started giving me a cosmetics allowance when my face wash, body lotion, etc. started making her grocery list way too long. That really put the cost of things in perspective.

  10. NewReader says:

    Re Q2, I like to bargain hunt for high-end shoes, it really saves me money in the long term. For example, six years ago I bought a pair of Italian designer black boots for $150. The original price was $600 but I found them at an outlet store marked WAY down. Even $150 is a lot for me to spend on shoes/boots, but they are a wardrobe staple and classically designed so they don’t go out of style. Last fall, I had them resoled for $27, they are good as new and I expect to wear them for several more years. Not to say I don’t also like my $2 flip-flops from Old Navy in the summertime, but I do love these boots!

  11. Des says:

    (re-posting because my previous post is in moderation. This is not the same Des as Q2)

    RE Q1 – An authorized user is not the same as a joint owner, and the company cannot simply treat them the same. It sounds like the person you spoke with just doesn’t know what they’re talking about. Understand that most phone reps are entry-level positions, often held by students. They receive training, but it is not extensive and much of their learning is on-the-job as things come up. Some will make things up just to get you off the phone and on to the next call (which increases their stats). I would call back and insist they remove him as a user. Ask for a supervisor until they do it.

  12. Johanna says:

    Q5, Amanda: First of all, I agree with Trent that you need to get health insurance. That should be priority #1.

    I think there’s a case to be made for signing up for your 401(k) now, for two reasons:

    1. If your employer offers any matching funds, you’re passing up free money by not participating in the 401(k). That’s money you can’t ever get back.

    2. If, once you’ve paid off your debts, you decide to go similarly gung-ho at retirement savings, you’ll have a bit of a problem, since there’s a limit on how much you can contribute to your 401(k) each year. But if you split your money between the 401(k) and the debt payments, you can put more money in the 401(k) without running up against the contribution limit.

    The reason it’s often advised to pay down debt before contributing anything to retirement is that most people don’t have much money to split between savings and debt reduction, so they probably won’t ever have to worry about running up against contribution limits, and paying down debt faster can give a quick psychological victory, which can be good even if it means leaving employer matching funds on the table. But you’re paying down your debts so fast that you’ll still have plenty of psychological victories even if you channel a few thousand dollars toward the 401(k).

    I think you’ll still be all right if you hold off on starting your 401(k), since you’re very young, your debt will be paid off very soon, and you’re apparently living very far below your means. Not having a 401(k) isn’t something to lose any sleep over in your situation. Still, it does make a lot of sense for you to start contributing now, especially if there’s an employer match.

  13. Jules says:

    For the blogger: don’t advertise your blog straight away. Plug away for a few months at it, and if you’re still going on after six months, still finding fresh stuff, then plug it amongst other blogs.

  14. Suzanne says:

    Q5: I was 23 years old and in perfect health when I was diagnosed with lymphoma. Get health insurance ASAP because you never know what might happen.

    Q9: Not knowing anything about your business, would being in a location that makes you happier and therefore less miserable enable you to make more money with your business because you are more motivated/engaged/happy?
    I would be inclined to move towards a work/life balance that is happier, especially what you have been through with your cancer. Worry doesn’t help with your health, and if that is all you are doing then you might be hurting yourself in the long-run physically for the sake of helping yourself financially.

  15. jim says:

    Q1 Erin : Cancel the card.

    One of 2 things are happening. a) the bank is totally screwed up and doesn’t know their head from their tail. b) you inadvertantly made the card a joint account so you and your ex are co-signers and equally responsible for the debts. Either case you should cancel the card and find a better bank.

    Q5 Amanda: Do not go without health care. One major injury or illness could bankrupt you. Thats not worth the risk. If your employer matches 401k funds then contribute to the match at least. If you don’t you’re throwing away free money.

    Q9 Valerie: Don’t live somewhere that you are miserable just to save more money. Go ahead and move to where your son is. Being happy & saving ‘just $5k a year’ is much better than being miserable and saving $15k a year.

  16. Adam P says:

    On the credit card debt versus free match 401k thing, even with the employer match you still come out ahead by paying the debt first in certain circumstances.

    Say you’ve got $20,000 in credit card debt at 23% interest (ouch).

    Your employer will match your 401k contributions 50%, and your plan will earn you a decent guaranteed 4% tax sheltered return on investment. If you earn $40,000 a year, should you put that 6% ($2400) a year on the card or in your 401k to get the matching?

    401k contribution
    Year 1:
    Put the $2400 in the 401k and you make 1200 from the match (woohoo!) and earn $144 in investment income (4% of 3600) so you gain $1344 intotal.
    Year 2: 4% of $3744 (3600+144), you gain $150 in interest.
    Year 3: 4% of $3894 (3744+150), you gain $155 in interest.
    So you made $1200 + $144 + $150 +155 = $1649 from your $2400 investment in the 401k. You’re awesome!


    If you put the 2400 on the credit card, you’d pay less interest every year (we won’t compound the credit card debt for simplicity over the years):
    Year 1: 2400 x 23% = $552 less interest paid
    Year 2: 2400 x 23% = $552 less interest paid
    Year 3: 2400 x 23% = $552 less interest paid

    So you’ve saved $1,656 ($552 x 3) by paying the $2400 into the card in year 1.

    Uh oh, that is more money back from the $2400 investment than the 401k with 50% matching! Egads!

    Just some food for thought.

  17. Johanna says:

    @Adam P: Why are you assuming a three-year time frame? Amanda is talking about having all her debt paid off by next May – and since only a portion of that is credit-card debt, she’s going to have all her high-interest debt paid off in much, much less than three years, even if she diverts some money from debt repayment to the 401(k) (and health insurance, emergency fund, etc.)

  18. Adam P says:

    @Johanna, I wasn’t assuming a 3 year time frame for Amanda at all. Sorry to give that impression.

    I’m just giving a *generic* scenario where a person is better off after 3 years and being overly simplistic about it too. By all means, I agree with your advice on Amanda, it’s good advice for her and she’s not going to be in debt for a long period of time.

    My comment was just a knock against one size fits all advice that some may take away from the comments. The “pay into the 401k plan to get the match before paying more on debt than the minimum payment” isn’t as plausible when someone has toxic interest rates and the repayment plan stretches out a few years (in this case, 3 or more?)

  19. Chuck says:

    RE Q6: I do volunteer job coaching for a couple charities. Encourage your son to visit a job coach to get some help in finding a job. Churches often do this and some states have government offices that also help. He can probably find this sort of help at no charge if he looks.

    It is hard for a felon to get a job. But it can be done.

  20. Annie says:

    Q5: My brother was also in great health and excellent physical condition, and thus decided to forgo health insurance. Two years ago he died of colon cancer at age 27. More than one doctor refused to treat him because the treatments were $13,000 every other week and he did not have insurance.

  21. kristine says:

    “my job is a government contract so it’s likely I won’t lose it.”
    That sounds naieve.

    The shoe answer did not show an understanding of the question. She did not have a cobbler make shoes for her. She had old shoes repaired many times. Not the same thing.

    The felon son-what was the answer here? It’s a tough problem? Take steps? Did I miss something, or was there no actionable advice? Is it me?

  22. Janis says:

    Q10 Medical school – If you are considering primary care (family or internal medicine, pediatrics, obstetric/gynecology plus a few other special need areas), please consider the National Health Service Corps’ loan repayment program (Google it). For a five year commitment to providing care in an underserved area (urban, rural, prison populations, etc.) you can have $170,000 of your medical school debt repaid. You may be surprised to learn that there are some fine communities that qualify as underserved.

  23. Hannah says:

    Q1 you don’t have to cancel the card, you can just report it as lost, and they will send you a new one with a different number. If they don’t have your ex’s address then he will never know the new number.

  24. Rob says:

    Q5: In general, it is always best to pay off your debt before investing. Second best is to split the extra money between paying down debt and investing. Third best is to pay down the debt on schedule and invest the extra money. It doesn’t matter if your time horizon is 1 year, 10 years, or 50 years, you will always pay less in interest by paying down the debt first. You will not recoup that interest by investing. I just made a post at my blog running the numbers.

    There are two caveats to this:
    First, if you don’t have an emergency fund, you need to build one asap. One of the main drivers of credit card debt is emergency spending. If you spend all of your money paying down your credit card debt and don’t have some money set aside, when your roof springs a leak or your engine locks up, you just erased all of your hard work.
    The second, the only time it makes sense to invest instead of paying down debt is when you have a reasonable chance to make more money than you’re paying in interest. Consider my student loans for example. My interest rate is sitting under 4% annually. I am reasonably sure I can beat that return on investments. But I have to accept the risk that I won’t be able to beat it. However, if I’m dealing with a credit card debt of 23%, there’s now way in h-e-double hockey sticks I’ll come close to that. Warren Buffett hasn’t been able to do that consistently over the years, you certainly won’t.

    In summary:
    Get insurance. Everyone else is spot on. It doesn’t matter how healthy and careful you are, the chance that something catastrophic will happen is non-zero. It’s better to have insurance and not need it than need insurance and not have it.
    Start an emergency fund, NOW! It’s the only way you can protect yourself from being forced back into credit card debt and erasing your gains. I suggest splitting your extra-payments between the debt and the emergency fund until you’ve got three months of minimum bill money saved up. That will push your payoff date back, but having the emergency fund is one of the most important things you need to stay out of debt.
    Pay off your debt as quick as you can. At your age, there will be time enough to max out your retirement accounts after you’ve paid off the debt.

    Q7: Don’t compare the cost of repairs against the value of the car. Compare them against the expense of replacing the car. $1,000 to replace an engine may seem like a lot of money, but compared to $16,000 in car payments, not so much. There are very few things that can not be repaired, replaced, or safely lived with in a car. Instead of buying another car, use that $150 to rebuild your emergency fund.

  25. Riki says:

    Q5 Amanda

    The thing that strikes me about your letter is that you seem panic-stricken about your debt.

    You’ve done amazingly well to pay down your debt as much as you have in such a short period of time. The thing is, there’s a lot more to life than just debt-repayment. In your desperation to pay off the debt, you’re taking on a huge risk by not purchasing health insurance or maintaining at least a small emergency fund.

    So, my first piece of advice is to RELAX. My second piece of advice is to buy some health insurance! It’s foolish to go without anything. Third is to put together an emergency fund. At your current rate of repayment, you could easily save a decent emergency fund by taking half of your debt repayment amount and putting it in a savings account. Do that for 3 months and you’ll have a nice cushion and it will not set you back that much. Heck, do it for one month and you’ll have a decent cushion.

    But please, remember that paying down debt is important, but LIVING is also very important. Balance in all things.

  26. bogart says:

    @Sarah I’m sorry that you find yourself in the situation you do. I have a family member who works with prisoners re-entering society after they have served their sentences and there are many, many hurdles they face as they try to do so, including finding work.

    Legally, you have no obligation to your son (assuming he’s an adult) to let him live with you, use your car, etc. So one option is to give him a deadline and perhaps talk to a lawyer and tell him when he needs to be out (and change the locks). I can’t tell from your post whether you’d want to do that or not.

    Absent some of what you’re facing, we did once tell one of my DH’s (adult) kids they needed to be out by a certain date or start paying a (modest!) rent. We’d have had trouble enforcing that (immediately) had we needed to, but we could have followed through with other steps (this wasn’t an issue we faced — said kid did move out by the deadline we set).

    Some of the work the re-entry folks I know of, have been able to find, has been construction, and also stuff like delivery jobs, sometimes as a freelancer (of course that requires a car).

    Good luck to you.

  27. SwingCheese says:

    Q5: Regarding the health insurance issue – are you really saving *that* much money per pay period by not having insurance? If you’re determined to go without, find out if there is a clinic in your area that offers a sliding scale option – basically, you pay according to what you make. Then, once your debt is paid off, (assuming your employer does this) you can sign up for health insurance when it is offered again. But unless you are saving a tremendous amount, I would just grab the insurance now.

    Annie: I’m sorry to hear about your brother. I thought doctors *had* to treat patients, regardless of insurance. How awful.

  28. Steve in W MA says:

    Why in the world are you paying off debt that was the result of identity theft? Contest the debt and have them provide proof (signatures, which they won’t have) that you incurred it. They won’t have it. Dispute it.

    Don’t pay another cent of that.

    The credit card company may go after your relative if they figure out who it is. Of course, if you provide them the evidence that this relative is the one who did it, they definitely will pursue him or her. These are criminal activities of grand theft, fraud, and uttering a forged document.

    Are you seriously going to let your relative steal $10,000 from you and just eat it? They stole. They made the choice to commit a serious criminal act. If you are willing to eat this, then at least be honest with yourself that that is what you are doing even though you have no legal liability to do so and no responsibility for the debt.

  29. Diane says:

    Q9 Valerie – First of all, congratulations on your breast cancer victory! Since five years is the first big post-cancer milestone, I wouldn’t make any move before you cross that threshhold. It’s even possible that your son will move again before the economy fully recovers. I, too, am a cancer survivor and at age 53, I am passionately saving in the hope of affording an early-ish retirement.

    Here’s my been-there advice: Do. Not. Move. (Yet.) Plan to spend the next two years blooming right where you’re planted. Volunteer, look for others who can benefit from your time and talents, join a church, try online dating, join a book club or game club or whatever club. Visit shut-ins or a veteran’s hospital, convalescent facility, or any hospital of any kind, including a pet hospital. There are a million good causes out there and all of them can make you feel better about yourself. You are a grown, mighty woman. You do not need to be under your son’s feet or in the perfect climate to start building a great life.

    Next, look for ways to rachet up your savings without suffering. I usher at a regional theater to get free entertainment and I’m meeting lots of new people. Win-win.
    Also, you must get the rest of your financial house in order. Why are you not taking advantage of the generous tax provisions for self- employed people (Keough, Sep IRA, etc.)? You are shooting yourself in the foot financially. I’m personally no fan of SuzeO, but think highly of both Ric Edelman and Dave Ramsey. Get their books (from the library, of course) and get started! Discover all the other great financial blogs out there…if you don’t know what GRS and ERE stand for, find out. (I know you know what TSD stands for – great start!) There are lots of other good ones out there. Find a few you like and play follow-the-links.

    I have used parts of all the advice above. Recently, I was invited to a meeting to begin planning a city-wide Volunteer Day. The e-mail did not show any other names so I had no idea who would be there. I was so surprised to discover that I knew over half of the people in the room! I’d met every single one of them through my volunteer activities.

    You have a lot of good years ahead of you. Start enjoying life right now, right where you are. If, at the end of two years, you still want to follow your son, you’ll have a whole new skill set which will help you get established with your own friends, on your own terms, wherever you are. I suspect that by then you will have established such a good foothold in your current community that you won’t want to. Good luck to you and please let us know what you decide.

    Q5 – I was 20 years old, in excellent health, when a “harmless” cyst at the back of my knee was diagnosed as malignant. I’d have lost my a** without health insurance. Run, do not walk, to HR in the morning and get signed up. If they won’t let you in until next enrollment period, at least buy a HD policy in the interim. The adage “penny wise and pound foolish” could prove to be too true. Don’t let it happen. You will sleep better at night and that’s good for your health too.

  30. Steve in W MA says:

    As to the police report, the statute of limitations is 7 years, I believe. It probably hasn’t expired.
    Tell your relative that you expect to be repaid. Don’t do it in person, hire a lawyer to send a letter to him or her, with instructions to send payments care of the lawyer (not directly to you), This will make your relative think and put him/her on notice that you are not going to lie down and take it. If he or she doesn’t respond with a heartfelt apology and a check and payment plan Have you told other family member about this? Your final resort is the police, but sending communications from a lawyer as a legal agent gets most people to take notice and implies further legal action (of course, it implies civil, not criminal, legal action, but also lets them know that their ploy of stealing from someone who was reluctant to rock the boat has not worked) Your relative has done something really scummy by stealing from someone in his or her family, who she or he believes will be reluctant to prosecute. Really nice. At this point, they deserve a registered letter from your lawyer.

  31. kristine says:

    Sarah, if your son is having difficulty finding a sense of purpose each day, maybe he can get involved in something like habitat for humanity. He can absorb some skills, fill time, and earn a few references for jobs.

  32. Dave says:

    Q4: Lisa, you and your husband must be a doppelganger couple of my wife and me. We recently moved and have been having the same problems with finding good games for two.

    Lately, we’ve been playing a lot of Scrabble Poker, Mancala, Scattergories, and Guggenheim, which is like Scattergories, except one player chooses five categories and the other chooses a five-letter word, set a timer, fill in the squares, and score it similar to Scattergories.

    My wife found it in an old copy of Hoyle’s Book of Rules, which has TONS of old games that can be played by two people. See if your library has a copy. I remember that the current edition as of 10 years ago was at least 10 times as thick as the edition we have (from the ’70s).

    Carcassonne is a lot of fun, Dominion is too. In my experience, Dominion is significantly more fun with three or more people. With two, the game gets kind of predictable.

    Games like Agricola and LeHavre can be fun, but I’d HIGHLY suggest reading reviews and borrowing someone’s copy before buying it. The play style is… different. They can also be played by yourself, which is nice, though.

    Good luck!

  33. Tom says:

    I only quickly scanned the comments, but it may not be so easy for Q5 to just walk into HR and pick up insurance whenever he wants. Most places have enrollment dates and, barring life-changing events (marriage, child birth, etc.), don’t let you enroll in health insurance whenever you want. She probably will now have to find individual health insurance on her own rather than through the company.
    She ought to be congratulated on having a plan to pay of $42,000 in debt in the next 13 months, but maybe she can push it out to 14-15 months and start saving a small amount for emergencies

  34. Courtney says:

    Q6: Stop supporting your son financially and kick him out of your house. Focus your time and energy on helping the three innocent children that your bum of a son has irresponsibly chosen to bring into this world.

  35. Janis says:

    Q6 Sarah, for some reason, I’ve been thinking a lot about your situation with your son. If you still love him and want to help him get his life to a better place, it is really beyond time to lay down some firm ground rules.

    First, he needs to help you out around your home if he is going to live there. That means housekeeping and upkeep, plus helping out financially. If he can’t pay his way, then don’t support any of his extracurricular activities – that means NO use of your car (and gas), your TV, and anything else that keeps him entertained, but unemployed. If he doesn’t like it, he can go live somewhere else and, indeed, you should set a deadline for that to happen anyway.

    Now, as for the girlfriend and grandkids. You made an interesting comment, wondering if your son’s girlfriend could be made to support him. To me, that speaks volumes about your level of frustration with your son because HE should be supporting, if not his GF, then at least the three children that they have together. Obviously, I don’t know anything about the GF’s situation, but if her landlord doesn’t want your son living there because of his criminal record, couldn’t the GF find someplace else to live with her children and their father? Seems like that should be the ultimate goal in this family dynamic, aside from your son finding some kind of gainful employment.

    And about that employment, some folks have suggested that, if your son can’t find a paying job, he should find some meaningful volunteer work. This is a great suggestion. Your son will make connections, establish good work habits and skills, and maybe even feel better about himself if he is able to give back a little to the community. Depending on the type of crime, your son’s record may make this more of a challenge, but there may even be an organization in your community that helps people just like your son so that they can become productive members of their community. He needs to look into this.

    Good luck to you, your son, and his family.

  36. kristine says:

    Yes, I was also taken a bit aback by the suggestion of a single mom with 3 children paying supoport to man who has given up looking for work. Poor judgement for having 3 kids in such a vulnerable position aside, the suggestion is really off the wall, as it would surely compromise the care of the grandchildren.

  37. Courtney says:

    The suggestion that Sarah’s son (Q6) get involved in volunteer work is highly unrealistic. The guy is a felon and a deadbeat dad, he has no interest in looking for work and is content to mooch off his mom and her very limited income. Not exactly the profile of someone who would be motivated to work for Habitat for Humanity…

  38. deRuiter says:

    Dear Sarah #6, Throw the bum out! His GF is sucking the welfare system dry with her illegitimate offspring and I am tired of paying for your son’s screw ups with my taxes. The idea that the welfare broodmare should pay for your son and three illegitimate children out of her generous support checks from us taxpayers, her section 8 checks, her free halth care, her ADC checks (aid to dependant children), her WIC checks, her other government (taxpayer funded) dole is outageous. Throw the bum out, hide your car keys, change the locks on the house. He will find a way to support himself and if he commits crimes he will go back to jail. You and your “family” are sucking at the taxpayer trough and I am tired of it.

  39. Kathryn says:

    Q3 – Let her make the clothing decisions for herself. This is a great opportunity for her to flex her decision making wings and try things out while you are still available to advise and guide her. Let her make some mistakes and afterwards you can offer her some different options for the future. When she has a great new pair of jeans and all holey underwear, she may begin thinking differently about retail prices and name brands (though I admit, I’m making some assumptions about her fashion sense). I keep a clothing “fund” for my 16 year old daughter. Every month, she has another $30 available to her. It’s her money, her clothing and her decision. She is also required to buy her school uniform shirts and pants from this fund, so if she wants a new black polo next year, she can’t go overboard on summer swimsuits. Just be clear with your daughter about what you will provide for her versus what she is expected to pay for with this money. For our situation, shoes and special occasions (prom, semi-formal, etc.) are separate funds, and she is limited to a specific amount per event

  40. Kathryn says:

    Q3: This is just another way to go about it, based on what my parents did with me when I was your daughter’s age. They bought my “necessary” clothing–underwear, winter coat, one swimsuit, basic shoes, and a minimum number of basic pieces for school and church (2 pairs of jeans, a few shirts, and a couple of dresses). Then they gave me an allowance that had to cover the rest. As I got older and learned more about managing money, they increased the size of the allowance and the types of clothing it had to cover. By the time I left for college, I had been buying all my own everyday clothing for a year or two.

  41. Mary says:

    Regarding trying to remove the ex-boyfriend from her credit card, couldn’t she just get the credit card number changed-same card, different number? We have had to do this when it appeared the number could have fallen into the wrong hands, also once in a blue moon our credit card company just decides to change the card’s number for security reasons. So couldn’t she do this (say it’s been stolen if you must) then she’ll still have her same card & good credit on it, but he won’t have the number.

  42. kristine says:

    de ruiter- that’s a lot of assumptions. Perhaps the woman is supporting herself, and rents as saving a down payment is difficult with 3 kids. Perhaps the son/man in question is a white collar criminal from Wall Street, and the embezzled amount made it a felony? I know such people personally. I am not saying that’s this is the case here, but it could be, and you seem to make a ton of negative assumptions that reveal a tightly closed mind. The only thing I agree on is that he should get work. But he could also be severely depressed, which would be somewhat mitigating.

  43. AnnJo says:

    @kristine, you’re right there are a lot of assumptions in de ruiter’s comment, but consider the data:

    Sarah, the writer, lives on Social Security Disability and VA benefits and ALSO has a strong entitlement mentality, since she has no problem with her son not supporting his children but wants the GF to support him and whines about there being no “good or fair jobs” for felons. Her son seems to share this mentality, since he expects his mother to support him and has no interest in supporting his own children. He also has been convicted of at least one serious crime.

    Landlords don’t care about Wall Street banking and securities crimes, they care about drug crimes and crimes of violence. Welfare agencies also care about who is living with recipients, or in public housing, so that may be the reason he can’t live with his GF.

    As for the GF, a woman of character can certainly make a mistake and pick a loser like that to have one child by, but when she has three by him, it’s fair to assume she shares his basic outlook on life and would milk any entitlement programs she could.

    Therefore de ruiter’s assumptions are pretty reasonable, although by no means necessarily true.

    As for what Sarah should do, it might help if she dramatically changed her outlook. Her son is not entitled to a “good or fair job.” She should cut him off from the use of her car and gas except to drive to and from a job that can’t be reached by bus, bike, walking or carpool, and she should insist he take any job he can get, even if it’s a lousy one, and count himself lucky. She should set a deadline of a month or two by which he has to move out if he hasn’t found at least a 20-hour a week job, and started paying her some rent and buying his own gas, as well as paying some child support to his GF.

    The son may well be depressed. In fact, he SHOULD be depressed, since his life sucks by his own doing, but lots of depressed people work and in his case, it would be therapeutic, since he’d be overcoming the situation that is causing his depression.

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