Reader Mailbag: Travel Thoughts

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. A pile of problems
2. Financially helping a boyfriend
3. Vinegar and water for cleaning
4. What debt comes first?
5. Subsistence farming
6. How much term insurance?
7. Thoughts on iPad
8. Entrepreneurship gone bad
9. Cell phones gone wild
10. Powdered homemade laundry detergent

Taking a five day trip, followed by a two day break, followed by a six day trip, all with three children under the age of five, is not a good idea. I officially need a vacation from vacation.

I’m having severe financial troubles and have no clue as to how to proceed. I’m 48 and unable to work due to disability (but I have been denied several times for disability benefits). My husband, who is 43, has been unemployed for a year and a half. He was working at California Closets in the shop previous to that. We have been living on his unemployment check ($1600 per month) and now that has ended. We’ve moved in with my parents and have applied for food stamps. It simply can’t get much worse than this. Oh but yes it can. We have about $10,000 in credit card debt and $2500 in medical bills. (I know, I know…. stupid!!!) We had been keeping up with these payments when he was receiving unemployment but now cannot pay them and are accruing late fees. We can’t even file for bankruptcy because we did that 4 years ago when our business of 10 years (retail bookstore/gift shop) failed. I’m mad at myself for letting things get this bad and I feel helpless and stupid that I’ve made so many poor financial decisions in the past. If you were in my situation, what steps would you take. What should I do?
– Kim

The absolute first thing you need to do is to figure out what work you’re capable of doing. If you’re being denied disability benefits, clearly there is an opinion out there that you are capable of some level of work. Seek out employment services that can help you with this, because it can sometimes be difficult to make a good self-assessment in a situation like yours.

You also need to remember that the debts you have now have no collateral, so not paying them for a while won’t result in repossession of anything. It will result in further damaged credit and a good deal of harassment, however.

You’ve got a rough road ahead, at least in the short term. Patience will be your best friend here.

I bought a house last year with my boyfriend of 3 years. 1 month after closing he was laid off from work. Unemployment insurance gave him enough to pay bills/mortgage. He did not want to share any financial information with me, and I knew he had debts. I offered to help out with budgeting and his general financial well being and he was against it.

We also had a very tough year personally, family-wise. He never budgeted or practiced being frugal before we met, and continued this after we started living together. It is 1 year later and he just got a job that pays very little. I calculated he can pay the mortgage with little left over for bills (his half). Then there is no money for food, paying off debt ect.

He is continuing to look for a better job. He finally let me in on his finances. He has 7K in CC debt, with ridiculous interest rates. I am having him do a balance transfer on a 0% CC (if he gets approved), or a lower interest CC. Also there is about $600 in other debt (doctors, things that aren’t financed). He had said he never thought about all the fees, and money he was giving away with his spending, and bad CC’s rates. He has 1K in savings and a 401K from a previous job. He has cut his spending, created a budget, understands this is a problem, and we are on the same page now, but much damage has been done. He has no money coming in to pay his debts.

I work in a creative field and am lucky to have a comfortable income. Last year I got a significant raise and have been saving a lot, I did not make much money previously. Also I am frugal, coupon cutter, and am upset that my boyfriend did not care about his finances. What should I do? We are not married, and the mortgage/bills need to be paid. How long am I suppose to cover him? He thought we would be married by now, but being laid off sort of paused our lives. Not being able to get married is upsetting to him, making him feel like a failure. I feel I am in a tough situation. Our families act like we are married, but we do not combine finances. I also do not want to be the sole provider. I can afford the total mortgage on my own, does that mean we should keep the house? I did not plan for this at all. I have 2 thoughts: #1-I work hard for my income and do not want to carry him. #2- I get upset that all these fees, interest charges, could be money for saving to have a child, so if I don’t help him out, it would effect me in the long run.
– CM

How long are you supposed to cover him? The answer to that question is the same as another: how long do you think this relationship is going to last?

Your last paragraph seems to hint at some very serious trust issues in your relationship, as well as some incompatible values. If you can’t get those things on the same page, your relationship is not going to be one for the long term, and you’re better off moving on now.

If you are thinking this is going to be a very long-term relationship, then his debts are effectively your debts, because they steer what you’re going to be doing in the future.

If you’re sticking around out of some kind of obligation to take care of him, you shouldn’t. He’s an adult and can make his own choices in life.

You need to answer for yourself whether this is a relationship that is going to last. If it is not, move on.

What proportions are best for floor cleaning w/ vinegar & water? thanks for your advice….using this will be so much better than the expensive Swiffer products & other harsh, harmful & costly products.
– Donna

I usually use equal amounts of water and vinegar, and use full-strength vinegar on tough stains. I do this on both hardwood and linoleum surfaces and I haven’t seen a problem yet.

Considering the huge jugs of vinegar you can get for just a little bit of pocket change, this is a pretty cost-effective way to get the floor clean. You don’t need too much of the liquid as long as you have a good mop to work with.

Actually, that brings up another good point – the better your mop is, the easier the cleaning is, regardless of what cleaner you’re using. I trust the recommendations in this article over at Real Simple.

I am 25, recently married (2 months ago), my wife is 26. I currently work in web development making $44,000 per year (about $2600 per month after tax). My wife is a high school english teacher and unfortunately was part of budget cuts this past school year and is now unemployed. She is collecting unemployment now until we can find her a new job (it may not even be this fall given the job market) So she will be collecting unemployment at about $1860 per month.

We currently have the following debt:
Mortgage: $276,000 (bought house last year at 5%)
Car Loan: $7,000 (at 5.9%)
Car Loan: $3,200 (at 5.2%)
Student Loans: $11,000 (about $184 per month)
No other debts. We have about $14,000 in retirement savings, and another $27,000 in high yield savings accounts (at 1.3%). I try to sock away $1,000+ per month into those savings from our monthly income.

My question is what should I do with the money? I’ve contemplated knocking off the car loans to get them done with, but don’t want to reduce our savings too much to do it. What’s your take on the situation?
– Erik

The first thing I would do is make sure you can make ends meet with your current income level, and also with the income level that you’d have if your wife’s unemployment runs out. If you’re not going to be able to make ends meet easily in those situations, I wouldn’t use up the emergency fund too much.

If you do decide that paying off debts is a good move – and it certainly might be, because it will improve your monthly cash flow and your long term net worth if you don’t have to dip into debt in the future – I would pay off the lowest balance one first, because that will provide the most direct benefit to your monthly cash flow.

I’d also encourage your wife to take on any work that would bolster her resume, even if it’s unpaid. Things like working at educational-based summer camps, getting involved with America Reads/America Counts, or anything along those lines can be a real boon. The more experience she gets teaching children and the more things she gets on her resume, the more likely it will be she can find a teaching job down the road.

I am a 20 year old girl living in an apartment in Raleigh NC with my boyfriend. I work part-time as a nanny to pay the bills and he works part-time at a moving company so we have a very modest income and no savings. We have a shared dream of some day, hopefully sooner than later, moving into a moderately sized house on a large area of land where we can grow our own vegetables in a greenhouse and raise a family and perhaps even adopt a few more dogs and some chickens. The problem is is that I have no idea where to start. I’ve been a city girl all of my life and because I am not going to college and I am underemployed, home ownership is still a distant dream. Do you have any tips for me as far as how to become a subsistence farmer with little experience and no money?
– Melissa

Trying out subsistence farming with little experience and no money is pretty much begging for absolute failure.

If you want to learn the ins and outs of small scale farming – and you’re only working part-time – get a part time job for a small-scale farm. Tell them your story and that you’re willing to work hard in order to learn how it all works as something of an apprentice.

I can tell you from experience that if you want to grow lots of fruits and vegetables or raise animals, nothing trumps experience. The more experience you have, the easier it will be to start things on your own without a long series of outright failures.

I work at a relatively stable job and my employer offers a life insurance policy of 6X times my annual salary for just $8.23 per 2 weeks. I plan to purchase this policy as the premium is so low for such huge coverage. However, I fear that this policy would lapse if I get laid off. And so, I wish to purchase term insurance from a 3rd party such as Metlife or such Insurance companies.

So, I am wondering if I should reduce the coverage of my employer-sponsored life insurance policy to 3X times my annual salary and get the other 3X times my annual salary from a 3rd party insurer.

Can you offer any thoughts or opinion on this matter? It would really help me.
– Indrajeet

That plan makes quite a bit of sense. In essence, you’re spreading out the risk.

Obviously, the plan offered by your workplace is less expensive than virtually any other life insurance you’ll probably find. It comes with a risk, though – if you lose your job, you lose the insurance. Splitting the policies in this way spreads out the risk.

My only suggestion would be to keep a careful eye on your employment status and get an additional policy if you lose your job.

I’m starting a four-year PhD course in September. I’ve just finished my undergraduate course (graduating with a First) and in total I’ve read over 550 papers (and that’s just the ones I kept track of in my EndNote library!). At the moment I print out most papers that I read, carry them around, read them, highlight bits and make brief notes on them, and then put them in a big pile. I’ve been wanting for a while to make this (a) easier, (b) more environmentally friendly (although I do recycle all of the paper afterwards) and (c) reduce my hugely high printing costs.

After asking around on various internet forums it seeems that a tablet computer would be a good bet, and most people seem to suggest the iPad. Leaving aside the issue of whether the iPad is the best device to purchase, the question is: should I buy one?

I’ve tried to crunch the numbers. Assuming I read around 200 papers a year, and using a rough length of 20 pages per paper it will cost me around £100 a year for paper and printing costs.

The price of the iPad in the UK (including academic discount) is £429. Working on the price saving above for one year leaves £329, or if I carry it through for all four years of my PhD then that only leaves £29! That’s ignoring the other uses of the iPad – both those related to academia (such as proof-reading coursework) and non-academic.

If I only count one year’s savings then the price that’s left (£329) is just under one hour’s work a week for a year (based upon my PhD stipend and the hours I’m meant to do) – which seems very reasonable.

However, this is a substantial financial outlay at the moment, especially as I’m getting married next year (projected to cost around £3000) and then setting up home with my new wife.

What do you think? It’s not necessarily your place to advise I know, but I was trying to apply some of the principles I’ve learnt from your blog, but still don’t know what to do!
– Robin

Before you worry at all about what to buy, make sure that you really understand your need first.

From what I understand here, you’re struggling with the ongoing cost of printing out research papers for your studies. Based on my own experience, you’re probably annotating them in some fashion. You also need the papers to be very portable.

A tablet computer does solve most of those concerns. However, don’t just limit yourself to the iPad. There are a lot of other tablet computers out there (like these). A netbook may also be a great solution for what you’re trying to do.

The real danger I see here – and it’s one that I’m guilty of myself – is seeing a particular gadget or other item and imagining in your head all of the problems that it could solve in your life. The problem with that kind of thinking is that often, you’re not solving real problems, just imagined ones.

Your best bet is to always go through your life and just look for things that pop up again and again that could be done in a better way. If you think to yourself every night that your bed is uncomfortable, a mattress might be a good buy. On the other hand, watching a mattress ad and thinking to yourself, “That looks comfortable… I’d better buy one,” is not a good personal finance solution.

For me, at least, I’ve had an ongoing list of features I’d like to see in a tablet computer, a list I’ve kept for years. These are all things I do all the time that would be massively simplified with a tablet. As the apps from the iTunes Store get more and more robust, I’m beginning to believe that the iPad actually is that device.

In December 2007 I bought a franchise. It was in an area that was a passion for my wife and I while fulling a dream of entrepreneurship. Unfortunately the economy decided to poop on my dreams. Essentially we opened our doors for business in November 1st 2008, and closed them Oct 28th 2009. We filed bankruptcy and our house was lost in foreclosure. That was all settled in February, all except for one small detail. WE have an $80,000 SBA loan held against an investment property that my in-laws own. I could have let that mortgage go and saved our own home in the process but chose to keep the debt and do what I feel morally obligated to do. My in-laws would have had to either pay that debt or lose the rental.

Fortunately I still have my day job (they allowed me to go part time while starting the business) and it has kept us afloat. We lived with my in-laws for about 6 months until my family’s sanity was just about gone… Now we are currently renting very close to my office at a pretty good price for the area, $925, any lower and the places get much less safe and with a 4 and 2 yr old, that’s not something I will risk for $150-200. My wife has just gotten a job at my work and so the kids are hitting daycare.

Hear’s the breakdown. Between us we will be making about 75-80K a year (without any bonuses). $1108 a month for SBA, $925 for rent, $330 for my wife’s car and $1200 (OMG) for daycare. I think we went to every daycare possible within 15 miles…

I sold my car, and got a cheap motorcycle to have something to drive. We don’t have cable or home phones and the only extra we have is internet (got a great promo deal after pestering Comcast for a couple of weeks…). I am building my e-fund, albeit slowly, but this extra $80K SBA loan is killing us. There are no other debts and I just want to be done with it so I can move on, pick up the little, tiny, demolished pieces of my dreams put them in a box of mementos and stick it in the attic. Oh wait I rent and apartment now… Stick it in the storage unit then.

How can I deal with such a LARGE debt?
– Aaron

To put it simply, you deal with it slowly but surely.

Paying off this debt is all about cash flow, period. The less you spend in a given month, the more you have to contribute to that debt.

Right now, you have a handful of major expenses eating up your cash flow. $925 a month for rent? You’re significantly delaying the payoff date of your loan by moving out of your in-law’s house. $1,200 a month for child care? Given the other opportunities your wife would have to save money as a stay-at-home mom (for example, babysitting during the day, preparing home-cooked meals, etc.), is that really saving you money?

What about that $330 a month car payment? Do you need a car that requires $330 a month? Wouldn’t a low-end used car get the job done and let you channel $250-300 more per month into that loan?

If you’re reacting to these comments with defensiveness, you’re thinking about this the wrong way. Paying off a giant debt means making hard choices, ones that sometimes make us uncomfortable. Yet, the debt is also making you pretty uncomfortable, too. You have to answer some hard questions about what’s best for your entire family.

Potential entrepreneurs: Aaron is the face of exactly why it’s so important to have all of your ducks in a row before you jump into business ownership. The more debt you take out at the start, the bigger the risk is, and Aaron’s story shows loud and clear how painful the downside can be.

I recently visited the Verizon store with my husband (a minor stuff hoarder and chronic upgrader) We were replacing the 2nd phone he ruined due to water. (fishing and then walking in the rain). Before we were married, I was fine with dial up internet, one home phone and no TV. Now we have Verizon FIOS bundle with HD, sports and outdoor TV, internet, land line phone and 2 cell phones. Anyway, back at the Verizon store, he wanted a droid because it takes pictures you can send to your email and it is new cool technology. (I suggested he just take our camera with him and he rolled his eyes) With quite a bit of effort, I was able to pull out all the costs from the salesman. It is an extra $10/month just to have the droid, another $30/month to have internet service and it costs to send the photos or text. I went from spending $30/month on all this a few years ago to $250/month with growing costs on all this technology that just makes my life more complicated. I love my husband and want him to be happy and am fine with having these things now. We can afford it but deep down, I have difficulty with my feeling that we are being blindsided and ripped off.
– Laura

You’re not being blindsided or ripped off. It sounds like you have two top-of-the-line phones with unlimited data plans and unlimited texting. Those are all going to cost you – and those are all unnecessary services.

It sounds like your husband has a gadget addiction and, even more worrisome, he doesn’t take care of the gadgets he already has. You’re being blindsided and ripped off, but it’s not by Verizon. It’s by an addiction to gadgets.

You have a choice to make. You can either just sign off on all of this stuff or you can have a sit-down with your husband and make some hard choices together. It’s up to you.

Trust me, though: gadget escalation gets more and more and more expensive. There really is no limit to it except for what you impose on yourself.

Curious if you have ever tried the powdered versions of the homemade laundry soap. I love the homemade soap concept (especially having a 5 month at home, so we need perfume and dye free soaps) but the idea of storing 5 gallons seems like a headache. Seems like I could store a pretty big supply of powdered detergent in a small Tupperware. Any experience on this?
– Jeff

You can certainly make powdered soap, but it takes a bit longer to make.

Just use my homemade laundry detergent recipe. Just use the three solid ingredients:

1 cup washing soda (I use Arm & Hammer)
1/2 cup borax (I use 20 Mule Team)
1 bar soap (I use whatever’s cheap, in this case Pure & Natural)

Grate that bar of soap with your finest grater until it’s basically powder, then put it in a large quart jar along with the other ingredients. Shake the jar thoroughly – for two or three minutes – until everything’s evenly distributed. Keep a lid on the jar and put it in your laundry room.

When you’re about to do a load, use two tablespoons of the powdered detergent. Start filling the machine with water, add the detergent, wait a moment, then start adding the clothes. You’ll be good to go!

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag. However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

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