Updated on 02.12.12

Reader Mailbag: Writing Focus

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. Budgeting with bi-weekly paychecks
2. Gross or net income?
3. Investing in this economy
4. Car trade-in time?
5. Blogging workflow
6. Using money before pay cut
7. Sharebuilder IRA?
8. What is a dependent?
9. Major car decision
10. Long haul relationship

Most days, I spend some time working on a novel. It’s been an interesting experience.

The biggest thing I’ve found is that I can get sucked into novel writing for very, very long periods. With a post for The Simple Dollar, there’s a reasonable length I have to stop with. I generally try to keep the articles short enough so that they can be read in a quick burst.

With a novel, well… it’s a completely different story. I can get sucked in for hours and hours and the words just fall onto the page in a flood.

Q1: Budgeting with bi-weekly paychecks
My husband currently has a paycheck every 2 weeks, NOT bi-monthly, but every 2 calendar weeks. This is very frustrating when budgeting as each paycheck happens at a different time and different bills come out of each paycheck every 2 weeks (as the months aren’t arranged in 28 days, which would be nice). We also has extra income sporatically (he’s in the National Guard, so this is from training on the weekend and flying in the middle of the week) that we DO count on. Our main focus right now is paying off a loan that we used to pay for his truck (NOT an auto loan). Any help in getting us ahead in this would be awesome!

– Kelly

What I would do is have some bills come out of the first paycheck of each month and the rest of the bills come out of the second check each month. Pretend as though you only receive those 24 checks in a given year.

Now, you are going to receive a third check during two months out of the year. I would use those checks entirely for irregular bills – insurance premiums, property taxes, and the like.

I would probably pay all bills with a due date after the 15th out of the first check each month, then pay all bills with a due date before the 15th out of the second check each month. That way, you’re never running late on a bill.

Q2: Gross or net income?
When trying to determine how much of your income you save each month, do you look at your gross income or your net income?

– Angie

I would never look at net income for the purposes of saving for the future, especially when saving for retirement.

In retirement, you’re going to be responsible for your own taxes. Unless something unusual is going on, a large portion of your income is going to be taxable income, which means that a chunk of it is going to go to Uncle Sam. Your calculations should always reflect that.

THe easiest way to do it is to just keep all of your calculations based on gross income, and assume that tax rates are going to be nice and high when you retire. You’re always better off having more money in retirement than less, after all.

Q3: Investing in this economy
I was wondering if you had a moment to give some advice on what might be good investment ideas at at this state of economy. I know that may seem like a loaded question, but I’am really curious what you might be thinking.

– Marcus

The best place to invest in an uncertain economy is to invest in yourself. Education. Training. A small business. An emergency fund. Debt elimination. Medical visits.

If these bases are well covered and you still have money to invest, I’d probably put it in very stable blue chip companies that have been around for a long time and are incredibly stable. These companies aren’t going to make you rich, but they will steadily pay you a nice dividend over time and they won’t go bankrupt. I’d look at companies like those in the Dow Jones Industrial Average.

Another option is to just invest in a very broad-based index fund, like the Vanguard Total Stock Market Index. Choose one with very low fees. It also won’t earn you a mint, but it’ll be pretty stable and pay you a healthy dividend.

Q4: Car trade-in time?
I’ve worked hard (after some hard lessons) and I have $5,500 savings toward whatever car thing might be needed next. We also have about twice that in joint savings and our only debt is a home equity mortgage that we can now comfortably pay off. We are not exactly wealthy but our financial life is in good working order and we continue to save some each month.

I drive a 2003 Hyundai with 104,000 miles on it. Runs great. Will do the extensive tune-up soon but my question is about the paint job. The paint is burning off from sun exposure so there are more & more ugly bare metal “bald” patches, and I wonder if I should invest in a paint job.

I’ve heard horror stories about terrible paint jobs that only look good for a year or 2, and the best deal I could find from someone recommended to me was $2,000 to just repaint the center of the car from hood & top to hatchback, leaving the doors untouched & just buffing them since they are not where the bald patches are. Any recommendation I can get just comes from my oil change place or other business; I’m sure everyone just recommends each other because they know each other thru business or socially, and the recommendation wouldn’t guarantee a great job. (Speaking of guarantee, it looks to me like repaint shops only offer 1, 2 or maybe 3-year agarantees on the work, which is not encouraging. I happen to know a couple of antique Porsche collectors/aficionados, who tell me you get what you pay for & it’s a mistake to get any car repainted for cheap. As if $2,000 were cheap, anyway…)

Is it worth the $2K for a repaint or should I look at trading my car in for something with similar mileage that looks better? I hate to get rid of what has been an awesomely reliable car.

Part of me says I shouldn’t care how the car looks, but when I go to an interview I kind of cringe hoping the potential employer won’t see what I drive. I do some freelance jobs that involve meeting new people on a regular basis, and I’m not sure *I* would hire someone if they drove up in a really beat-up car, as in some way it is a reflection of the person’s taste or lifestyle or something. In some way my car is like showing up in dressed cheaply & shabbily for an interview.
– Jeff

For starters, if someone drove up to a job interview with me and was driving an older beat-up car, but they paired that with a good resume, I’d be more inclined to hire that person. Someone who drives such a car tells me that they understand the concept of value and bang for the buck. One of my good friends who made a much better salary than I drove a 20 year old car with rust spots and a bumper made out of a discarded 2″ by 4″.

Now, if you’re asking yourself whether the paint job is worth it or not on your car, the people you’re talking to are telling you the truth. You get what you pay for when it comes to a paint job on your car. The cheaper you get, the more likely it is to quickly wear off and put you back in the same situation you’re in.

The problem is that if you buy a really nice paint job on a ten year old car with mileage into the six figures, the paint job will probably far outlast the usable lifespan of the car. I wouldn’t go down that route.

If I were you and I decided that a car with a decent paint job was a requirement, I’d either trade it in now for a replacement or get a cheap paint job that would last for a couple of years, then trade it in at that later time.

Q5: Blogging workflow
I am constantly amazed at how much content you come up with for The Simple Dollar. How do you make that all happen? What does your daily workflow look like?

– Sean

I’m usually constantly brainstorming post ideas. I write them down in a pocket notebook no matter where I’m at. I let inspiration come from anywhere, and whenver I even have the vaguest idea, I jot it down.

The first thing I do is filter these ideas. 90% of them get discarded before I do any research or write a word. The ones that survive that first test get a basic outline and/or a bit of research on the topic for notes. I usually kill about 50% more of the potential posts at this point, and this takes up about half of my actual work time.

The rest of the time is spent turning these nascent post ideas into posts. I usually have the key ideas in place already, so it’s just a matter of transforming that into something readable.

I just do this over and over and over and over again.

Q6: Using money before pay cut
My husband and I are wrestling with the question of how to use our money wisely before I take a massive pay cut. Together, we currently bring in about $110,000 before taxes. However, I got accepted to a PhD program (yay!) with full funding (yay!) of about $14,000 a year (yeesh). So that will cut us down to about $74,000 a year. We have a mortgage that runs us $1700 a month, student loans (from his law school and my undergraduate studies) of about $70,000 at a low rate, and then all of our household expenses. We are already cutting back on going out to eat, which is our #1 vice. I’m planning on selling my car, which will free up about $3,000 in cash. We have two savings account with about $12,000 saved up, and $15,000 in investments.

I’ve been reading your blog for long enough that I know how to cut my budget down and live frugally. My student loans will be deferred and we’ll cut our car insurance and payments in half. What we really need to know is how to manage our money wisely for the next six months before I leave my job. I’ll be responsible for my books, and I’ll need to professionalize my wardrobe. We are finishing up all the necessary household repairs now while we can still afford it. What can we do to spend the money we do have wisely and still save up for any emergencies that come up while I am in school?
– Linda

Very few Ph.D. paths require what I would call a “professional” wardrobe. I know graduate students in a lot of fields and the vast majority of them dress extremely casually almost all of the time. Know the culture of your program before you buy a bunch of clothes.

Aside from that, I think you’re already making the right choices. You know where your biggest money leak is and you’re fixing it. You’re cutting enough from your monthly bills that I don’t think you’ll be in trouble, as your effective tax rate is also going to drop because of this life choice.

You’re doing the right things.

Q7: Sharebuilder IRA?
I currently have an online savings account through ING Direct, and they recently just sent me an e-mail offering an extra $50 if I open up a ShareBuilder IRA account and deposit $200 by March 1st. I’m a 22 year old student and have been wanting to start a Roth IRA account for several years to kickstart my retirement savings; this seems like a good way to start and a pretty good deal to me, since other Roth IRA accounts I’ve looked into opening require, like, several thousand dollars to start (that I don’t have the moment). I have an emergency savings of $1500, hope to pay off my student loans by the end of this year, and feel as though I could easily handle the $200 contribution. Do you know anymore about ShareBuilder accounts or have you heard any feedback from anyone regarding these accounts? I’m just wondering if I’m missing the small print and will end up finding out that I need to contribute several thousand dollars a year….

– Chris

While Sharebuilder does offer a nice low starting amount, Sharebuilder charges a $25 annual fee just for having the IRA and charges you $4 for each automatic transaction. Those fees are high enough that they just completely decimate your returns.

If I were you, I’d start saving that IRA money in a savings account. Set up an automatic savings plan to transfer, say, $25 a week into that account.

When you get to $1,000, open a Roth IRA at Vanguard (which is pretty much fee free) and buy into their STAR Fund, which has a minimum balance requirement of $1,000. Switch your automatic investments to that fund. Then, when you reach $3,000, transfer that money (and the automatic transfers) to whatever fund you think is best.

Q8: What is a dependent?
I have a question about taxes. Specifically, who can qualify as a dependent. I am a full time student and under the age of 24. My parents claim me as a dependent on their taxes. I was wondering if this is correct. My college is paid for through scholarships and student loans taken out in my name. Last year I worked a campus job and and an internship to cover my living expenses (apartment for a whole year, food, utilities). The IRS has a test to see if a person counts as a dependent, and one of the provisions is the dependent has to provide less than half of their own support. Can my parents still claim me even though I do not live at home (at any point during the year) and I pay my own bills? To be fair, they do pay for my insurance and cell phone bill, and own the car I drive.

– Shane

It’s hard to tell specifically from this example, but it’s likely that you are providing for more than half of your own support, in which case they cannot legally claim you as a dependent.

Usually in the case of college students, the IRS does not really bother to figure out dependency status as long as you’re not being claimed by both yourself and your parents, so I don’t think there’s a real problem here.

You need to sit down and have a chat with your parents about dependency status. Present them with the IRS test you’re mentioning here and talk about where to go from here. The best thing to do is probably for you to claim yourself in the future.

Q9: Major car decision
I drive a Honda CR-V. It’s six years old, 130,000 miles on it. I was just told by two different mechanics (one dealer, one independent) that my engine is dying a slow death (it’s burning oil at the rate of 2 quarts every 3,000 miles.) I owe approximately $8,000 on the car to my credit union. (Note for your readers, NEVER refinance credit card debt to a vehicle even if it gets you a lower interest rate, that is why I owe money on the car, and now I’m stuck with a messy situation.)

Here are my options:
1. Keep the car, keep making payments on it, and keep filling it up each month with an extra quart of oil on top of plus regular oil changes (I get oil changes every eight weeks as is, because I put a lot of mileage on my car, and the car starts malfunctioning when I hit 3,000 miles between oil changes.) According to those who looked at the car, my car could last years doing this, or it could start burning oil faster, which means a faster death. Crapshoot in terms of how long I can make it last this way.
2. Buy an engine. It would be used, cost around $3,900 for an engine with 95K miles on it and a 1-year warranty. Crapshoot in terms of whether the engine is a good engine or not and unknown on how long the rest of my car’s parts will work (i.e., What if I have to replace the transmission, etc.) Independent mechanic says he wouldn’t buy a used engine unless it had less than 60K miles on it and those are hard to come by. And I would have to finance this as I don’t have that kind of cash laying around (although if I started with Option 1, and then saved up for a year or two, I could get there with cash.)
3. Trade my car in to the dealership and get a used car (from the dealership) for around the same price as what I owe, which means my debt is paid off, and I have another car, with probably over 130K miles on it. Crapshoot in terms of what I would end up with – was it well maintained, am I going to have additional problems, with more than 100K miles on it, am I going to end up spending a ton of money on it anyway, etc?

Other considerations:
1. I LOVE my car. I know it seems so superficial, but I do love it. I bought it at one year old, and the intention was to drive it until it’s old and rusty and questionable to have out in public (and even then, keep it around to use as a “farm car” as I live on an acreage.) It’s 4 wheel drive, which has helped out numerous times in Iowa winters. We also use my car as the road trip car. From a functionality standpoint with my family, it would be a loss. Our other car is a 13-year-old two-door Accord which just doesn’t have the room we need.
2. I have a fair amount of consumer debt (I’ve reduced my debt by more than half in the last two years, but still have a ways to go.) Getting rid of this car would definitely help, but I don’t know if the risk is worth the potential zeroing out of this particular debt..
3. I can’t sell my car via private party without disclosing the engine issue so that option is out as I would get less for the car that way than what I owe on it. A dealership, in this case, will at least get me out with a zero at the end.

I’m leaning towards Option 1 and seeing how far it will get me. And basically deciding between Option 2 and 3 as the situation presents itself. Right now, the used car market is slim pickings. I don’t necessarily want to buy an engine either, but if I could fine one with less than 60K on it, I would be more comfortable with that option. By the way, the dealer told me their recommendation is to just keep up on the oil indefinitely. The Independent mechanic told me to keep it going until summer, then trade it in.

So I guess my question is, what would you recommended? Is there anything else I should be considering here?
– Ralph

I think you’ve covered pretty much everything you can do at this point. I don’t see any other options.

If I were you, I’d go for the first option. I’d keep putting oil in it and keep driving it for as long as I could.

I would also use this as a wake-up call to start getting serious about my finances. Start saving right now. Put away as much as you possibly can each month for the inevitable replacement of this car.

Q10: Long haul relationship
What relationship advice can you offer to young couples? What have you learned from your marriage to Sarah? (You seem to have a very strong relationship, based on what you write.)

I know you write about finances, but hey, divorce is expensive! How do you keep a relationship going for the long haul?
– Monika

My experience has been that a marriage works best if you put time into making it work. If you just assume your partner will always be there no matter how you act when you’re together, you’re probably going to be disappointed.

Both of us make some effort every single day to show the other that we care. It might be something small like taking care of a sink full of dirty dishes. It might be something like a note stuck inside someone’s bag. It might be the surprise of a wonderful dinner prepared without any prompting. It might just be holding hands for a moment and saying “I love you.” It might be a serious discussion about our shared future.

Every single day, we both try to do something. Often, we do multiple things. It’s a constant reminder that the other person cares.

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. Nate says:

    #1: I also get paid every other week instead of twice monthly. What I do is have my paychecks direct deposited into my ING savings account. I set up the ING account to automatically make deposits on the first and 15th of the month to my checking account. I’ve determined what I need for my monthly budget and divide into two payments to myself a month. This makes it easier to make sure I have enough money in my checking when bills are due (I put in about $600 more on the 1st than I do on the 15th since I have more bills at the beginning of the month). The “extra” paychecks twice a year are automatically put into savings this way so you’re not tempted to splurge on something you don’t need.

  2. Jayme says:

    Q1: I’m that same way, so what I did was to work hard to put about 1 month’s expenses in our checking account. Then when I paid the bills for February, it was like using January money. The money was always there. It could take some work to get there, but that works great for us.

    Then the 2 months/year that I get an extra paycheck, those usually go straight to savings because I’m not used to getting that money.

  3. Katie says:

    I do what Trent talks about on the biweekly paycheck – rent is paid out of my first paycheck; student loans out of my second. In addition, my bank lets me set up automatic transfers on a biweekly basis, so I set up biweekly transfers to savings that happen on the day my paycheck gets deposited, whatever that might be.

  4. Jonathan says:

    Since I pay all of my bills online a lot of them are paid for with my credit card, so I can get the rewards. I pay the card off at the end of the month to avoid interest charges.

    I had never thought about it, but this approach might make dealing with the irregular dates of paychecks a bit easier to manage. As long as the money is in the account by the time to pay off the credit card it doesn’t matter if it was there when the bill was due or not.

    Of course this only works if you are certain you can and will pay the card off at the end of the month. I would not suggest this approach to anyone who is carrying a lot of credit card debt, or who has a history of forgetting to pay the bill on time, etc, because it could result in costly interest and/or penalties.

  5. mjd says:

    Regarding Sharebuilder, I have an IRA account with them (wanted to do some ETF investing), and I pay $1.00 a trade for 12 trades a month. I have never paid a $25 annual fee.

    It still may not be the best choice for a lot of people, but your facts don’t seem to be quite right.

  6. Tom says:

    “Usually constantly” I’m not one to bicker about grammer, but I can’t get over the irony of how poorly-written the answer to Q5 is.

    Q: How do you put out so much content?
    A: Simply put, don’t bother editing too much.

  7. Daria says:

    Q10; I’ve been married for almost 31 years. To add to Trent’s good suggestions, when you get up to make yourself a cup of tea or get a glass of water, ask your partner if they want one. Choose your battles, being willing to say you are sorry when you are wrong, don’t put down your partner to other people and this includes “when you’re just teasing” because your partner might not take it so and sometimes other people don’t see it as teasing and they wonder about your marriage. Don’t be little your partner’s ideas. If you think an idea doesn’t have merit, make sure your comments are constructive. Ask your partner about their day and listen without interrupting. And if you have children, make sure that you have dates with your partner. My husband and I would get a friend to watch the kids and go for bike rides together because my husband really likes riding his bike. I could have let him go by himself but it was special because it was the two of us. He will come to the scrapbook store when they have make and take weekends and make a card with me. He could let me go by myself but it’s special because he goes too.

  8. goldsmith says:

    All those tips are great. However, strictly on *budgeting*, it works like this (and I have this tip from a non-profit consumer organisation): You gather data from tracking your expenses until you have a reasonable idea of your monthly outgoings. Then you multiply the sum in each category by 0.46. This gives you the fortnightly slice of same, so that you can see *exactly* where all your monthly expenses are as a percentage of each fortnightly paycheck. For example, if my mortgage were $1000 a month, it would be $460 out of each paycheck.

    This makes it very easy to recalibrate your budget in a hurry when it comes to raises, pay cuts, or not-previously budgeted monthly outgoing such as loan repayments. I highly recommend it!

  9. David says:

    #6 “I’m not one to bicker about grammer”

    Nor spelling, presumably.

  10. Tom says:

    …and of course I misspelled “grammar” and the hyphen is probably unnecessary, so what do I know?

  11. valleycat1 says:

    Q10 – to Trent’s & Daria’s recommendations, I would add that each be willing to forgive your spouse and yourself when either of you acts like a human being & isn’t the perfect spouse. (I’m talking about normal human failings, not abuse or major addictions). And don’t hide your head in the sand when things get awkward or uncomfortable, talk with your spouse or get counseling about what’s wrong, recognizing that both of you are really on the same side, just with different viewpoints – making the marriage last.

  12. Johanna says:

    Q5: “I usually have the key ideas in place already”

    Well, yes – from the 500 times you’ve written exactly the same article before.

  13. Jessica says:

    @Q8: You’d better look into how you’re going to get health insurance by yourself. Due to newly enacted laws, you can stay on your parents’ health insurance policy until you’re 27 so long as you are a student.

    Does your job or university offer free or very inexpensive insurance that is just as good as your parents’ policy? If not, then that should be the number one concern.

    At 24, you might not expect to have any need for health insurance, but do not overlook it.

    When I was 25, a bone in my foot died. Obviously, no one expects to have a bone in their foot die. I was not overweight. No known cause was to blame for it. However, the pain grew and grew and conservative treatments (taping, orthotics, cortisone injections, rest, stretches) did nothing to alleviate the pain. X-rays were inconclusive. An MRI showed avascular necrosis of a small bone in my foot. The bone was surgically removed and my pain was resolved. The cost of all that would have easily been $8k cash without insurance.

    Two years later, the same thing happened in my other foot. Another MRI, another surgery. This time, the bone had moved out of place due to tissue death and was crushing the tendon and nerve to my big toe.

    Again, no one expects that to happen at the age of 27. As a student, stay on your parents’ comprehensive medical plan as long as you can until you have a good job with the same level of coverage.

  14. Katie says:

    Jessica, I’m sure someone else will jump in if I’m wrong, and I might be, but I don’t believe staying on your parents’ health insurance is related to whether or not your parents claim you as a dependent. Also, she just says her parents pay for her “insurance,” which could just as well be car insurance.

  15. Jessica says:

    Effective January 1, 2010, Wisconsin law (and every other state, for that matter, because it is a federal requirement) requires health insurers to provide coverage for an adult child of the insured. The child must be:

    Over 17 but less than 27 years of age.
    Not eligible for coverage under a group health benefit plan that is offered by the child’s employer and for which the amount of the child’s premium contribution is no greater than the premium amount for his or her coverage as a dependent.

    There may be a tax effect when health insurance coverage is provided to an adult child. The value of employee health insurance paid for by an employer, including coverage for spouses and dependents, is excluded from the employee’s gross income. Therefore, employer-provided health insurance for an adult child of an employee is only excludable from the employee’s gross income if the adult child qualifies under federal law as a dependent of the employee.

    To qualify as a dependent on your federal income tax return, your child must be either your “qualifying child” or “qualifying relative.”

    Generally, to be a “qualifying child,” your child must:

    Be (a) under age 19 at the end of the year, (b) under age 24 at the end of the year and a full-time student, or (c) any age if permanently and totally disabled.
    Have lived with you for more than half of the year.
    Not have provided more than half of his or her own support for the year.

    If the child meets the rules to be a qualifying child of more than one person, you must be the person entitled to the exemption.

    To be a “qualifying relative,” an individual must be:

    A child, brother, sister, stepbrother, or stepsister; the father or mother, or an ancestor of either; a stepfather or stepmother; a son or daughter of a brother or sister of the taxpayer; a brother or sister of the father or mother of the taxpayer; a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in law, or sister-in-law; an individual (other than the spouse) who, for the taxable year of the taxpayer, has the same principal place of abode as the taxpayer and is a member of the taxpayer’s household,
    An individual for whom the taxpayer provides over one-half of the individual’s support for the calendar year,
    An individual who is not your qualifying child or the qualifying child of any other taxpayer, and
    An individual whose gross income is less than the exemption amount ($3,650 for 2010).

    For purposes of health insurance coverage only, an adult child may meet the definition of a “qualifying relative” even though the adult child’s gross income may equal or exceed the exemption amount.

    If the adult child does not qualify as a dependent, the fair market value of the adult child’s health insurance coverage is income and taxable wages to the employee.

    The fair market value of the adult child’s health coverage is determined by the employer and insurance provider. Contact your employer for further information. The Department of Revenue cannot determine the fair market value of the coverage.

  16. Suzanne says:

    Jessica, great point about health insurance. I had cancer at 23. No one expects that either. Fortunately I had excellent health insurance via my job (and an extremely supportive boss), but many young people are not so lucky.

  17. Michelle says:

    I hope #8 doesn’t think that being claimed as a “dependent” on her parents taxes has anything to do with her financial aid status at her university. The government has 7 questions on the FAFSA, and if you can’t answer yes to at least one of them, then you are still considered dependent for financial aid. These questions are…

    Are you 24 years of age or older by December 31 of the award year?
    Are you an orphan (both parents deceased), ward of the court, or was a ward of the court until the age of 18?
    Are you a veteran of the Armed Forces of the United States?
    Are you a graduate or professional student?
    Are you a married individual?
    Do you have legal dependents other than a spouse?
    Are you a student for whom a financial aid administrator makes a documented determination of independence by reason of other unusual circumstances?

    It doesn’t matter how your parents claim you on their taxes. I used to work in a financial aid office, and that was the number one thing parents would call and complain about, “I didn’t claim my kid on my taxes, why are they still considered a dependent?”, then I’d have to explain it all, and they’d get upset because they missed that years tax benefits because their student gave them bad information.

    So, unless you have some very pressing reason, I wouldn’t stress about whether they are claiming you or not.

  18. JS says:

    Q6: Regarding the professional wardrobe for grad students, Trent is correct that the vast majority of students dress casually, but in some programs, it is customary to dress in business casual clothes. Also, you will need *some* nice clothes at regular intervals no matter what field you are in (conferences, presentations, interviews, etc.). When I was in grad school, I got a research assistant position that required me to visit people’s homes, and doing laundry was a constant concern at first because I didn’t have a lot of business casual clothes.

    My advice is to slowly start buying the clothes you will need now- buying clothes one piece or outfit at a time is a lot less financially onerous then buying them all at once, and you’ll have enough before you know it. This also gives you time to shop thrift or consignment stores, or sales at department stores. Focus on pieces that will be acceptable in a wide variety of situations- black dress pants, button-down shirts, blouses that can be worn both on their own or under a suit jacket, etc.

  19. Vanessa says:

    Q1: My first job paid me once a month–now that was frustrating! Most of my expenses would be paid around the first week, which left me nearly broke for the rest of the month. But that experience taught me so much about budgeting and the importance of savings, even just a little.

    Somehow you need to build up a buffer in your checking account to cover at least one month’s worth of expenses. When you do that, it won’t matter what date your paycheck falls. Sell something, cut way back on spending, or take money out of savings, but you need to build up that buffer to break your paycheck-to-paycheck cycle.

  20. Telephus44 says:

    I’m guessing that Q8 has more to do with tax returns. If he can claim himself as a dependent, he’ll obviously get a much larger tax refund than if he can’t.

  21. Baley says:

    Q6: You may want to start living as if you only had the one income now, then socking your income into savings. If you need to you can use it to buff up your wardrobe, but maybe you can try to work in a clothing category in your budget based solely on your husband’s income.

  22. Des says:

    Q4 – Here is how I would go about deciding this: Figure out the trade in value of your car and add the cost of the paint job. Compare that amount to the other cars you could buy (at the dealership) for that price. So, if your trade in value is $3k and painting it will cost $2k, look at the cars you could get for $5k. If yours is better, go for the paint job. If you can get a better one from the dealership, go for that. (Of course, that ignore the private sale option, but Jeff mentioned trading in, so I assume that is the route he prefers.)

  23. Angie says:

    I love when people criticize someone’s grammar and misspell “grammar.” Cracks me up every time :)

  24. jim says:

    Q4 : Your car is probably worth what $3k-$4k? I think $2000 is too much to spend to make it look nice. I’d shop around for a respected yet reasonably priced paint shop and spend less, just sell the car and get something else or simply live with it as is.
    Also, other than Trent, I do think that quite a lot of people WILL judge you in some way if you are driving a run down looking car.

    Q8 : Impossible to tell without actual numbers. I’m not sure how the scholarship counts. It alone might make it so you aren’t providing half your support. Note your parents don’t have to provide over 50% of your support, for children the test is only if the child provides over 50%.

    Q9 Ralph : I agree with you about going with option 1 for now then resorting to option 2 or 3 if necessary. Keep feeding it oil for now. Worst case you have to buy a new engine, best case you keep it running for years.

  25. Brit says:

    Q7 – I have had a Roth IRA with Sharebuilder for about a year now, and was easily able to avoid those fees. I just double-checked and as long as you invest in their special no-fee mutual funds, it’s completely free. This worked out really well for me (and I’m assuming it would for you too) since I’m still in Graduate school and didn’t have the $3000 minimum for Vanguard, nor could I afford the $200 monthly minimum for automatic investing to be free anywhere else. So, with the no-fee mutual funds I just put $75 a month in, and its free. Seems like a deal to me, good luck!

  26. Availle says:

    #6: Are you sure about the “professionalizing”? What you need to wear depends heavily on the local standards and on the standards of the field you’re in. Computer scientists can wear jeans and tshirts everywhere though :-)

    I’d suggest to take a look at the faculty around and check what they are wearing. If the majority of them can get around with random tshirts, so can you.

  27. Elysian says:

    Q8 –
    It probably doesn’t matter too much for your own taxes, and probably makes a big difference for your parents. All the credits available for being a student (or for claiming your own deduction) only make a difference if you actually owe federal taxes. It sounds like you don’t make a lot of income, so probably won’t benefit much from either the deductions or credits you might qualify for.

    My parents claimed me as a dependent all through college, never gave me a time, and pocketed all the educational tax credits. It was something that just wasn’t worth fighting them on because I earned so little as a college student that I got all my federal taxes back anyway. It was kind of jerky of them, but I wouldn’t have benefited if they stopped. You probably wouldn’t either.

  28. mary w says:

    Q1. When deciding how to handle your two “extra” paychecks a year, remember that while some expenses are monthly (rent, utilities, cc payments) others are a function of days. You’ll need the same amount of what I call walking around money (gas, lunches, groceries, etc) whether it’s the 1st or 3rd paycheck of the month.

  29. Brianne says:

    Q8 – My mother claimed me as a dependent throughout my undergraduate schooling and it truly sucked. She paid my car insurance (because it made hers lower too) and she gave me $1,000 my junior and senior years of college. I never used her health insurance though I was probably still covered. I ended up owing tax every single year and she made out by getting money back.

    Also, I ended up staying an Ohio resident throughout my undergraduate and Ohio is one of those wonderful states that also has city income tax. So I also owed a city that I didn’t actually live in. I didn’t even realize that most states don’t have city income tax.

  30. Nancy says:

    Replies #15 & 17,
    Thanks so much for your in-depth replies. I’m copying this info down!

  31. Roberta says:

    to Vanessa at #19 I don’t understand why you can’t budget on a monthly paycheck. Don’t all your bills come in once a month? You look at the calendar on payday, subtract what’s due on what day, and go from there. We did it for 25 years when we got paid once a month. You just budget the same way you do for anything else. When my husband started getting paid every two weeks instead it was really wierd to think, ok, his pay won’t cover the mortgage this week.

  32. valleycat1 says:

    Q1 – The biggest challenge I had when I changed jobs to one that paid every other week was putting enough money aside to cover required expenses when the due dates came before the next check. Your husband’s sporadic income would be a good source for that. Work toward setting aside enough money to cover your usual rent/mortgage, utilities, and 2 weeks’ groceries.

    It might be helpful to you to list all the paydays for the upcoming year, so you can figure which months you need to be most careful to be sure your bills are covered by the cash on hand. One disadvantage to the employee when getting paychecks every two weeks is that your actual monthly pay is less than what it would seem based on your annual pay (1/13th instead of 1/12th). And I never seemed to get much benefit from those two “extra” paychecks as they seemed to hit just as rent & other major bills came due.

    My 2nd step was to list all my required expenses (meaning, simply, bills I had to pay, like car payment, insurance, rent, utilities) & total them. Then I knew how much remained in the budget for food and other variable expenses, and how much of each check needed to go toward them. Any payments with a hard due date (rent, for example) are prioritized. I worked with a couple of the places where I made monthly payments to shift the due date later in the month.

    I also tracked this on a very simple worksheet for about a year until I got the hang of how the cash flow worked out.

    #8 Goldsmith’s calculation works on paper but not in real life, as I know of no landlord or lender that will accept 46% of a payment every other week.

  33. Vanessa says:

    @ Roberta #19

    To me, getting paid monthly felt like a windfall. All month there’s no money, no money, no money, then…MONEY! I’d feel flush with cash and want to splurge on groceries, household items, and other things I’d denied myself all month. But I would remember how long it would be until my next paycheck and that convinced me to have some restraint. I was earning very little at the time and there wasn’t a lot left over after paying my regular bills, which made waiting for that next monthly paycheck feel even longer.

  34. Vanessa says:

    Sorry, that’s Roberta #31!

  35. Lindsey says:

    Q1: My mom used index cards to organize which how much each bill was and when it was due. That way, when a paycheck came in, she was able to easily see which bills needed to be paid before the next check. (all this was back when you mailed a check) She still does this and we still tease her for this :)

    No matter what schedule you get paid on, budgeting is the same. You’ve got to prioritize the bills, pay the ones due now, and save up for the bills that need multiple paychecks to cover. It may require some self-discipline to not spend that money, but it can be done.

  36. Raya says:

    Wow, awesome mailbag edition!

    I’d love it if Trent would talk about writing his novel some more.

  37. Riki says:

    I get paid once monthly and I love it. It makes accounting simple – one pay cheque and then all the bills (inc. savings and retirement) come out and whatever is left over I can spend for the month. Organizing all of my bills to get paid on the 4th makes that very, very easy.

    Whatever is left over I get to spend, so I divide it roughly into 4 equal chunks (for each week in the month, give or take) and I use that as a guide for how much to spend every week.

  38. jim says:

    #29 Brianne said : “My mother claimed me as a dependent throughout my undergraduate schooling and it truly sucked. She paid my car insurance (because it made hers lower too) and she gave me $1,000 my junior and senior years of college. I never used her health insurance though I was probably still covered. I ended up owing tax every single year and she made out by getting money back.”

    Your mom paid your car insurance, paid your health insurance and gave you $1000. Thats worth far more than the amount you lost by not being able to claim yourself.

    I think its safe to assume your mom had higher income and higher tax rate than you so if she claimed the deduction it would be worth more than if you claimed it. If you were in the 15% bracket (like most college students) then a single exemption of $3700 is only going to change the tax bill by about $555. Your health insurance probably cost more than that.

  39. jim says:

    Didn’t mean to ignore state/city tax rates. I don’t know what those would be but it looks like Ohio tax would be in the 3-4% range so about $150 more.

  40. Pat says:

    My husband has been paid biweekly for years. At first I had a hard time figuring out bill paying but once I started using online bill pay it is so much easier to budget. I schedule a 1/2 payment for each payday. Those 2 extra paydays a year are treated the same way so I make extra payments to all our bills. This has helped us pay off all but 2 bills using the ‘snowball’ method too. Our daughter bought a home last year and uses bill pay weekly to pay 1/4 of her mortgage. Her bank has no problem with her submitting her money this way (they actually encourage borrowers if this suits their budgets). This will save quite a bit of interest in the long run and she is already over 1 month ahead on her mortgage payments. I wish all banks did this for their customers.

  41. Joan says:

    Q#5 I really enjoy this blog, however; ending a sentence with at is like fingernails on a chalkboard to me. Probably because my highschool English teacher threatened to fail any student she heard ending a sentence that way.

  42. SLCCOM says:

    And your high school English teacher was wrong!

  43. michele says:

    if your parents are paying for your car, your car insurance, medical insurance,and your cell phone, figure out what the total amount is for those payments. If you can handle the payments by yourself, and truly be independent, then do so and claim yourself. If not, stop complaining. Your parents are providing significant amounts towards your support, and they have the right to avoid paying additional taxes (not ‘evade’) . Car insurance, car payments and upkeep aren’t cheap. Try getting a cell phone on your own with all the bells and whistles college students ‘need’. You might appreciate the bundling your parents are providing you for those bills. And, perhaps, talking with them about the difference in your taxes might be more helpful than going directly to a blog. Usually, parents love their child and aren’t screwing them out of money on purpose. Talking to them might clear up the problem. It didn’t sound as if you were worried for them and possibly making an error in their taxes; it sounded like you actually think your parents are cheating the system or not giving your your due.

  44. Bill in NC says:

    Q4: $500 paint job from Maaco, etc.

    Plan on a lot of over-spray, but will still look better than bare metal (at least for a year or 2)

    Q9: No rebuild option?

    While out of town my engine needed a new head gasket (a known problem with that model Subaru)

    Had it done at the local dealer – $2000, which also included a loaner and replacing all belts/hoses/seals/water pump/radiator.

    Already have 20,000 on my ‘new’ engine, still runs great, for far cheaper than any car payment.

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