海角大神

Right now, as my wife approaches the end of a challenging pregnancy, I鈥檓 doing a lot of planning for the next six weeks so that you鈥檒l continue to have fresh posts to read while the baby arrives. This means a lot of extra writing right now to ensure this happens.

However, I still might miss a post or two if the baby arrives very quickly or something like that, so if you see a day without a post, you can be pretty sure that I鈥檓 holding a tiny baby instead of writing.

I am looking for a cost-effective data storage/back-up solution. Currently I have photos, music files, and financial docs on my laptop hard drive, and I back up periodically to an external hard drive. However as I get more and more financial information electronically now, I am considering whether I should have some off site back up solution. I鈥檝e been looking at services like Carbonite that offer online data storage for ~ $50-$60 / yr. Any thoughts on whether or not to sign up for this?
- JT

I back up static information to DVD-Rs. Things like photos, music files, home movies, and so forth are static 鈥� they鈥檙e not going to change. I make an annual DVD-R set with all of these documents on it and I make monthly 鈥渁dditions鈥� on CD-R. This costs me maybe $5 a year.

For data that changes a lot, I usually just keep it backed up on a flash drive. I back it up regularly, encrypt it, and keep it on my keychain.

As I鈥檝e said many times on here, I don鈥檛 trust sharing lots of personal data with additional companies unless there鈥檚 a deep need for it. My financial information in particular is something I don鈥檛 like to share.

My father passed away in 2006. For many reasons, including being financial naive, I did not take inventory on what he left behind. He left my mother 4,000 shares of Hudson City stock (HCBK) and I want to help educate her so we can maximize its potential.

Right now she gets paid a dividend four times a year which she uses to help pay her home taxes. A third party administrator who worked with my dads company is advising my mother and wanted to reinvest in more HCBK stock. Here is where I get lost and have questions. Shouldn鈥檛 she diversify? Is that not the case because my mom is semi dependent on the dividend payments? My feeling and advice would be to hold with belief it will get back around the 19.15 price it held in Sept 08 and at that point sell half investing the earnings conservatively because my mom is 59. As my financial where-with-all has grown, I am far from an expert and don鈥檛 feel totally comfortable providing this advice. I guess I am looking for some reassurance before I suggest things to the professional. Ultimately I just want to do what is best for my mother and would appreciate any thoughts you had based on the information provided.
- Ed

I agree with you that diversity is good. If all of the money is in one particular stock, you鈥檙e completely out of luck if that company goes out of business.

However, I think you鈥檙e focusing on the sticker price of the stock way too much. It鈥檚 pretty clear that your mother isn鈥檛 going to sell the stock unless she鈥檚 desperate. Instead, she seems happy to be receiving the dividends from it.

Thus, if she鈥檚 going to invest more, I鈥檇 suggest identifying and then investing in a company that issues a healthy dividend like clockwork. Don鈥檛 worry about the stock price at all 鈥� just focus on finding a healthy company to invest in.

I鈥檓 a recent college grad who just started working and I鈥檝e got about 20k in loans (6.8% interest rate) with no other significant debt. Using a debt snowball calculator I figured that I could pay it off in 30 months using about 15% of my gross salary. However, right now my parents are letting me stay at their home for free for the next five months. I figured I鈥檓 saving anywhere from 700-1100/month by living with them. I鈥檝e already got about 1k in my emergency fund. Should I use my extra money I鈥檓 saving in rent to pay off my student loans faster or use it to build up a bigger emergency fund?
- Bryan

I鈥檇 probably put aside some amount for the expenses you鈥檒l have starting out living on your own 鈥� a deposit on an apartment, for example, and a bus pass, and basic kitchen supplies and an initial food purchase to fill your cupboards. I鈥檇 put aside $1,000 for that outside of your emergency fund (and perhaps more, depending on where you live).

Since you have no assets, I鈥檇 probably put a bit more in the emergency fund, enough to cover at least a month of living expenses after you move out.

After that, I would pay down the debt. Debt freedom is definitely a worthwhile goal.

What do you think about life insurance and prices? Is it possible for me to buy life insurance through my business to insure my son because he completely refuses to buy it himself even though he has a family of 7. If something happened to him, we would feel responsible in caring for his family. Personally, I don鈥檛 think that is quite fair.
- Rosalie

I agree with you that he should take out some life insurance on himself. It is the responsible thing to do, especially with a number of children.

If he鈥檚 not going to do it, you absolutely can take out a life insurance policy on him with you as the beneficiary. This is to protect yourself in that situation. If he passes, you can then use the money in whatever way is needed to secure the situation for your grandchildren. I鈥檓 not sure this is an expense for your business. I鈥檓 pretty sure that this would be a personal expense.

As for what to buy, just buy a term policy. Don鈥檛 worry about any of those policies that have some sort of investment package tied in.

Recently I鈥檝e been very focused on improving 2 aspects of my life 鈥� my physical fitness, and my career. I鈥檝e made strides on both, having lost about 20 pounds and sitting about 10 pounds from my target weight, and I鈥檝e done it by making what I hope are sustainable, gradual changes. This has GREATLY increased my energy level, and given the the confidence to tackle my career goals, as I鈥檓 actively looking for the right move for a new job.

Since you鈥檝e written about your weight loss and work on your book, I thought you might have some thoughts for someone who鈥檚 managing multiple goals looking to take that next step. Ideally, by June I鈥檒l have reached my weight goal for beach season, and by September I鈥檒l be happily in a new job with a realistic chance at making six figures by the time I鈥檓 30 (which would nicely dovetail with my goals of buying an engagement ring in 2010 and a house by 2012.)

In the past I have motivated myself with small rewards, ie, if I write 3 cover letters tonight, I鈥檒l get myself a nice bottle of wine. It usually works great, but I鈥檓 running out of rewards that don鈥檛 directly conflict with my new lifestyle. Using food as a reward conflicts with my fitness goals, and probably isn鈥檛 a great idea anyways. Buying something I don鈥檛 need, likewise, doesn鈥檛 really fit my financial goals. On top of that, I鈥檝e found solid, affordable replacements for so many of the things I *thought* I wanted that I can鈥檛 find the right things to motivate me to make the next level of effort.

As much as I鈥檇 love a PS3, my PS2 keeps me entertained just fine. As much as an expensive bottle of wine sounds nice, I鈥檝e got a group of $10-12 bottles that I鈥檓 totally happy with. Even a nice, but healthy meal out isn鈥檛 really a big deal since I鈥檝e gotten good enough in the kitchen that I can make most of the things I really love It seems like all I have left is literally taking things off the board so I can reward myself with them later (I鈥檒l let myself do the Sunday crossword AFTER I run) but that doesn鈥檛 seem like the kind of self-deprivation I can maintain long-term.

All of the above are great, since they allow me to keep my spending down and really appreciate the value of the things I have. The problem is that for the last 2 years, I鈥檝e had a checklist of things I wanted (cookware, books, clothes) that I鈥檝e slowly accumulated as I鈥檝e rewarded myself for various goals. Now I鈥檓 tackling two major goals, and I鈥檓 running out of short-term motivators to keep me from feeling too deprived. I just hit a major goal in my savings ($20K) and took a long-planned vacation in February. Now I鈥檓 looking at a spring and probably summer of job searching, exercise, and eating right. I need some form of reward to keep myself going on those slow days.

I鈥檓 on a great path, but I need a little motivation along the way. Any thoughts would be greatly appreciated.
- Matt

Honestly, I use time as a motivator. It really works well for me.

What do I mean by that? I promise myself blocks of time doing something that I deeply personally enjoy guilt free if I accomplish certain things. So, for example, if I get twenty articles finished this week, I鈥檓 going to spend half of Saturday doing something fun. If I keep on my weight loss pace, I鈥檒l allow myself two hours one evening doing something purely fun instead of washing dishes or something.

If I waste time, I usually feel guilty about it. If I do this, however, the guilt is gone. I just get to enjoy myself because I know I worked for this free time.

This really works well as a motivator for me because I don鈥檛 want stuff. I want time.

I鈥檝e gotten my credit card debt to $2,700 from $6,000 this February. I have $5,800 in a 401K, and about $1,500 in a checking account. I鈥檓 also going to need about $1,000 in repairs to my car soon. My credit card company (Citi Visa) mentioned the other day some program they have to help pay off the balance of the credit card. I don鈥檛 remember the specific details, but it was an incentive to pay more than the minimum payment. Their deal is that every time you pay more than the minimum payment, they would reduce the amount you owe by a certain percentage. They cap the incentive at 20% of the existing debt I believe. It sounds like this could save me up to $500 or so.

My question is if I do something like this, would it count as a settlement and affect my credit rating? Part of their program requires you to freeze your credit card usage until everything is paid off.
- Joe

It depends on the specifics of their offer. You need to ask them specifically how this is reported on your credit report.

They may view this as an internal program and will just report that your debt is being paid and the balance is going down rapidly. On the other hand, they might report it with some sort of notice that could result in a negative on your credit rating.

You have to read the terms of the offer. You should start by simply calling them up and asking specifically how this is reported on your credit report.

I鈥檓 25 and live alone (well, with a roommate) in the Los Angeles area. I have a good job and make what was a good salary when I started, before three years of 鈥渃ost-of-living鈥� raises that didn鈥檛 live up to the name. I have no debt except for very easy informal school repayment to my parents, and I have a 3-month cushion saved (though I鈥檒l feel much better when I get up to 6 months).

I have two major goals in life. The first is to own a house, which is something I have wanted intensely since I was about 10 years old 鈥� with or without a husband to help me buy it. I picture this as part of a larger financial independence. The second one is that, now that marriage really does seem unlikely, I want to develop friendships and a social life that can sustain me happily through middle age and beyond.

The problem is that I cannot keep within my 鈥渋nvesting and entertaining鈥� budget. (I call it that rather than the more conventional 鈥渆ntertainment鈥� to remind myself that the purpose is outgoing, to develop relationships, not to selfishly amuse myself.) I am always overbudget, but even then, if I鈥檓 invited to do something, I never refuse, because I can鈥檛 bring myself to miss any opportunity of being with friends. It should be mentioned that none of these outings are particularly expensive 鈥� they average around $15 鈥� and in general I hang out with people about once a week. My group of friends also entertain each other frequently in our homes, but I actually don鈥檛 find this to be much cheaper as either I have to take something to share, or if I鈥檓 hosting, have to fill in the gaps of what others have brought. The obvious solution is just to cut back and start refusing invitations, but so far I鈥檝e been unwilling to do this because I value these events too highly.

To be clear, even if I鈥檓 over-budget, I still have the money, it just has to be re-allocated from somewhere else. Since I鈥檝e trimmed everything as tightly as I can, that usually means savings. And then I feel horrible about that, because of my other goal of house/financial independence. I can only save about $100/month even if I don鈥檛 dip into it 鈥� which I feel bad enough about anyway.

So the question is 鈥� how do I reconcile the two goals and/or cut my entertaining expenses? Is there a solution I鈥檓 missing? Or is there nothing more I can do other than start making more money?
- Ashley

It sounds to me that the problem isn鈥檛 with you, it鈥檚 with your budget. You鈥檙e putting an unrealistic 鈥渃ap鈥� on your entertaining budget and feel disappointed whenever you exceed it.

Clearly, by the way you live your life, you value these entertaining experiences. They鈥檙e one of the key parts of your life. I鈥檇 encourage you to go ahead and spend roughly what you鈥檙e spending on it. What you need to guard against is escalation of that spending.

The warning bell for me is that you say you鈥檝e 鈥渢rimmed everything as tightly as I can.鈥� This is very rarely true in anyone鈥檚 life. Are you buying generics? Do you have a programmable thermostat? Have you disconnected your cable television? Do you still have a landline phone? Are you making inexpensive meals at home (think vegetarian, particularly vegetables bought on sale)?

There are many, many ways to make cuts to your spending in other areas, the areas that aren鈥檛 important to you. Look deeper.

How do you steel yourself against all the unsolicited advice offered as comments to your posts? I recently read the frugal pet tips post and found myself getting increasingly irritated as people offered up advice you had in no way requested and that had nothing to do with frugal pet ownership, like don鈥檛 get one since you have a baby on the way and pleeeeeeease don鈥檛 tie up the dog all day in the yard.

Anyway, it鈥檚 really a question that needs answered since you have a billion subscribers and questions but just wanted to show some solidarity 鈥� maybe it doesn鈥檛 tick you off, but if it does, you鈥檙e not the only one!!!
- Kelli

When people read an article I鈥檝e written, they filter it through their own experiences and then offer up a comment based on the mix of the article and their own experiences. Most of the time, it鈥檚 because they genuinely care (yes, there are some people out there just trolling, but most commenters care or they wouldn鈥檛 bother).

The person who writes in with concern about the baby has probably witnessed an aggressive dog biting a child. There are vast differences in dog breeds in terms of their behavior and I have no interest at all in getting any dog that鈥檚 aggressive at all. I have negative interest in a 鈥済uard dog.鈥�

The person who writes in with concern about tying up a dog has seen a neglected dog tied up outside all day and felt a lot of sympathy for that dog and wants to make sure that I wouldn鈥檛 treat a dog like that (I won鈥檛 鈥� the only time the dog will be tied up is when they鈥檙e on a leash for a walk.)

They鈥檙e seeing my situation, reflecting on their own experiences, and sharing their thoughts and concerns. Yes, sometimes they go off the train of thought. Yes, sometimes it can be frustrating (for me, too). Usually, though, they鈥檙e saying something of some degree of value and they obviously care about something. In short, I don鈥檛 mind them at all as long as they鈥檙e not attacking anyone.

Sometimes, such comments seem like an attack on me. They seem to be assuming that I would engage in the negative behavior they鈥檙e describing. That used to bother me a lot and I would respond pretty defensively. For example, I could easily see the above comments as saying 鈥�Trent, you鈥檙e so stupid you鈥檇 get a pit bull and put it by your baby鈥� or 鈥淭rent, you鈥檙e so cruel that you鈥檇 get a dog and tie it up outside all day.鈥�

But the more I thought about it, the more I realized that most of the time, people writing such things aren鈥檛 even thinking about that in that way. They鈥檙e expressing concern about something that bothers them and not even thinking that they鈥檙e implying that I would do such a thing. They鈥檙e just relating a concern they have that has little to do with me other than to just give me something to think about. And that鈥檚 cool with me.

I have a question about the relative benefits of moving. Here鈥檚 our situation: My fiance and I are 31 and 27, respectively, and live together in the Bay Area. He is an IT professional (he makes $65-70K) and I am a PhD student (I make $30-35K). I hope to finish my research and PhD thesis in late 2010 or early 2011. After that, I鈥檒l look for a permanent research position in the Bay Area. Because the market has gone down so much, we want to buy a house, but we can鈥檛 yet afford the size of house or the neighborhood we desire. We rent currently (with a housemate) and have been saving as much as possible for a 20% down payment on a house we hope to purchase when I am permanently employed. We have $80K saved, but our target house price will be $500-600K, so we need $100-120K.

We seemed to be on track to saving enough money until our housemate indicated that he wanted to move out, to a place with cheaper rent. If he moves out, we鈥檒l probably have to pay his portion of the rent (it鈥檚 a fancy place, our landlord prefers 鈥渆stablished couples鈥� and didn鈥檛 want us to have a housemate in the first place, and I don鈥檛 think he鈥檇 allow us to sublet or add a new person to the lease). This means that our rent as a couple would go from $1533 to $2295 per month, which directly impacts our ability to save for a down payment. We could move to a cheaper apartment, but it would only be for about a year, and the considerable expense of moving and hassle of changing our address several times in a short period of makes us hesitant. Do you think (if we can鈥檛 convince the landlord to let us get a new housemate) that we should stay put and pay more rent or make the effort to move, even if it鈥檚 just for a year?
- Ann

It depends on how much you save. If you鈥檙e willing to live in a tiny apartment for a year, you鈥檒l be able to save quite a bit over the next year and probably buy sooner than you might otherwise be able to. If you鈥檙e not willing to do that, then you鈥檒l live better for a while, but will be in financially worse shape over the longer haul.

Whenever I read a question like this, I always think of the old Dave Ramsey nugget, 鈥淟ive like no one else so you can live like no one else.鈥� If you want something exceptional in life, you have to make some sacrifices along the way.

If I were you, I鈥檇 get a tiny apartment for the next year. If you have too much stuff, rent a storage place for the extra stuff (or sell off a lot of it 鈥� even better). Handle as much of the move yourself as you can before hiring a moving service. Put some sweat equity into it.

My credit is apparently good enough now that a company called me this week wanting me to refinance my 30 year fixed mortgage (24 years to go) at 6.375% to a 15 year fixed mortgage with a rate much closer to 4%.

Problem is that I have about 23k in high interest credit card debt. I鈥檝e called several times and asked for a lower rate and threatened to jump ship, but I get the same excuse that credit is very expensive right now and they can鈥檛 reduce my rate. More importantly, I got so mad after one of those calls, I took the card out of my wallet several months ago and haven鈥檛 used it (or any) since.

I don鈥檛 think refinancing the house is the best move until I eliminate or at least majorly reduce the interest rate on my credit card debt. I鈥檓 trying to figure out the best way to do that. Do I seek a low rate credit card with an attractive balance transfer? Do I look into a second mortgage/home equity loan with an eye to shift some of the credit card debt to a lower rate (i don鈥檛 have enough equity to get it all) and at the same time reduce the existing mortgage to eliminate PMI?

The other question I have is timing. I鈥檓 currently on leave from work with a 7 week old. I won鈥檛 have a full time pay stub for income verification until probably June. I鈥檓 eligible to pull my free annual credit report again in late April. Should I try applying for a low rate card now and transfer the high interest debt as soon as possible? Should I wait until I review my credit report? Should I wait until I鈥檓 back to work so that I can provide documentation of my income for credit applications?

For further background, I鈥檓 married, 2 kids, have about 2 months income in savings, both of us are in early 30s, we both have retirement savings through work though I鈥檓 not contributing while on leave, all of the debt is shared and my husband is finally committed to paying off the debt.

Your opinion? Do you have other suggestions for me?
- Joyce

This might be an opportunity to roll some of that credit card debt into the mortgage. Call the people who offered the refinance and ask if you can refinance for more so you can take the difference to pay off some or all of the credit card debt. It really depends heavily on what your home is worth whether this will work or not.

I鈥檓 fairly surprised that you can鈥檛 use an older stub for income verification in this situation. Have you checked to make sure that you can鈥檛 use an older stub?

If you have to wait until June until you can get the refinance, I would probably try to apply for the new card right now to minimize the impact it will have on your credit rating later. You can then transfer the balance to the card to eliminate interest for now, but I would still try to take out extra on the home mortgage to pay off that credit card debt.

Remember, your entire goal is to minimize the interest you鈥檙e paying each month. I think, given the information you provided, that this is the best route to take.

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