Reader mailbag
I had forgotten the rewards and challenges of having a newborn. In some ways, both the challenges and the rewards are amplified by also having a four year old and a two year old at home.
My son is 20, and is a straight A student at college but doesn鈥檛 feel that he knows what he really wants to do. Everything, academically, comes easy to him. (I know he doesn鈥檛 like manual labor. LOL.) How can he decide what he really wants to do with his future when he鈥檚 got a 鈥檚urplus鈥� of brains but a lack of motivation? (He actually asks me these questions, and wants to find a 鈥減assion鈥� but hasn鈥檛 found one at this point of life yet.) We鈥檙e not wealthy, just conservatively 鈥榗omfortable.鈥� I try to expose him to a variety of opportunities to explore, but he鈥檚 so 鈥榝rugal鈥� (from us) that he doesn鈥檛 want to explore options as much as I would like. Do you have any suggestions??
- Carolyn
What does he talk about? What does he spend his free time reading about or learning about when there鈥檚 no requirement to do so?
Whatever that is, it鈥檚 your first clue as to where he should be headed. If he鈥檚 constantly following politics, for example, then he should delve into politics. If he鈥檚 constantly writing, then he should be a writer. If he鈥檚 constantly tinkering with things, then he might want to consider engineering.
One of the biggest shames of our culture is that we send kids to college who have no idea what they want to do with their lives, so they go and spin their wheels for years, racking up expenses and debts.
I live in a low-income urban environement and am looking for Personal Finance material that is directed at low-income folks. As I have begun to do some one hour classes I am realizing that the issues are very different. If you can point me in a direction that would be awesome.
- Andrew
Most of the resources designed for low-income people aren鈥檛 centralized at all. There is no 鈥渙ne stop shop鈥� for such resources, as most resources are either created by small groups that don鈥檛 market themselves well or are written for a very broad audience.
One place worth looking at is . Again, some of the material there isn鈥檛 written explicitly for low-income people, but there鈥檚 a lot of good content there.
Also, CNN Money鈥檚 has a lot of good resources, but you definitely have to pick and choose among them.
wondering how much you spend a week on groceries 鈥� prior to the new addition (congrats by the way.) And what you include as groceries (ie. would you include baby stuff like wipes).
We鈥檙e a family of 4 鈥� 3 yr old girl and 1 yr old boy.
- Jordan
I calculated this a while back and found that . However, I think what we spend that money on is atypical.
We do a ton of things to reduce our spending 鈥� grocery lists, meal plans, and so forth 鈥� but we also buy things like fresh saffron, fresh morels, Maytag blue cheese, organic milk, grass-fed beef, and so on. I鈥檒l do things like buy a bottle of brandy to aid in making coq au vin and include the cost of that bottle in our monthly food accounting.
Our 鈥渇ood鈥� spending does include a few non-food items. I don鈥檛 go through grocery receipts and excise the three or four non-food items purchase, like a tube of toothpaste or something like that. So our true food expenditure is probably lower.
I have two almost maxed out credit cards with interest rates of 14.4% and 11.4%. I would like to get a credit card with a 0% balance transfer option so I can transfer/ close out one of them. I have applied for two so far and keep getting denied. Am I hurting my credit (which is good despite my amount of debt) by continuing to apply for different 0% cards? Should I just bite the bullet and try to pay them down at their current interest rates? I have been trying to pay them down (paying more than minimums) It just doesn鈥檛 seem like I am getting anywhere.
- Kay
Applying for a credit card lowers your credit rating by about 5 points for 6 months 鈥� here鈥檚 the details on a .
I do find it a bit odd that you haven鈥檛 had any success at all applying for a 0% balance transfer option, though.
If I were you, I鈥檇 check my credit report at (the one that鈥檚 actually run by the FTC and is actually free) and make sure there isn鈥檛 anything you don鈥檛 know about on that report.
I am a soon to be college graduate (2 weeks away!). I am on an active job search, but I haven鈥檛 had any offers yet. Right now, my plan is to live with my parents for a few months while I work an hourly job at a restaurant, save money, and keep searching for a job. My family has started to ask me what I鈥檇 like as a graduation gift, and I鈥檓 at a loss as to what to tell them. I used to be a gadget freak, and I still have a weak spot for those things but right now I鈥檓 doing fine with what I have currently.
Since I鈥檒l be living at home and putting my current apartment stuff in storage, I don鈥檛 have an immediate need for anything apartment related. I鈥檓 having a hard time thinking of something practical that would help me in this transitional period of my life. Do you have any thoughts?
- Phil
Don鈥檛 go for stuff, go for experiences.
Instead of asking for a material item, ask for a ticket to De Gaulle Airport and a pass on Eurorail. Get your passport and backpack around Europe for a few weeks after graduation, just seeing things. It might very well change your ideas about the future.
Similarly, you could turn this into a volunteer project. Work at a Romanian orphanage for six months. Work in a small African village. These things are golden on a resume, plus they鈥檒l give you a new perspective on the world.
This is probably one of your best windows in life to really grow as a person. Take advantage of it.
I am 41 and my wife is 27. I have no debt while she has over $100k 鈥� mostly student loans, a reasonable car loan ($5k) and no credit card debt. The loans range from 2% to 8% with monthly payments of $1050. We both earn $80k a year in secure jobs. I have about $200k in savings and she has none, but our 403b is quite generous: 12% of annual salary a year from our employer with nothing required from us.
I handle the finances and in past years I鈥檝e worked down her debt with some success. Meanwhile she tried her hand at a doctoral program that added $27k to her existing debt. She has since dropped the program and those loans are now due for repayment.
My question is more philosophical than mathematical. How much responsibility should I take for alleviating her loans?
1) I can pay the minimums with her money, knowing it will take decades for her to be free of debt and her lessened income will impact our choices.
2) I can decimate my savings, leaving us both to start out at zero again, assuming I will never be able to make up that ground and will eventually become a financial burden to her in old age.
3) I can continue to do what I can where possible to pay down the debts and 鈥渂uy鈥� her loans on occasion to lessen the interest burden, thereby improving her situation while hampering my own ability to save.
Personality wise, she鈥檚 the spender and I鈥檓 the saver. She always assumes more money is around the corner, whereas I鈥檝e been laid off and gone through the economic downturns both personal and global. She hasn鈥檛 given up on the doctorate either, just postponed it.
- Leigh
It sounds as though you don鈥檛 have merged finances at this point, which is fairly unusual for a marriage. It took my wife and I a year or two to get everything in line, but once we combined our finances, it was really a good thing.
If you鈥檙e truly committed to your marriage and your finances and life are bound together for good, then her debts are effectively your debts because they affect your household cash flow and savings potential. The sooner you get rid of them, the better.
If you don鈥檛 feel that confident, then there鈥檚 a marital issue involved that you should work through.
We live in Baton Rouge (just moved here) and are thinking about changing from Regions to this bank. (as well as opening an account at a local credit union).
A 4.01% checking account is amazing!
- Trish
This offer is just like many other promotional interest rate offers. They look great until you break down the specifics.
The big catch here is that 鈥�0.10% APY will be paid on the entire balance in any cycle where the requirements are not met.鈥� That鈥檚 an awful APY.
What are the requirements? The big one is that you must have a 鈥渕inimum of 12 check card purchases鈥� each month. I very rarely reach that number in a given month. If I do, it usually means that I don鈥檛 have a good grip on my spending.
Of course, not having a grip on your spending means overdrafts. And if you don鈥檛 overdraft but don鈥檛 use the card enough, you get only a 0.10% APY. For me, that鈥檚 too many requirements on my spending just to earn a bit more interest on my checking account.
Twenty year son wants to move out and in with a friend. Advantages and disadvantages of this? Friend owes him money and son does not have full-time career or job yet nor does the friend.
- Chris
If neither one of them has a full time career or job, how are the bills at this apartment getting paid? Food? Electricity? Rent?
I鈥檝e got to assume that someone external is writing the checks for these things, and I think that鈥檚 a very bad idea. It sets up a pattern of financial dependence that doesn鈥檛 really give the person who is dependent any motivation to break free from. Why should they? They鈥檙e not working and the bills are getting paid.
If he gets a full time job, there鈥檚 nothing wrong with him renting an apartment with a friend and you might even give him a bit of financial help when he leaves. But an ongoing financial dependence is not a good thing for either of you.
I don鈥檛 understand why people buy lottery tickets. Talk about an awful investment.
- Andrew
Why do people gamble at all? There鈥檚 usually two reasons. One, it鈥檚 an enjoyable pastime for them 鈥� they love the game. Second, the reward curve is uneven, giving the player the potential to multiply his money. Unfortunately, the multiplication is usually zero, but most people are a bit overconfident about such things.
The big issue is, from a societal standpoint, that people who are able to step back and carefully think through such decisions generally do not participate in lotteries and instead invest their money elsewhere. At the same time, that skill of analysis helps them to earn more money in their life.
Yes, lotteries are not a good way to spend your money if you look solely at costs and returns.
How鈥檚 the baby? We want updates!
- Kellie
He鈥檚 doing quite well. He鈥檚 home from the hospital 鈥� as is Mom 鈥� and he seems to be doing well.
He currently has his days and nights mixed up, meaning he鈥檚 up a lot during the night and sleeps a lot during the day. We鈥檙e trying to use light signals to help with this, keeping him in bright rooms during the day and dim rooms at night.
He鈥檚 already a surprisingly sound sleeper 鈥� when he鈥檚 asleep, he tends to stay asleep very strongly until he decides to wake up. Our oldest child is a very light sleeper, but our daughter sleeps similarly deeply.
We like him. He鈥檚 a keeper.
Got any questions? Email them to me or leave them in the comments and I鈥檒l 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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