海角大神

What鈥檚 inside? Here are the questions answered in today鈥檚 reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
Single mom, crazy life
Debt payoff or Roth IRA?
Pay cash for car?
401(k) or IRA rollover?
Cut Roth contributions to travel?
Switch to HSA?
Watching sports without cable/satellite
Finding scholarships for adult students
An unexpected hit 鈥� and overanalysis
Music suggestions

A few months ago, I decided to grow my hair out to ten inches in order to donate all of it to charity. However, I鈥檓 running into a problem 鈥� it鈥檚 itchy. It鈥檚 driving me crazy over my ears and on the back of my neck. I don鈥檛 think I can stand it at this length, let alone any longer.

My life has exploded with craziness. I am 26, a single mom (again) going through a dissolution of marriage from my husband (not my son鈥檚 father). My husband kept everything, the house (currently in foreclosure) and furniture, his paid off car, the pets, etc. I kept my son and his belongings, my second hand dresser (older than me) my bed and books and my new car with a slightly hefty car payment (just under $300/mo). Everything else I own is second hand. I鈥檓 happy with this decision. I miss my house (I made it a home) but I鈥檓 happy with my 2 bedroom apartment. I removed myself from a very unhappy situation and with the support of my friends and family I鈥檝e found independence and happiness. My mother is disabled (brings home $800 a month after her medicare cost) I help her out as much as I can and in exchange she gives me free babysitting for various times. My son is 7, is very active (soccer, baseball, cub scouts, etc) has many friends and is the love of my life. I give him an allowance of $10 a month which is split between spending, saving (for college), charity, and saving for a long term goal (currently a vacation next year). He also receives spare change and sometimes dollar bills from my wonderful family which he is awesome about saving for his long term goal or giving to charity. I鈥檝e taught my son what my parents did not, money management. I鈥檓 still trying to teach myself. This year was especially crazy as my sister is getting married. I spent about $1,000 on the wedding (I鈥檓 a bridesmaid).

I currently work 2 jobs (1 full time and 1 part time), I coach soccer, I am involved in my sons鈥� scouting activities (mostly planning/helping at pack mtgs), and I have just started dating a very wonderful, responsible man. My problem is I feel like I don鈥檛 know where to start. I gained a lot of unwanted weight during my marriage, the accumulated debt feels like a dead weight which I鈥檓 ALMOST done paying off but can鈥檛 seem to get rid of the last little bit, I鈥檝e saved quite a bit but have also spent a majority of my savings due to unexpected expenses, I鈥檝e neglected my mental health (I鈥檓 diagnosed bi-polar and depression) because I can鈥檛 seem to squeeze time and money for therapy sessions ($25 co-pay per 50 min visit), my teeth are in bad shape due to past bulimia/lack of insurnance problems. How would I prioritze my and my sons needs/wants? My sons teeth are in OK shape, mostly needs 1 cavitiy filled but the other 2 cavities are in teeth that will fall out very soon (doesn鈥檛 make sense to fill them). He suffers from ADHD and requires monthly medication (behavior therapy was not enough). Otherwise his acitivies just seem to nickle and dime me to death. My boyfriend and I planned a vacation before we started dating and we were just friends. He gave me the deal of a lifetime and I took it with the support and well wishing of friends and family. We are now dating and he doesn鈥檛 understand that I don鈥檛 want him to pay for everything, even if I鈥檓 struggling. I have a need to accomplish things on my own, I don鈥檛 want him to rescue me everytime I make a mistake financially.

I have a separate vacation fund with Smarty Pig, a savings account linked to my checking account which is used as a small emergency fund. and am waiting until after my sis鈥� wedding to start a Smarty Pig emergency fund that I won鈥檛 be able to touch as easily. I promised my son we would take another family vacation next year and I feel that I could swing it if I pinched my pennies harder.

I guess my question is how do I priortize my life? How would a normal (i.e. an individual who doesn鈥檛 feel like they are drowning) put their priorities? I鈥檝e always put everyone else first, mostly I had to because I was a young single mom and relied on others to help me out so I felt like I owed them everything. Do I tell my mother (who helped me immensely when I was 17 and pregnant) I can no longer give her a stipend and pay for her cell phone so I can pay off my debts faster? Do I break my promise to my son and not go on vacation? Do I put everything on the back burner except my therapy and see if going back helps me feel better? Do I throw my budget out of whack and get a personal trainer so I can feel better (no self discipline which is a HUGE problem)? I鈥檝e cut a lot out of my spending except cable tv. Do I give up this last thing and hope for the best? I don鈥檛 want to put so much of my life and myself first that I forget my son or my boyfriend. Am I being stupid by not wanting help? I do accept help for certain things that I feel guilty about (my dad pays my car insurance, I don鈥檛 pay my dad for babysitting but I pay my mom, etc). I鈥檓 intelligent, I鈥檓 better off now than I鈥檝e ever been in my life and I鈥檓 happy even under all this feeling of helplessness and feeling overwhelmed. Between both jobs and my child support I gross about $36,000 but I can鈥檛 really identify where about $8,000 a year goes. I鈥檓 currently tracking my spending in Excel to figure it out. What advice can you offer me? What books or websites might you suggest? I need to hear the truth from an objective party, no matter how gruesome it is.
- Kymm

Financially, I think you鈥檙e on the right path, particularly with tracking expenses so you know where all of your money goes. You鈥檒l be shocked at how much you actually spend frivolously, I bet.

I think you鈥檙e at a difficult crossroads where you鈥檙e trying to fill a lot of responsibilities and roles at once. You鈥檙e a girlfriend. You鈥檙e a mother. You鈥檙e a daughter. You鈥檙e an employee. You鈥檙e also yourself with your own personal needs. Each of those roles come with a lot of obligations and promises.

It is impossible to be perfect at everything, and with each role you take on, you reduce your ability to excel at the other roles.

What you have to decide is what parts of all of this are actually most important to you? Ignore what other people want from you for a moment (aside from what you need to provide for your children). What is actually most important for you? What fulfills you each day?

Is being a parent your top priority? Then be your own version of a 鈥渟occer mom鈥� and focus on that until your child is older and can manage more of his own responsibilities.

Is your relationship your top priority? Then focus on making that relationship work with every spare ounce of energy you鈥檝e got.

Whatever is your priority, focus on that and chop the other things out of your life. The more you slice up your energy and attention, the less you have for each thing in your life and the more likely you are to completely burn out and not be able to do anything.

If that means breaking up with your boyfriend, so be it. If that means relying on babysitters and friends for child-related errands, so be it. If that means cutting off your mother鈥檚 allowance, so be it.

If you try to be all things to all people, everyone loses, especially yourself.

I graduated from Iowa State in 2008 and immediately found a ~60k/year job in IT for a large corporation. Through the jobs in college i graduated debt free and have spent the last two years building up a net worth (401k, roth IRA, emergency fund) of about 65k. I beat the match of my 401k and fully fund my Roth IRA and emergency fund. I鈥檓 about to become engaged and she has about 90k in student loan debt at 4.96% from 4 years at a private college and now has a ~30k a year job. We鈥檝e done a lot of budget work but she can barely afford the minimums and at this point is basically paying all interest and no principal.

With the plan i put together, i think if we pay $1700 per month, we can pay down the entirity of the debt in just over 5 years. I think i can afford that but i think it will require pulling down the 401k to just the match and stop the IRA contribution almost entirely.

Once married, do you think it鈥檚 wise to pull down the 401k to just the match and basically stop the Roth IRA in favor of paying down that 90k in debt? Or would it be better to keep the Roth going fully funded and pay about $1300 a month, paying down the debt in 7 years and paying 5k more in interest.
- Scott

It really comes down to how much the match is. If the match plus your contributions adds up to more than ten percent, then I鈥檇 recommend that move.

Clearly, you have your financial house in order if you鈥檙e freshly out of college, debt free, and willing and able to pull out $1,700 a month to put toward debt.

One thing I would make sure of, though, is that she鈥檚 financially sensible. If she鈥檚 seeing that debt disappearing and then feels that it鈥檚 okay to rack up other forms of debt (as people sometimes do), then you鈥檙e not going to get ahead. Your plan here works if it鈥檚 flanked with lots of conversation between the two of you and a commitment from both of you to live within the money left over after these debt payments.

My husband and I are a one-car family, and unfortunately, our car is on its last legs with 240,000 miles on it. We鈥檝e been saving up for a replacement with the intention of paying cash. We have about $10,000 in cash, which is pretty close to what we鈥檇 like to spend. With interest rates as low as they are, though, we are rethinking our strategy. We have excellent credit, and could likely get a very low-interest car loan. I have about $22,000 in federal student loans with a 6.25% interest rate. So, here鈥檚 the idea we have: put $0 down on the car, and buy the whole thing with a low-interest loan. Simultaneously, withdraw our $10,000 in cash and put it towards my student loan, which has a much higher interest rate. I鈥檓 sure there are dangers or disadvantages to this approach, but am having difficulty identifying them. The biggest concern would be decreased cash flow, since the car loan would be higher than the minimum payment on the student loan, but we鈥檙e already putting at least that much aside every month. Additionally, we both have secure if not spectacularly lucrative jobs (total combined salary of $60k annually). What鈥檚 your advice?
- Rhiannon

One danger to this approach is that you鈥檝e moved from a loan without collateral (your student loan) to one with collateral (your car loan). Another danger is, as you mentioned, decreased cash flow due to the higher car loan payments.

This kind of move is one of those 鈥渇uture self鈥� moves that I discourage people from making. Your future self just isn鈥檛 bankable because you just don鈥檛 know what鈥檚 coming down the road. Illness? Job loss? An unexpected family change? All of those things can completely train wreck your plans.

If I were you, I鈥檇 pay cash for your next car, then go back into savings mode. Save $150-200 a month for the next car after that, then use any extra you accumulate to build up an emergency fund and/or pay down the student loan with extra payments.

I am 28 years old. I have about $6k in a Vanguard 401k from an old employer, and my new employer uses John Hancock, I am putting $400/month in that (there is no matching at this new job) and have chosen the conservative portfolio. I think the old 401k has maintainance fees now that i no longer work there, so I am trying to decide whether to roll the money into an IRA with vangaurd or into my current employers 401k. I know that an IRA allows distributions to buy a first home, and I think I might really like that flexibility, even though I am close to being on track for a down payment in savings around the time I expect to move out of the Bay Area (there is no way I could afford a home here). But the simplicity of only dealing with one retirement account appeals to me as well. What is the best choice?
- Deborah

You should definitely roll over the old 401(k) if you鈥檙e getting dinged with maintenance fees 鈥� those can be really steep.

As for which one you should roll over into, it really comes down to the investment options available. Take a look at the fees for the investments you would want in each fund. Also, look at the performance history of those investments.

My guess is that Vanguard will top a John Hancock 401(k), but I鈥檓 not certain. You need to check the numbers to be sure.

I鈥檓 24 and thinking of an extended overseas trip (a quit-your-job-and-backpack-for-months kind of trip). I have a vague notion of grad school in my future, but I鈥檇 like to go on this trip before I commit to that (or to a career). I鈥檓 hoping for some advice on financing the trip.

It will be somewhere inexpensive (SE Asia or S America, probably) and probably 4-8 months. I anticipate setting off for the trip in about a year鈥檚 time, and would rather have too much than too little saved.

I鈥檇 like to have ~$9k for the trip (including airfare), with another ~$3k for when I get back (for food, transport, 1st/last/security for an apartment, etc.). I currently make $35k (pre-tax) and have ~$5k in savings. This means means I need to save another $7k in a year. I figure I can save around $3k pretty easily by being more frugal, but the other $4000 will be more difficult.

I鈥檓 currently contributing ~$4400/yr to my Roth (currently at ~$4k) and ~$1675/yr to my 401K (no matching; currently at ~$1100). I鈥檓 comfortable forgoing the 401k contributions because they鈥檙e less, and because the Roth is the better investment right now. This would put me about $1200 (after taxes) closer to my goal. But I鈥檓 still $2800 short.

Considering my age, is it financially acceptable to cut my Roth contributions for the coming year (and the time I鈥檓 traveling) to help finance the trip? (Again, the goal is a once-in-a-lifetime/while-I鈥檓-still-young experience) If not, what alternative would you recommend? If so, should I contribute 100% for the first 4-5 months and then cut the contributions to zero, or just save a lesser amount over the whole year?
- Ben

If you鈥檙e committed to this trip, do it right. Don鈥檛 leave yourself in a situation where you鈥檙e in southeast Asia without access to any money at all.

There鈥檚 also a factor of what your financial needs will be when you return from the trip. Are you going to completely rely on mom and dad when you get back or will you have some resources for your own use?

If I were in your shoes, I鈥檇 cut the Roth contributions (for now) and start socking all of that away for the trip. If you find at a later time that you have more than enough money for the trip, your Roth contribution window is still open and you can still contribute later.

My wife and I have five children. My employer鈥檚 health insurance plan is so expensive ($800+ per month) that we currently have an HSA/HDHP alternative (employer refuses to chip in on this by the way) that costs us $222 per month (up from $170 per month last year). Our deductible is $7500 per year. We have very few medical expenses each year; the only items that would normally be submitted as an insurance claim are small outpatient visits (such as chiropractor). Well-child visits are covered 100% with the HDHP (deductible not applicable); we generally have 1-2 sick child visits per year.

None of our medical expenses are ever submitted to insurance. Because the chances of reaching our $7500 deductible seem so slim, we鈥檝e thought it made more sense to pay cash for services (often at a discount) out of the HSA.

Is this a good idea? If we were to somehow have significant medical expenses that caused us to reach the $7500 deductible after-all, we would be able to submit 鈥渁lready paid鈥� bills.
- Andrew

Your question seems to be whether or not it makes sense to pay for things out of the HSA instead of submitting to insurance and getting closer to that $7,500 deductible.

If that鈥檚 the question, and you鈥檙e able to submit already-paid bills to your insurance to inch closer to the deductible anyway, it seems like a very good choice to use the HSA for such expenses.

Even if you鈥檙e not able to use already-paid bills, I鈥檇 still use the HSA, provided I had a healthy emergency fund in place that could cover the full $7,500 deductible if need be. The HSA simply makes it very easy to pay for healthcare expenses with pre-tax dollars.

I have a question concerning alternatives to cable TV. I know you have addressed aspects of this before but the one component I haven鈥檛 found a good answer for is sports. My wife and I have cable TV and internet bundle from Comcast. Right now we pay about $60/month but this is an introductory rate that will increase substantially in a couple of months. This is for the most basic digital cable package available plus the cheapest cable internet they offer. The shows we watch (Glee, Top Chef, 30 Rock) we can get online in some way, either Hulu or renting from iTunes. It would be cheaper to drop the cable and pay for the shows we watch regularly, but there are two issues. One, when we drop the cable the price of internet increases from $24.99 to $40 since we are no longer bundling. Two, we are both college football fans and not being able to watch our team in the fall is really not an option (more so for me than my wife, I admit, but she does watch with me). Do you have any suggestions for ways to watch sports without cable? What about canceling the cable after football season and restarting it every fall? Often the games are only available on ESPN so an antenna isn鈥檛 an option (plus we live in an apartment).
- Ryan

A few suggestions:

First, get a digital converter box and see what channels you can get over the air. You can get a surprising number of channels over the air, many of which air sports programming on the weekends.

Second, look for places where you can go to watch the games. Find a place with a nice television where your wife and you can go to watch particular games.

Third, just get cable installed during football season and have it removed after the season is over. Yes, you won鈥檛 get any great introductory rates, but you鈥檒l save a ton by not having to pay for it over the full year.

Finally, keep an eye online and make sure that you can鈥檛 get good feeds of the games you want from various websites like or the website of your favorite athletic conference. I watch 99% of my baseball online, for example.

My wife and I are currently debt free, except for our mortgage, which we owe about $100,000.00 with a 950.00 monthly payment. I am looking to go back to school to finish getting my bachelor鈥檚 degree. I have several credit hours accumulated and it looks like I can finish in a year using an accelerated program.

I was wondering if you had any ideas on how to find scholarships for an adult student. We don鈥檛 qualify for any financial aid except for student loans which will still leave us with a 700.00 monthly payment while I am in school. Although we are dept free, between utilities, daycare and other normal living expenses we don鈥檛 have that to spare. I have been looking on line for scholarship and grant information and many of the sites ask for a credit card or just leads you from one site to another without giving any usable information.
- Jess

You鈥檝e simply got to beat the pavement for such scholarships, just like any other student. The best first step you can personally take is to contact the financial aid office at your school 鈥� they can help quite a lot. Apply for everything you can and see what comes up.

You have an advantage in that you鈥檙e a non-traditional student, a group that鈥檚 often helped by specific scholarships. However, your income level and assets aren鈥檛 completely clear and they may keep you from getting some scholarships.

If scholarships were easy to get, everyone would go to school for free. It takes a lot of effort to get them, but they can be worth it.

I am naturally very conscious of how much money I am saving and spending. I have always brought my lunch to work, I have always repaired broken items before paying to have them fixed or replaced, I have always taken care to save more than I make, I have always (ok, usually) invested modestly and wisely 鈥� in short, I feel like I have pretty good habits when it comes to money. Sure, there鈥檚 room for improvement, but I feel like I鈥檓 on a good financial and personal path.

At any rate, I just returned from an extended trip (my honeymoon) and realized that my tuition from graduate school is 1 week overdue. It is completely unlike me to let something like this slip through the cracks, but okay, it happens. So I鈥檓 being charged $150, which isn鈥檛 a ton in the grand scheme of things 鈥� but I can鈥檛 stop thinking about it in terms of all the little sacrifices I make to nickle and dime that kind of amount into my savings account. It鈥檚 driving me nuts. To take one example, while I enjoy bringing my lunch to work, it still requires more time and energy than simply walking out of my building and buying food. It does. So here I am, making all these micro-sacrifices, and then I go and blow an entire month鈥檚 worth (or more) by forgetting about this stupid bill.

Any tips for thinking about an unexpected hit like this differently? Maybe I鈥檓 just over-analyzing it. But it鈥檚 driving me crazy!
- Jeff

Things like that happen sometimes. You have to treat them as water under the bridge and just deal with your situation as it is now rather than lamenting the past.

What can you do to ensure this never happens again? One good way to do that is to simply make sure all of your bills are paid before you travel anywhere.

Did you try calling them and explaining your situation and asking if the late fee can be removed? It can鈥檛 hurt.

You that your most listened-to song according to your iTunes stats was 鈥淢argaret vs. Pauline鈥� by Neko Case. I was going to ask you what your other top ones were but I didn鈥檛 want to have you tweeting a pile of them so I thought I鈥檇 suggest that you list your top ten or so in your next reader mailbag.
- Jennie

Here are my top ten most played songs in iTunes, with links to performances/videos/tributes of those songs on YouTube so you can listen if you want. I listen to music most of the time when I鈥檓 writing as it helps me to focus.

鈥� Neko Case
鈥� Blind Melon
鈥� Vampire Weekend
鈥� She & Him
鈥� Pearl Jam
鈥� Jeff Buckley
鈥� Kate Bush
鈥� Regina Spektor
鈥� Old Crow Medicine Show
鈥� Gillian Welch

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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