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.

1. Assessing property
聽2. Scratched DVD repair
聽3. Worried about upcoming baby costs
聽4. Disagreeing about what鈥檚 鈥渆ssential鈥�
聽5. Gardening baby steps
聽6. Baby expense disagreement
聽7. Fixing a credit score
聽8. Taxes and investments
聽9. Contractor versus employee
聽10. Toll question

A new week is a new opportunity.

You have a full workweek ahead of you. What can you achieve this week to set yourself apart?

You have five days with which to plan something special for this weekend. What can you plan that will make something memorable?

What can you do to make this week not just an ordinary week? What can you do to make it special?

Q1: Assessing property
聽We bought our home in 2010 for around $189,000 in an area with reasonable property taxes and felt like we were getting an excellent deal, far below market price. The year after we moved in my husband contacted an assessor to revalue our property in hopes of lowering our property taxes. I was somewhat hesitant in case the opposite would happen, however we did manage to scrape off several hundred dollars in taxes for the year. This year the town we live in did their own revaluation of our property/land and the net change in assessment went down $6200. Essentially they are now valuing our property/land at $190,700 which is not too far from the price we paid for it 3 years ago. Depending on the budget process to occur later this year we are excited to potentially have lower property taxes yet again. Despite this, is there a point at which we should be concerned our assessment is nearing or may eventually be less than our original purchase price? The appraisers are available to meet individually with home owners and I鈥檓 just wondering if there is a benefit or risk to these open conferences. Is there a reason we would want to present evidence to increase the property value? (We plan on staying in this home for at least the next 5 years).
聽- Marjorie

Don鈥檛 worry about this too much. Assessed values and actual property values rarely match each other. In some areas, the assessed value can be more than 20% lower than the market value and in others it can be close to the market vaue or higher. It depends on the assessors and many other factors.

The reason appraisers would meet with people is so they can hear arguments about why their assessed property value should be lower, not higher.

I might be slightly concerned if I were trying to sell the property today. If you plan on staying for a while, I wouldn鈥檛 sweat this at all.

Q2: Scratched DVD repair
聽My wife and I went through our DVD and Bluray collection intending to sell a lot of them off. We鈥檙e hoping to get a dollar or two on average for all of them. Anyway, I was verifying that they all worked and about ten of them had scratches that caused them to not work. Any ideas for a cheap way to fix them? If it鈥檚 not cheap, it鈥檚 not worth it for us because we probably won鈥檛 get more than $10 out of the scratched ones total.
聽- Bradley

If I were in your shoes, I鈥檇 buy some toothpaste (not gel, paste), put a little dab on the disc, then rub it around with a soft cloth all over the disc. After that, I鈥檇 gently clean off the excess paste and see if that helps. Unless the scratches are severe, this usually does the trick.

Some people will take this an extra step and use a tiny bit of car wax on the disc, rubbing it in using much the same technique as a follow-up to the toothpase. I鈥檝e never found this necessary.

Remember, though, your mileage may vary. I鈥檇 experiment on a single disc (perhaps the least valuable one) first to make sure it works to your satisfaction.

Q3: Worried about upcoming baby costs
聽So my husband and I are expecting out first child (a son) in November. This is something that we had talked about for a while. We currently have around $6,000 in our savings and (thanks to generous wedding gifts from family) put an additional $1,500 in the account last month. We have been looking for other ways to save and I am stuck. And panicking.

I鈥檓 not sure where to cut because it feels like nothing CAN be cut. I also have a student loan payment of $898 per month with Sallie Mae and $78 per month with AES. The Sallie Mae loans are private and federal. I鈥檝e looked into consolidating them with Wells Fargo. The issue is I need a co-signer. My husband鈥檚 credit is not good (his mother stole his SS# when he was young and registered a bunch of cars in his name and never paid taxes on them) so I鈥檓 not sure he would be a good cosigner. My parents have said they will not cosign for me. I am on time with all of my payments each month and have a good working history.

I guess I鈥檓 just feeling overwhelmed because I want to try and save as much as possible before the baby comes. And after he comes I鈥檇 like to be able to offered his needs and pay for daycare without eating Ramon noddles every night.
聽- Sally

An $898 monthly student loan payment seems incredibly high to me. Even at a 7% interest rate, you鈥檙e talking about well over $100,000 in student expenses, which would make me assume that you must have a graduate degree of some kind.

In your situation, I鈥檇 try to find a cosigner as soon as possible, as I鈥檝e got to believe that the interest rates on this loan are excessive. The first thing I鈥檇 do is check my husband鈥檚 credit history at annualcreditreport.com and see what鈥檚 actually on there. If the events involving your husband are far in the past, his credit may be recovered at this point.

I would make other suggestions, but I鈥檓 unclear as to what your career situations are like, whether you plan to stay at home with the child, whether you鈥檙e near grandparents, and so on. There are many, many factors that can make a big difference when it comes to affording a child.

Q4: Disagreeing about what鈥檚 鈥渆ssential鈥�
聽My husband and I agree that we should cut back to the essentials until we get our debts paid off. We disagree on what鈥檚 鈥渆ssential.鈥� I don鈥檛 view cable as essential but he does. Our 鈥渃ompromise鈥� feels like I鈥檓 the only one giving up things and our discussions are getting pretty heated. Any advice?
聽- Denise

Without suggesting anything specific, ask him to make a list of the things he considers 鈥渆ssential.鈥� Make your own list, too. Then, together, walk through both lists. I would be very surprised if you didn鈥檛 list at least a few things that he didn鈥檛 include.

The conversation should then focus around compromise. Which 鈥渆ssentials鈥� are you willing to give up? What about him? You should be willing to each give up a few things and hold on to a few others.

When you sit down and one person is naming off expenses and the other person is describing them as either 鈥渆ssential鈥� or not, you鈥檙e begging for arguments.

Q5: Gardening baby steps
聽I want to plant a garden to be able to save on our grocery budget. I think a garden would also be a great teaching tool for my children. How do I begin? When do I begin? Where do I start? The red Georgia clay could prove to be a big problem in starting a garden but I still see a benefit to growing our own veggies and maybe strawberries/raspberries. Any advice on this would be great. (remember, I.KNOW.NOTHING!)
聽- Andrew

I would honestly start with a book like Gardening for Dummies, which you can easily check out from the library.

The best time to start thinking about gardening is during the fall, where you can go outside, figure out where you want a garden, and do a bit of basic preparation. Planting usually happens in the spring, with harvest in the fall. Wintertime usually involves buying seeds and, in the late winter, starting some plants.

It鈥檚 not complicated, but it does take time. I tend to find garden work rather soothing.

Q6: Baby expense disagreement
聽My husband and I agree that we should have a baby, but we disagree as to when. He thinks we should have it now so that we鈥檙e younger during the child鈥檚 milestones. I don鈥檛 think we have enough money yet and that we should wait for a while. Combined we make about $80K and our only debt is our student loans which add up to about $70K. We might buy a house soon, though. I am 27 he is 28. Should we wait?
聽- Olivia

I think you need to sit down together and establish what milestones you want to cross before you have a child. This is a discussion you need to have together.

From what you describe, I don鈥檛 think you鈥檙e in a bad financial position to have a child unless you intend to be a stay-at-home parent. If that鈥檚 the case, I鈥檇 try getting rid of that debt first and get some additional savings in the bank.

Be aware that one spouse can interpret another spouse鈥檚 desire to wait as a hidden desire to not have children at all, and that can be upsetting to someone who wants to have children. You simply need to talk through this and you also need to think about what your own true desires are.

Q7: Fixing a credit score
聽After a bankruptcy and foreclosure, do you have suggestions for how to fix a credit score? Other than paying bills on time and using a cash-based system of course.
聽- Julie

Those are really the best things you can be doing right now. There aren鈥檛 any magic credit fixes out there.

If you can get a credit card with a small credit limit, it鈥檚 a good idea to start using that for some purchases as long as you pay off the entire balance each month. Just use it for gas, for example.

The best thing you can do is just let time heal the wound and keep your nose clean for a while.

Q8: Taxes and investments
聽I have a question about investments and taxes. If I decide to buy some stocks and I sell them, how do I figure out how much tax to pay? Can I really end up paying more taxes than I make on the investments?
聽- Shane

If you buy an investment today and then sell it in a year, if it goes up in value, you鈥檙e going to generate a capital gain. The difference between the purchase value and the sale value is the capital gain. So, if you buy something for $5,000 and then sell it for $6,000, that鈥檚 a capital gain of $1,000.

If you held the item for more than a year, it鈥檚 considered a long term capital gains and, for most people, it鈥檚 taxed federally at a 15% rate. Short term capital gains are taxed at your normal income rate. Note that the exact rates for capital gains changes fairly regularly depending on the political situation in Washington.

So, if you held that item for eighteen months and sold it for a $1,000 gain, you鈥檇 owe $150 in federal taxes on that gain. The exact purchase price and sales price really do not matter 鈥� what matters is how much you gained.

Q9: Contractor versus employee
聽I鈥檝e worked at the same company as a full time contractor for about three years. We just found out that starting in 2014 the company is going to be making the switch from everyone working as a contractor to becoming employees. Some people who work primarily off-site will get to stay contractors, but everyone else will be offered employee status. I have been told that since I鈥檓 currently in a management position that I would be considered 鈥渆xempt鈥� rather than non-exempt. My question is if you have any advice for me on how best to equip myself for this change. I currently pay quarterly taxes, have my own private health insurance policy, and typically bill for over 40 hours per week due to my workload. Becoming an employee will give me benefits (PTO, health insurance, etc), but it sounds like my take home pay will probably be less. In general, I鈥檓 excited for this change, but I want to make sure I can negotiate a salary that will be commensurate with the amount of work that I do. Any advice would be appreciated!
聽- Jared

I would figure out what you make in a year, subtract away the cost you鈥檙e currently paying for the benefits that you鈥檒l get as an employee, and use that as a baseline for negotiations. I would consider a small salary drop acceptable as most full-time employees are more stable than contractors.

How you negotiate depends entirely on the process of determining your salary. It also somewhat hinges on the quality of your performance over the last three years. The higher your quality, the more likely you are to be able to negotiate with ease.

You should also consider what full-timers in your field are earning. You should be somewhere in the ballpark of what you should expect for someone with your level of experience in that field in your area. The key part is in your area, as a software developer in Silicon Valley will likely make more than one in Des Moines, but the one in Des Moines is enjoying drastically lower costs of living.

Q10: Toll question
聽When I drive to work, I can either drive about 12 miles and pay $2 in toll or I can drive about 20 miles toll free. The routes are about the same speed, so the longer route takes about 10 minutes longer. Which way is cheaper over the long haul?
聽- Reginald

It depends on a lot of factors. How new is your car? A newer car will depreciate faster with each mile than an older car, so a newer car leans toward the shorter route. How fuel efficient is your car? The more fuel efficient it is, the better the longer route becomes. How much do you value your time? The higher the value you put on your time, the better the shorter route becomes.

If I were driving an old Honda Civic, for example, and I was listening to a book on tape to learn something that was relevant to my career, I鈥檇 drive the longer route every time.

On the other hand, if I was driving a new pickup and I was also trying to jumpstart a side business at home, I鈥檇 drive the shorter route every time.

Got any questions?聽The best way to ask is to email me 鈥� trent at thesimpledollar dot com. I鈥檒l 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 many, many questions per week, so I may not necessarily be able to answer yours.

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