Free Money Finance

Help a Reader: Refinancing Question

Here's an email I recently received:

I purchased our home right at the peak of home prices.  I financed 100% so I have very little equity in the home and it would probably appraise for $10-$20k less than I owe on it.  My interest rate is over 7% (with great credit).   I've tried asking for a rate reduction but since I'm not behind on payments, they won't do it.  I could save around $300 per month at today's interest rates but it doesn't seem like I have any options.  Help!

So, what would you suggest for him?

Help a Reader: Going Back to School

Here's an email I recently received from a reader:

Yesterday, I got an obnoxious raise: over 15%. I don't make much, but for the company I work at, this is a tremendous jump. I have an awesome set-up here. My company pays for my housing and utilities. I work for great people. There is nowhere for me to progress to as far as this position is concerned, but for a fresh-out-of-college job, after over two years here, I have it made.

About a month ago, I submitted my materials for a teaching or research assistantship and a master's degree. The degree would be in Northern Studies (I have an undergraduate degree in an unrelated field). I have no qualms with leaving my current job, especially if I receive the assistantship (which is free tuition, plus $300/week stipend for the duration).

My question is, is this a good return on my investment? It is not really like I am driving a half hour to the local SUNY school: I'd be trucking it 4,000+ miles from New York to Fairbanks, AK. That kind of lifestyle change is something I am 100% okay with, but is this a good time to be doing this? To be taking such a plunge?

My feeling is, because of global warming, other assorted world events (Arctic sovereignty, natural resources, conservation and globalization), this is a field where the population of experts will not be able to keep up with interest. I mean, I am not looking into any crazy career fields: research, professorships, University work, consulting, whatever -- and I know those salaries are low -- but some people pursue stupid degrees in college that don't pay off, and I want a job that I love, in a place I love, and I love the north.

It's been a dream of mine forever to live up there -- but while I'd love to wax poetic about it, life is hard right now, in this economy, and I was wondering whether you thought it is a good investment to pursue a graduate degree (with the only cost associated being living expenses). I have a nice set-up, but I've been waiting for this opportunity for years, and now the economy is tanking. What's your take on it?

I hardly ever respond directly back to readers because I don't have enough facts, aren't qualified to give advice on the subject, don't have time to give the type of advice they need, etc., but there was something about this one that made me want to respond. Here's what I told her:

• From an economic standpoint, it's probably a bad move. It sounds like you'll earn less in the new field than you could earn in your current one, plus you'll forego a few years of salary to get your degree. Plus, you may have some more debt before your schooling is done. Now if you could make more in the new career than you do now, it might be an ok (or even good) financial move, but it doesn't really sound that way from what you've said.

• From a "what you want in life" standpoint, it may be a good move. It seems like this is something you'd enjoy (though you never really know until you've been there). I'd suggest you think about it and decide if this is REALLY what you want to do with your life. If it is and you can leave school with little debt, then it's probably a fine move. You'll end up making less money, but you'll be doing something you love. And, after all, there's more to life than making more money (don't tell anyone I said that!) ;-)

Now, having read about the situation as well as my response, what advice would you give her?

Help a Reader: No Credit History

Here's a comment left here recently:

I am moving from Europe to the US in January. As I have no credit history, I will not be able to lease a car despite being on a very good salary. Would I be able to take over a lease with circa 10 months to go in spite of that, even willing to pay 10 months of lease payments upfront? Any thoughts appreciated.

What advice do you have for him?

Help a Reader: Budget Tips

Here's an email I recently received:

I am currently in graduate school. I hope to graduate with $60,000 in loans but this may end up being $80,000. The amount will depend on the amount of scholarships, jobs I can get next year. What kind of budget would you suggest with the following goals in mind: Possible potential salary is 160,000, in a relatively expensive city (this will probably only affect rent), I want to save (retirement, emergency and general savings) aggressively and pay off debt aggressively. What should my budget look like with these things in mind?

What would you suggest for her?

Help a Reader: Bad Reference

Here's a comment left here recently:

I have been given bad reference by an old employer. It has kept me out of work for almost 3 years. Now, I am underemployed. I am not sure what to do?

Not sure how this happens -- how does a bad reference even get delivered to a potential employer?

Anyway, what advice do you have for this reader?

Help a Reader: Splitting Up Assets

Lots of thoughts for the woman who made a ton less than her husband but still had to contribute 50% of all the expenses. Here's a comment that was left that also deals with how couples should split up finances:

My partner and I split our bills based on the ratio of what we contribute to our total income. She makes 40% and I make 60% of our total income. Therefore, she pays 40% of the bills and I pay 60%. While we both feel we have 50/50 ownership of assets, we disagree on how we should liquidate assets we have purchased together. I say that I should get 60% because that is what I contributed and she says it should 50/50. She will always gain 10% and I will always lose 10% of what we originally paid.

Personally, I'd say that if an asset is sold, the proceeds should be split according to the percentages each person put in to buy it in the first place. What do you say?

Help a Reader: Second Home

Here's an email I recently received from a reader:

We own a home in Atlanta, GA and a second home near a lake in rural Georgia.  The second home is a double-wide mobile home.  We are in the 12th year of a 30 year loan (you don’t have to tell me how stupid this was).  Needless to say, the mobile home is worth approximately half of what we owe on it.  Also, we rented it to my sister for a couple of years and it’s in pretty bad shape.  We have been trying to fix it up to rent again, but every time we get one thing repaired, we find something else major.  For instance, it needs new carpet, a refrigerator, and a new a/c system.  The problem with this is, my husband is a residential electrician and he has been working on and off (more off) for the past year, making about one-third of what he was making, so money is extremely limited.  We have gone through all of our emergency fund.

My question is, is there any way out of this?  What are the ramifications of a foreclosure?  Will they sell it and come after us for the balance?  Is there another option?  It is on property that belongs to my mother, so I can’t sell it.  At this point I am worried about ending up like the guy in your The Perils of Being Poor blog.

Any advice for her?

Help a Reader: Back to the US with $2 Million to Spend

Here's an email I recently received from a reader:

I am returning to the United States in December after five years working overseas.  (The global economic situation had led many companies to pull back on overseas ventures.)

I am 50 years old with a spouse and a daughter planning to enter college in 3 years, and am not sure yet whether I will be employed when I return.

During these years overseas, the organization I work for provided furnished accommodations, transportation, children's education etc. which was nice, but also means that I now have very few possessions - no house, car, furniture, appliances, etc.  I also have little idea what things cost in the US any more.

I have managed to save to the point that my total portfolio is approximately $2 million - was $4 million 3 months ago (!) - almost entirely in the stock market.  This includes 401(k), IRA, 529, and regular taxable accounts.

I would like to know what you think I should do to restart back home.  Buy a house?  Rent? Take a mortgage?  How much should I plan to spend on start-up, and how much per month, to be financially secure - especially if it takes me a long time to find a job?

And of course I expect some comments on my asset allocation - fire away!

What advice do you have for him?

Help a Reader: Return on a Franchise Investment

Here's an email I recently received from a reader:

I would like to know your thought on what would be a reasonable return on an investment.  I am considering becoming a silent partner in the opening of a franchise concept restaurant.  If I invested $5,000 what do you think I should receive back?  How would it work?  Would it be reasonable to say that they have a year or two years to repay?  I am just not sure here.

Personally, I have no idea. I'm not into this sort of investing (silent partner/franchise), so I have no idea other than to say you'd want a return based on the risk you're taking as well as what you can earn elsewhere.

Anyone else have any thoughts?

Help a Reader: Moving in with In-Laws

Here's an email I received from a reader:

I was wondering what your thoughts are about moving in with your in-laws and its tax ramifications?

My wife and I are in our late 20's and we have a 2 yr old child. We live in a townhome and are planning to move into my in-laws house. It has a two fold purpose, they were willing to help out for childcare and we in turn will take care of them as they get older. We plan to rent out our townhome in the meantime.

Are we considered homeless then? What will be our tax ramifications?

Anyone know anything about this situation?

Help a Reader: Saving on Moving

Here's an email I recently received from a reader:

I'm leaving my job as a management consultant in Washington, DC to work as a teacher in the Los Angeles Public Schools.  I'm trying to move across the country with my wife over the summer and make it as cheap/painless as possible, especially because we're taking a 60% pay cut.

Here's what I've been thinking:

• Sell almost everything that's large that we own on Craigslist.
• Ship most of our clothes and hiking gear, should be 3-4 medium boxes for $50 a piece.
• Drive across the country with our books and kitchen stuff in our car.
• Buy new things on Craigslist in LA.

I'm trying to weight the costs/benefits of moving vs. selling and buying new things.  The items we own and I'd like to keep that won't fit in our tiny, old Mazda are:

• A $300 mattress from IKEA (special for wife's back problem).
• An oak kitchen table I got on Craigslist for $50, but have been told it's worth $300+ which I really like.
• An old bike that I love, my wife's bike which is not so great.
• A nice futon that I could potentially return to my parents, who live 4 hours east, more or less on the way to LA.
• Some IKEA lounge chairs, ~$100 a piece new.

What advice do you have for this reader? Do you like his plan or have any other suggestions/thoughts?

Help a Reader: How to Tip

Here's a question left on my post titled Saving Money on Tipping:

My husband and I would like to provide a small gift (either cash or baked goods) to our mail carrier and garbage men. However, it's rare that we see these people to deliver the gift in person - other than our mail carrier who we occasionally see on Saturdays. For those of you who provide tips, how do you leave them for these two services? We have a mail slot into our house rather than a mailbox, so we can't leave a gift in a mailbox for our mail carrier. As for the garbage men, I'm concerned a card with cash might get overlooked and am not crazy about the idea of leaving baked goods next to our weekly trash. Thanks in advance for suggestions!

Anyone have any creative solutions here? We simply wait for them and catch them when they come to our house. Then again, my wife is at home all day, so she can make time to do this. But most people can't. So, what are some good alternatives?

Help a Reader: Splitting Costs on a Lower Income

Here's a question recently left on my post titled When Does "My" Money Become "Our" Money?:

My husband and I are constantly fighting because he makes 4 times what I do, but still expects me to "half" all of the bills. We each have separate accounts. I am using every penny I have to try to be fair, but I don't even have money to buy anything extra, while he is out spending money like crazy. Am I just being silly to think that he should contribute more than half since he makes so much more?

Any thoughts/advice for her?

Help a Reader: Used Car Problems

Here's an email I received from a reader:

I bought a 02 Honda Odyssey with 62,000 miles in Feb from a reputable dealer's used car lot. Consumer Reports loves the car. About 3-4 weeks ago the transmission began to slip.

I discovered from a Honda dealer's service department that the 02 was up for a recall. If the diagnosis for the recalled part came up, the van would be fixed and possibly the transmission slippage would stop. The diagnosis (a bargain at $65 vs $100 + at other dealers) stated that the transmission needed replacing and it would cost $6100. I did some research and discovered "good-will" warranties. Earlier Odysseys had suffered transmissions problems and there was a class-action lawsuit.

I called Honda of America and was told I had to start at the dealership level and ask for help. Help was given on a case by case basis. I spoke to the service manager and asked if I could get any assistance with the cost. He was polite and said he'd call the Honda factory rep and ask. I was called the next day and the price was reduced to $3440 with a 3yr 36000 mile warranty. Now contemplating my next move. A rebuilt trans would cost @$2500 or I could sell the van as is to a national used car dealer for $4000.

What's your suggestion for him?

Help a Reader: What to Do with Collections

Here's an email I received from a reader:

I very recently inherited two collections which I don't know what to do with. One is a stamp collection. It has several organized books of stamps from the 1860s to the 1940s. The other is a small suitcase full of matchbooks. In both cases a) I have no idea what they're worth (if anything!) b) I don't want to throw away something valuable c) I don't want to keep them and d) I have no idea how to find out their value in order to decide if it's worth trying to sell them.

With the stamps in particular, I could be sitting on a gold mine...or a bunch of crummy used stamps. :-)

Anyone dealt with inheriting a collection of unknown value? In my case no one will be offended or hurt if I sell or give them away.

What would you suggest he do?

Help a Reader: Buying Vacation

Here's an email I received from a reader:

I typically need an extra week off on top of the two weeks of vacation offered by my employer. There is no problem with my taking this time off as unpaid.
 
Now my employer is allowing us to purchase additional vacation time, and the option of taking the leave as unpaid remains. My head is spinning when I try to figure out which is the better deal or if it's pretty much a wash. Here are some details of the vacation purchase plan:

• "Employees may purchase three, four, or five days of additional leave for 2009 with pre-tax dollars. Pre-tax deductions will begin in January and continue for 22 pay periods."

• "The cost of Purchased Vacation is based on the employee’s December 2008 rate of pay." This is the only part that seems to be a clear advantage to the plan, assuming I get a raise in 2009.

• "Any purchased vacation deductions not taken in 2009 will be deducted the following year as a post-tax deduction."

If you are familiar with this sort of arrangement and can comment it would be greatly appreciated.

I'm not familiar with it. What advice do you all have?

Help a Reader: Chase Freedom Card

Here's a question that was left here a couple weeks ago:

Like you, I have been using Chase Freedom credit card to earn cash back as no other card in market beats the cash back rate (within my budget). While reviewing my credit report, I noticed that credit limit for my chase freedom is listed as $0.0 (though I have limit of $10K). All other credit card limits are ok. When disputed and talking to credit bureau (Experian), they informed that Chase reports like this and they cannot do anything and I should speak to Chase. When I spoke to Chase representative, they informed that my Freedom card is Visa signature card which works differently. It does not have any concept of maximum credit limit; I have infinite limit, that’s why they report $0.0 as credit limit to credit bureau; $10K is initial spending limit but I can go above it anytime. They suggested to downgrade from Freedom Visa signature to Freedom Visa to get a credit limit reported to credit bureau.

Following are my queries:

1) Since I charge most of the expense on Chase Freedom card and limit is $0.0, I feel my credit balance/limit ratio will be very high and is hurting my credit score. Can you comment and confirm my understanding?

2) Have you observed such limit ($0.0) being reported in your case?

Can anyone help/comment here?

Help a Reader: Helping Parents

Here's an email I recently received from a reader:

My husband and I are trying really hard to follow your ideas of how to become financially solvent.  They're great ideas.  My husband and I are just getting to the point where our noses are above the water instead of drowning in debt.  We're still working on getting out of debt and haven't gotten to the accumulation phase of your plan (we're figuring another 4 years or so, unless we get raises or bonuses). 
 
My parents are really stupid when it comes to money and they're starting to ask for help, and not the kind that's free.  They want us to help them buy a car, give them gas money, etc.  I explained to them that we can't afford to help them and we're in the same boat they are. 
 
How would you suggest handling that situation in a few years when we do have the money to help?  I've tried guiding them to websites and books like this, and they read them, devour the information, but don't have the willpower to apply it.  If it was a shirttail relative, I'd tell them they're out of line, but these are my parents.  I just have a feeling I'll sabotage myself with my plan to wealth unless I have a plan to deal with my parents' asking for money, so if you could give me something specific to go on, that would be great.

What would you advise?

Help a Reader: Deserves a Raise

Here's a question left on my post titled How to Demonstrate that You Deserve a Raise:

Here's my dilemma: When annual reviews were performed last April, I received high marks on the entire review (4s and 5s in every category, out of 5 total). I was told I would have received a promotion at that time, but I had only been with the company for 10 months, and policy is to not allow promotions until 12 months of employment (even though this policy was not followed by other departments in the company). I was then told that I would receive a mid-year review in October, where I would receive my promotion and pay raise.

It's now October, and I've been told that the company is not doing any mid-year reviews or promotions & raises. This is from the CEO and Executive VP due to the "current economic conditions". My direct manager has been fighting for me to get the bump, and has said things like:

"I just want you to know that I have personally (as I know others have) been very impressed with your professionalism, eagerness, ability to pick things up quickly, and most of all your ability to work directly with clients. You are performing at the next level and deserve a promotion!"

What should I do? I've updated my resume and am going to start looking for a new job, but I would like to stay with my current company besides the above mentioned situation. I've been absolutely kicking ass the past 6 months since my last review, making the company hundreds of thousands of dollars and sacrificing a lot of my personal life by working on the other side of the country. However, I have nothing to show for it.

Would my best plan of action be to get a couple of other offers in hand, go into the boss’s office and "threaten" to leave (in the nicest possible way)? Or is there something else I can do?

What's your advice for him?

Help a Reader: Renting Out a Home

Here's an email I recently received:

Your post titled “Why I Won’t Rent Out My Home” got me thinking.  In 2010, the World Equestrian Games are coming to my hometown of Lexington, KY.  This event is basically the Olympics for horses, and people from all over the world (primarily from outside the US) will be attending.

There are opportunities to rent out one’s house for the duration of the Games, which last 15 days.  Apparently, it’s a fairly lucrative proposition, since no hotel rooms will be available within 100 miles of the event.

My house is close to the site of the Games, and it’s a nice home (especially in size – by European standards, it’s a mansion).  It’s not luxurious in appointments, but the prime location would make it very appealing to a potential renter.  Rental prices for a house like mine are currently around $7,000-$8,000 for the duration of the event.

The rental company takes part of that, I’m sure, but with proper insurance and removing any personal items from the home, the financial risk will be minimal.

Here are the pros and cons as I see them:

Pros:

• Easy $7,000 or more
• Rental company takes care of cleaning and upkeep during the stay

Cons:

• Have to find somewhere to stay for 2+ weeks
• Potential damage to home (covered by insurance, but it would be a hassle)
• General weirdness of having strangers live in your home for 2+ weeks
• Have to basically move out all clothes and personal affects, store it, then move back in

I’d be interested in what your readers think about the chance to make some money off this event.

So, what do you think?

Help a Reader: 401k Transfer

Here's an email I recently received:

I just left my employer and am having trouble with deciding what to do with my 401K.  It is managed by Fidelity and is mostly in a Fidelity aged managed fund, the rest is in my previous employer’s stock fund.  Year to date it is down about 38%.  It's not a ton of money, but a lot for me, it was around $10,000 and is now down to about $6,000.  I can leave it as is with Fidelity as long as it is over $5,000.  I was thinking of leaving it till it came up a little since the price of the shares is so low.  My new company has many more choices and their age managed funds are through T. Rowe Price and seem to be faring much better, so far YTD they are only down about 2.85%, which means I would be selling my shares so low and buying theirs not so low.  So do I get my money over to my new company and cut my losses or try and wait it out a little till I recoup at least some of my funds?

What are your suggestions for her?

Help a Reader: Cheap Vacations

Got this comment recently:

Hello! I have a 1 month of vacations, and I want to visit exotic places. Could somebody advise me beautiful exotic place for vacations?

I'm going to re-word this a bit to, "Anyone have any tips/suggestions on how to get inexpensive trips to nice locales?"

Help a Reader: Giving Perspective

I recently received this email from a reader:

I have a question for you. Maybe not so much a question, as I need some reinforcement.

I take home $455 a week, after taxes and insurance and all of that. $125 a week automatically deducts into a money market fund (I am looking to move to Alaska in a year for graduate school, and want $4-5000 moving fund).  I'm grossly underpaid, but I figure I'm only 24 and have time to work hard and make a little money...it is important for me to start low and work up, as I've learned so many things by having to survive on so little money. I have a car payment, student loan (graduated two years ago), car insurance, cell and various other utility bills, I have a large dog and am a CSA member to save on organic vegetables.  I live in a rural area.  My employer pays my rent and housing utilities, which compensates well for my low pay.

I was thinking today as I was renewing my monthly donations to various organizations -- WWF, Polaris Project, Amnesty International and Greenpeace -- that I do not have a single friend that donates any money to charity.  Is it common for people to NOT donate money??  The amount I donate seems shameful (around $30/month) but it's really the most I can afford. It appalls me to see so many people that make more and do better donating nothing...I doubt the thought has ever occurred to them. What gives? Is the act of charitable donation as rare across the country as it is in my own life?

I figured maybe you could give some perspective. Over the past few years I've become kind of ashamed of the wastefulness and lack of financial smarts of people my age...I am hoping that the area I live in is not reflective of the wider population.

I responded to her but thought you all might want to as well. Any thoughts?

Help a Reader: Vetting an Employer

Recently got this email from a reader:

I have what appears to be a great opportunity to move from a larger, corporate environment to a smaller consulting firm that is more focused around the type of work that I love. They have been around for about 6 years, have experienced continual growth, and are busier than ever even during this economy. The people seem nice, the environment is relaxed but enthusiastic, and they're offering me a bit more money (and a better position) than my current job. It also appears that I would have potential for fairly rapid growth at the smaller company, and I have no doubt that I would really enjoy the work.

The thing is, I don't dislike my current job, and I have a fantastic relationship with my boss. My performance is great and I am on track for good things there, but have no idea how quickly promotions might come (this larger company is being hit hard by the economy). Although pay increases and promotions in the near term are uncertain, my current job security is better than it would be at a smaller company -- I'm almost certainly not going to be laid off, as I have proven my worth and am in a critical department. I should note I'm young and have only been in the workforce a year and a half.

And here's the final wrinkle: although the smaller company appears to be growing and doing well, I have heard a couple things that make me slightly concerned. A couple months ago, someone told me that one of their VPs had confided in him that they were having a few "cashflow issues", and then I heard that the local newspaper is sending them to collections because they didn't pay an advertising bill. Then again, while my current company doesn't have any trouble paying bills (as far as I know), profits are falling fast.

So what questions do I ask to find out if this company really is on sure footing? Would it be impolite to tactfully bring up those concerns with an exec there? Should I just believe what I saw and heard on the lower levels, that everything seems to be running great?  What would you do -- stick with larger company, more security, or take the risk of a smaller company, better pay, more interesting work but less security?

What would you suggest he do?

Help a Reader: Saving for a Home

Got this email recently:

My wife and I are looking to build in the next 2-4 years.  I have a great interest rate (5% on 15) on my existing mortgage.  I am considering refinancing through a local credit union, to keep closing costs low,  at 5.625% on a 30 and then throwing the extra money, we save from a lower mortgage payment, into a CD (@ 4%) or a high interest checking account (@ 5%) to save for the new house.

So, what do you think of this idea?

Help a Reader: How to Get Started

Had this comment/question left here a week or so ago:

I'm 23 years old, I'm having a problem with getting into college because I can't get any loans because my parents make too much money and they can't co-sign or help pay. I can't find a job in the town I live in because no one is hiring. I'm renting a house, I own both my vehicles and I'm barley making rent doing odd end jobs. How can I get started in making money so one day I to can be wealthy?

Lots of ways to go with this one. What would you advise?

Help a Reader: Late Doctor Bill

Here's an email I recently received from a reader:

I went to the Doctor's office in October of 2007.

In July of 2008 (9 months later) I received a bill for $92 with a note saying "Insurance No Longer Valid"

I had switched health insurance companies in May of 2007, so I mailed a copy of my insurance card and a short letter.

Instead of a response I received a second notice (this time with finance charges) a week ago.

I called the office and the lady I spoke with said "Your Insurance won't cover you because it didn't start until May of 2007."

I said, "May comes before October", and she replied, "Yeah it does, that's weird.  We'll run this through"

A few days later I receive a call from the doctor's office telling me that my insurance won't cover it because they only accept claims within 90 days of the visit.  My doctor's office wants me to pay the full amount.  It's a rather small amount, but shouldn't my doctor's office be responsible to cut their losses it if they neglected to send me a bill until 9 months later?  If they had sent me the bill within 30, or even 60 days of the visit, we could have easily straightened it out before the 90 day window.  Is there some sort of law or general accepted practice to send a bill within a certain time-frame for health related services?

Should I fight it?  Or should I just pay it.

What advice do you have for him?

Help a Reader: Financing a Car

Here's a question I recently received from a reader:

Would financing a car now, with a good down payment, and plans to pay it off before the end of 2009 effect my credit and mortgage worthiness if we wanted to purchase a home at the end of 2009 to mid 2010?

Your thoughts?

Help a Reader: What to Do with Money

Here's an email I recently received:

I'd love your readers' ideas of what to do with $6000 that I would like a sure return on. I put my retirement money into index funds, but this is to pay off a car loan.

We have about half of the money needed to pay off the remaining $14,000 on our car. Our car loan is a 0% loan and there is no benefit to paying it off early (except more monthly cash flow). What should I do to make the most of $6000 that will eventually be needed to pay off the car loan?

Since we'll need to be making $380/month payments for three more years, my first thought was a CD ladder with CDs maturing monthly.
Since this is money to pay off a debt, we don't want to put it into any thing speculative, but we'd like to get more than the 3% it's making in our ING savings account.

Other factors:

• We're aggressively adding to the car money till we have enough to pay it off in full, some time in early 2009.
• INGs CD rates are 4% for 1 year CDs and 4.5% for 18 month CDs.

What would you tell him to do?

Help a Reader: Withdrawing Retirement Funds

Here's a comment/question left here recently:

I would like to withdraw all of my retirement funds from the company of employment. My situation is this: I am employed by a county/government agency, no 401K just retirement plan. I plan to leave this job in the pacific NW and move east. What do you suggest in terms of investing my retirement withdrawal check amount? I may have a job ready and waiting or may not...

What advice would you give him?

Help a Reader: 401k Rollover

I recently received this question from a reader:

I have roughly 85k in a company 401(k) plan. I'm in the process of changing employers. What should I do with theses funds? I'm 38 yrs old and obviously will be building another retirement with my new employer. I hear that an annuity with monthly draw-downs will give me access to my monies without the tax burden if I just cash out. Or is an IRA the best option?

I've always rolled my 401k money into an IRA so I could then control/manage it myself with the investments I wanted to make.

How about you? What would you advise in this situation?

Help a Reader: Investment for Infant

Here's an email I recently received from a reader:

I'm a daily reader! 26 y/o male near Pittsburgh who's life has changed dramatically due to Crohn's disease. My girlfriend found out a baby was on the way a year ago and my wheels fell off. I've been struggling with bowel trouble since age 8, but lived, worked and saved normally. I may not be able to do that in the foreseeable future after repeated hospitalizations and heavy medication. As of today, I have $5500 invested through Sharebuilder, $3000 in ING Savings Account, $0 Credit Card debt and about $10k in student loans my mom helps with. The problem is $0 income right now. Disability may be in the near future.

My son is turning 1 in Nov and I've been eBaying years of trinkets, DVDs & videogames to raise funds to put away for him. My parents purchased a Zero Coupon Bond for me at that age, it matured to some $5000 and at age 20 I was able to spend a semester in NY for film work and buy a laptop. How can I best invest $1000-$3000 today to provide for my son in 20 years? I am unsure of 529s at the moment and would rather find a less restricted vehicle.

Any suggestions for him?

Help a Reader: What to Do with Excess

Here's an email I recently received from a reader:

I am 22 years old and just graduated college in May. I worked my way through college to make sure school was paid off. Among the jobs I held:

Assistant at a 3rd Party Logistics company, Package Handler at FedEx, Supervisor at UPS, Owner of an exterior house painting company, and some other small scale things. I thought of this when I read your post about kids working through college. For all of the people who said working hurts the experience... you are wrong. My experience was enhanced by working through college and got me a pretty decent starting salary along with a promotion within my first few months (not monetary, but it has gotten me more recognized by some of the higherups). When I wasn't working in school for 6 months I was not doing as many productive things, although that is when I picked up bicycling and started training for 100 mile races... so I got something out of it. And yes, I still had a life outside work and school. I was an officer of an academic society and I had a 3.8 GPA in a major for which my school was ranked 10th in the US. BUT anyways, back to the point...

I graduated debt free and lived very frugally in order to manage that. I am now 4 months into my new job with a large company in the food and beverage manufacturing and distribution industry. Here is a snapshot of where I stand:

IN
Gross Income: $2,000.00/biweekly (or 52/12 = $4,333.33/mo if you prefer to look at it that way)

401k Contribution: $160.00 ($320.00)
Healthcare Contribution: $46.30 ($92.60)
Dental Contribution: $15.16 ($30.32)

Taxable Income: $1,778.54 ($3,557.08)

Taxes: $510.11 ($1,020.22)

Net Income: $1,268.43/biweekly ($2536.86/month)

OUT
Rent: $449.50
Cell phone: $48
Electricity: $50  (I split it with a roommate... and it has never gone over $100, but being that it is variable I like to play safe)
Gas: $35 (Same as above)
Water: Free (Hot water gets charged under gas, though)
Internet: $28
Gas: $160 (To/from work and to visit the g/f)
Groceries and Restaurants: $100
Bars and Entertainment: $200
Car Insurance: $2000/12=$166.67

Total Out: $618.59/biweekly ($1237.17/month)

Leftover: $649.84/biweekly ($1,299.68/month) This all just goes into my savings accounts at this time.

Accounts:

BOA Savings - $3,981 (remainder direct deposit, which I then transfer around)
BOA Checking - $701 ($300 direct deposit every two weeks so I can write a check for rent and gas)
AmTrust Direct Money Market Checking - $6,857
E*Trade Savings - Pending Open
Fidelity 401k - $709 (down from $740)

BOA Visa - $556 (paid off monthly)
Shell Credit Card - $191(paid off monthly)
Chase Freedom - $239 (paid off monthly)

TOTAL: $10,553

As you can see I am putting 8% into my 401k (traditional :( ). The company matches 50c/$1 up to 4%... so they are giving me an additional 2%. Furthermore, they give me another 2% as a pension into my 401k. So altogether, biweekly $240 is going into my 401k.

I was thinking of putting about $6,000 in my E*Trade account for the higher interest. AmTrust Direct used to be my interest bearing account @ 5.26% but it has dropped below 2% and it is time to jump ship. I will keep $500 there just to keep the account open in case they ever increase interest rates to the old rates. I am thinking I should take $3,000 and do a Vanguard Roth IRA. And then I will leave the remaining $1,500 in my BOA account for easy access and emergencies.

Obviously my monthly expenses are very low, so I am hoping to get some good suggestions with what to do with the excess money as I am not needy and would rather save then spend!

What advice do you have for him?

Help a Reader: International Credit Card

Here's a question I recently received from a reader:

My job is likely to require me to move to Australia for a project starting in late 2009.  Since this is the beginning of the project we will need to have a credit card to set up hotels, car rentals, and all sorts of other miscellaneous type things until they get direct billing set up.  From previous experience this can total up to about $5000. 

Since this will be a very large sum of money I was thinking of finding the best way to capitalize on it.  I know the cash back option on an AMEX is very good, but I am not sure how well an AMEX will work overseas.  Likewise my company will fly us back and forth from the project to the US every 2 months, so a mileage card could really help rack up airline miles (since we front the cost for all expenses and then recoup them at the end of the month).

My company will pay up to $55 for a membership fee for any credit cart of our choosing.  So any sort of thoughts on how to get the most benefit out of this would be greatly appreciated.  I currently have just a basic credit card that I rarely use so this is an area of ignorance for me.

I have no idea other than to think that Amex would be a good choice for him -- specifically the Blue Cash from American Express card. But I'm not sure. Anyone out there with some experience in this area?

Help a Reader: Advanced Degree Options

Recently received this comment:

I am 33 years old. I've been with the same, Fortune 25, company for nearly ten years. My salary is 49,500. Based on the year, I'll make another 20,000 - 38,000 in sales bonuses. May of 2009 I'll complete my undergrad degree - Business Admin. I've taken night and weekend classes for the last nine years. Currently I am looking into MBA or Masters programs. Today, I assume I'll work another 25-20 years. My goal is to move around and move up within the company I am at now.

I have a number of questions, including:

A) Public or Private (I'm attending a smaller private college now)?
B) MBA vs. a Program like: Master of Business Operational Excellence or Masters of Labor & Human Resources?
C) Is spending more, worth it? I have company tuition aid of 5,500 per year & a MAX of 25,000.

What advice do you have for him?

Help a Reader: Work and Education

Here's an email I received from a reader:

I have a job offer at a major university.  It's a blue collar job where I would be working 12 hour shifts either days or nights but not rotating.  On a bi-weekly basis I would work 48 hours one week and 36 the next.  As a benefit I would get 9 credit hours free per year (does not include distance classes).  I was wondering what kind of experiences your readers have with working full time and taking classes, what sort of sacrifices did they have to make, if anyone has done it while working shift work and any tips they might have for someone that is thinking of trying it?

I am single with no kids.  The shifts are from 6 to 6. 

Anyone out there with experience in this area/advice for him?

Help a Reader: Time to Buy?

Here's an email I received this morning:

Although I know that continuous, regular investing is recommended, I wonder if now is the time to move a larger-than-normal chunk into an index fund, while the market is low? I have a mix of a few randomly selected stocks, plus some already in a Vanguard fund. We're fairly young and I've only been out of college and working a year and a half, so we've got time on our side, although we will probably dip into this for a down payment on a house in a little under two years.

Is it worth taking advantage of the down market by moving what's in my low-interest savings account (which I was considering closing anyway) into Vanguard or some other index fund? Or does this fall under the bad behavior of trying to time the market?

I have a long list of reader questions coming, so I usually don't post them the same day I receive them. But this one seemed especially timely. What would you tell him to do?

Help a Reader: Money Trouble

Here's a question a reader recently left here:

My job closed up I worked for 25 yrs. My new job, I took a $15,000 pay cut a year. I'm a single dad, divorced for 7yrs, raising my two kids on my own. Stuck in bad mortgage where I pay interest only, can't get out of it because of $25,000 debt and because of wages. I pay my mortgages on time and never late on card payments, credit score of 735 and a ratio of 95-100%. I’m now at my last pennies and can't seek help from any one.

Ready to declare bankruptcy soon. Can someone help me?

Any advice out there?

Help a Reader: Saving Too Much?

Here's an email I recently received from a reader:

I have a question that I haven't seen addressed.  Can you save too much?  My friends say this is my problem and why I never have any money to do anything.  Here is what's going on.

I make about 45-50K a year.  I'm 28 single male.  I have no debt except for a mortgage.  The mortgage is about 696.00/month. This includes taxes paid through my escrow.  The only other bills I have are cable/internet ($101/month), water ($25.00/month), electricity ($25-$45/month), cell phone (45.00/month).   As you can see my bills are not very much.

Where most of my money goes is my savings/retirement.  I put 5% to a rainy day fund, 6% to a 401(k), 9% to a Roth IRA.  I also put $100.00 per pay period (15th and last day of the month) in what I call a car replacement fund.  I put 6% in my 401(k) to get the maximum company match.

After all this, I feel like I have nothing left to spend for clothes, vacations, or just hanging out with friends.  I feel like I'm more stressed than some of my broke friends trying to make what I have after all this last until the next check.  By the way, what I end up having is about $350.00 after all the above has been budgeted out.

What advice do you have for him?

Help a Reader: Getting Card Transactions

Here's a question a reader emailed to me:

I just signed up for a 6% rewards checking program, which requires 10 check card transactions per month to qualify for the interest payments.  I'm not a big shopper, so aside from stopping by the gas station 3x a week to top off the tank, are there easier ways to meet the 10 required transactions?  Something involving online purchases via PayPal or $0.50 donations to a charity? 

I assume he meant three times a MONTH on the gas comment -- otherwise he's about there with the 10 transactions.

What would you suggest for him?

Help a Reader: HSA Questions

Here are some questions a reader left as a comment to my post titled Using Your Health Savings Account as a "Super Roth" Investment Vehicle:

Is there any tax rule that would prevent me from opening an HSA for all the advantages stated above, and still contributing a modest amount to my company's FSA for incidental medical expenses during the year? I am not eligible for a Roth, but I would like another retirement savings option.

Did I understand correctly that my future medicare premiums may be reimbursed with HSA savings even though my current high-deductible premiums are not?

Is there such thing as an HSA that lets me self-direct funds into more aggressive individual stocks instead of mutual funds?

Any of you super-smart readers out there have the answers for him?

Good Personal Finance Podcasts

Just got this email:

Can you suggest some good personal finance podcasts?  Dave Ramsey, etc.

I like the personal finance podcasts from the Wall Street Journal the best. They are informative, cover the news, and are quick (5 minutes or so.) I've tried Dave Ramsey's show (and others) before, but they are usually too long (45 minutes or more.) In that amount of time, there's a LOT of wasted/dead space.

What are your favorite financial podcasts?

Help a Reader: Take a Credit Card Offer?

Here's an email I recently received from a reader:

I just received an offer of a 0% loan from my cc company. Have you heard of others taking advantage of this?

Chase said I can get a 0% loan for 1 year, up to the amount of my credit line (29,000). They will charge a 3% fee, but it's capped at $199.

I use ING Direct, and they'll pay me 4% on a 12 month CD. So for a bit of paperwork, and tying up a credit line (which I don't currently use), this sounds like a free $900 (interest of $1100 minus the $199 fee).

Potential drawbacks:

1. I'll need to make the minimum payments on the card on time for a year (not a problem, since I pay online and have a calendar that emails me to remind me to pay).
2. Can't use the credit line (I only charge about $1000 month anyway, and have two other cards with 20k+ limits)
3. ? - is there something I'm missing?

I'd be interested to know if any of your other readers have offers like this and have taken advantage of them. Since I figure it will take me 4 hours of time to make sure of everything + make payments, this is about $200/hr - considerably more than I make at my day job.

I don't take offers like this, so I'm at a loss for what to tell him. What are your thoughts?

Help a Reader: Lots of Issues

Here's a (long) email I recently received from a reader:

I've made several changes to my spending habits and planning habits after reading through your website. I was wondering if you might be able to post my 'dilemma' on the site under the 'help a reader' section.  I'm really not sure what to do. Here is my scenario:

I am 34 years old, separated (since June 2006), have 2 young children (aged 7 and 4) whom I have 50% custody of.  In addition, I pay a small amount (224.00 / month) in child support due to income differential between my ex-wife and I.  My current salary is roughly 75,000 / year, however in a good year this can stretch to 100k.  The only catch is that my income is paid at 75% of my expected earnings, and I receive the remainder of the commission at year end.  So I have to make due on a reduced income for the duration of the year (approximately 56k gross), and I get bonused at year end - Anywhere from 15k-40k depending on how I perform.  As it stands now, I'm looking at roughly 20-25k (that may be slightly conservative, but I'd prefer to underestimate than overestimate).

Back to my dilemma...I managed to survive the separation with some assets intact.  I had approximately 135k left over from our division of assets 2 years ago after the dust settled.  I had to spend a fair amount of money on buying new furniture (bedroom, living room, kitchen supplies, dishes, bathroom supplies, towels, electronics, etc.  I essentially left everything with my wife and had to go and build a new home.  I also needed to buy a car.  I made some expenditures that maybe I shouldn't have made - I certainly could have been more economical, which I freely admit.  For example, I bought a 2006 Mazda 3 new from the dealership.  I could have spent much less and bought a used car.  There are several things I could have been more frugal with, however, what's done is done...at the time of the separation, I felt I needed to have a few nice things around me to make myself feel better about leaving my home to live in a basement suite with my kids half the time...Bottom line, I ended up with about 85k to invest after I set my self up again in my new home.

I have some pensions, RRSP's and some other tax sheltered small investments totalling around 55k.  I contribute to them every month.  My employer does a 50% price match on my pension contribution and on my share purchase plan