Free Money Finance

Help a Reader: Renting Rooms to Students

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

I live close to a university and I have the opportunity to rent some of my extra bedrooms to exchange students thru the college. I would like to know whether any of your other readers have ever rented rooms to college kids or to foreign exchange students thru the college? What experiences good and bad did they encounter and was it worth it to them?

What's your advice for him?

Long-term Care: What are the Options?

The following is a guest post from Genworth Financial. I have added some of my thoughts on this subject at the end.

Most of us are (justly) concerned with the current state of the economy and our own personal budget crisis. It’s hard to plan ahead when we’re constantly trying to stay on top of immediate concerns like mortgages and bills, especially in a doubtful job market.

But it is precisely in the midst of such uncertainty that we should be planning for the future. Armed with the knowledge that at least 70% of people over age 65 will require some long-term care and that 40% of people under age 65 already require long-term care, it’s safe to assume that at some point either you or a loved one will need long-term care, whether through the effects of disease, injury or even the normal ageing process.

There are some emerging trends marking changes in long-term care services. Certainly, the overarching trend is the rise in costs; the cost of care among facility-based providers has steadily increased, representing roughly 4.35% compound annual growth. To put it in hard numbers, Americans can look forward to paying approximately $17,520 more per year today for a nursing home than they had to pay in 2005.

As the cost of care increases, the cost of long-term care insurance (LTCI) increases as well. Most people look at four ways to potentially pay for long-term care: Medicare, Medicaid, out-of-pocket or private long-term care insurance, and each of these methods of payment have different issues as follows:

• Medicare is a federal program that requires co-payment and provides hospital and medical insurance to people 65 years or older and to qualified ill or disabled persons. Don’t count on Medicare unless you meet certain stringent requirements (Medicare pays 100% for the first 20 days only after a three-day hospital stay).


• Medicaid is reserved for low-income individuals.


• Self-insuring necessitates a thorough understanding of the cost of care you can expect in your area.


• LTCI policies are varied based on location, facility chosen and other factors.

Given these, LTCI is a viable option for many (most?) people. Here are the top five things to consider when buying long-term care insurance:

• Don't buy out of fear and don’t buy when you are highly emotional; this decision merits a steady head and the ability to plan for contingencies.


• Don't buy more or less insurance than you think you may need. Be realistic about your assets and income, and be realistic about whether you have family members who can assist financially. Remember that usually you will have the option of lowering your amount of coverage, but as you age and your health declines, it can be increasingly difficult to raise coverage.


• Make sure you understand the limitations of the policy you are considering. Depending on the type of policy you choose, you could be excluded from certain things that may not be covered. Make sure you plan for other expenses, such as supplies, medications and linens.


• Aside from health and age, external factors can lower the cost of LTCI. If your employer offers a group long-term care plan, then the costs may be significantly less than an individual plan. Also, see if your state offers a Partnership Program, a collaborative effort between the state and private insurance companies selling policies in that state and to state residents. A partnership qualified policy provides the purchaser with the ability to apply for Medicaid under a feature called “asset disregard.” It’s worth looking into.


• Consider your options with your family, make sure the decisions are sound financially and talk with a professional before making a decision.

-----------------------------------------

Some thoughts from me (FMF):

• I see this issue (how to deal with a potential long-term illness/inability to care for yourself) as a sub-section of the "retirement healthcare" issue. The key question: once you retire, how do you plan/manage for both in-and-out healthcare as well as long-term, end-of-life healthcare? The issues seem full of potential potholes and, unfortunately, the potholes are very, very expensive.


• I was surprised that LTCI costs are only increasing at 4.35%. I would have guessed that they were growing at a much higher rate.


• Out of the four options described above, there's NO WAY I'm counting on either Medicare or Medicaid as my LTC solution. I don't trust the finances of the federal government and I will plan for my own end-of-life needs accordingly.


• That said, the final two options are both up for consideration. Self-insurance could work for me and LTCI could be an option as well -- or maybe a combination of the two. I'm still researching the issue (not old enough to buy LTCI yet), and I have time to decide.

Anyone out there made a decision on this issue -- or have something to say about it?

The Most Overlooked Step in the Job-Hunting Process

What Color Is Your Parachute? 2012: A Practical Manual for Job-Hunters and Career-Changers lists the most overlooked step in the job-hunting process as writing thank-you notes. Here's a summary of their thoughts:

Every expert on interviewing will tell you two things:

1. Thank-you notes must be sent after every interview, by every job-hunter

2. Most job-hunters ignore this advice.

The book also says the following about the lost art of writing thank-you notes:

• Sending them will make you stand out from the crowd (in a good way.)


• You should send a thank-you note to everyone you meet on your interview day -- secretaries as well as the interviewers.


• In the interview, it's likely you were presenting yourself as one who has good people skills. Sending a thank-you note reinforces this message.


• It helps the employer remember you, which can be helpful in a crowded job market.


• The thank-you letter can reiterate your interest in the position, something companies want to see from potential hires.


• The note gives you the chance to correct any wrong impression that you left behind or to reinforce some of the positives you discussed.


• While you may not get this job, recipients may know of other positions that are open. A thank-you note opens you up for a potential reference to these.

Now don't get me wrong, I don't think a thank-you note is going to convince someone you're a fine catch if you blew the interview. But sending a note can't hurt, takes a minimal amount of time and effort, and may just be the one thing that separates you from the pack in a tight race. So why not send one -- especially if your competition likely isn't?

I must admit that I've been spotty sending thank-yous in the past (though I often do shoot off emails to my main contacts). But if I was looking for a job these days, I'd be sure to follow up any interviews I had with a quick and nicely-worded thank-you note.

How about you?

Reader Profile: JJ

The following is the latest post on my new "Reader Profiles" series. Each post in this series details the financial situation and challenges of an FMF reader. The purpose of this series is to help us all identify with people like us (in similar situations -- not all will be, of course, but eventually I'm sure you will find someone like you here), get to know the frequent commenters on the site, and hear some financial wisdom/challenges from people other than me.

If you're interested in contributing to this series, then drop me an email. I need more people to sign up! If you're enjoying this series, you need to contribute to keep it going. Ok, enough begging from me. :-)

Next in the series is FMF reader JJ. He answered my questions (in red below) as follows:

Please tell us a bit about yourself.

I’m an ISTJ (Myers-Briggs) who prefers e-mail to a phone call and Excel to Word.  I like action.  I welcome problems as long as my “team” is willing to be part of the solution.  I’m not a risk taker and I don’t invest in individual stocks.  I don’t jump in and out of the market and I like index funds.  I don’t like debt.  I am a Christian and I believe family comes before work.  My kids wear second hand clothes, I drive a 13 year old car, and I change the oil in all my vehicles.  I create a balanced budget every year and believe Washington should do the same.  Now with a bit more detail and less character…

My wife and I are in our late thirties and have been happily married for 17 years.  We have three beautiful children (9, 8, & 6) and all are happy and healthy.  We have lived in the mid-west (mostly rural towns with less than 10,000 pop.) and plan to retire here.

My wife has a college degree and has not worked outside our home since our children were born.  Other than a short stent at McDonald’s when I was in college, I have always worked in the health care industry.  My career has taken me from direct clinical (patient care) work to my current position in hospital administration.

Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.).

I am the sole financial provider in the family; however, I think it is important to point out that our financial position would look very different without the hard work and support of my wife.

My income has significantly increased since completing my masters and moving into administration.  My current NET income (I always prefer to work from net) is at $118,999.

Despite my high income, I don’t consider it the “secret” to our financial success; although it has accelerated it.  My wife and I are both very frugal and learned early on how to live below our means.  Over the last 15 years we’ve averaged 20% of our net income going to savings (not including retirement).

Expenses as a percent of net revenue are below.  I tried to keep it simple so there will be some rounding error.

• Savings - 22% (What we’re currently saving to pay off our house)
• Credit Card - 19% (Chase Freedom and it is paid off every month)
• 401k - 12% (Employer 401k close as I can get to maxed without going over)
• Charity - 12% (Church 10% + other non-profits)
• Roth - 8% (Maxed Roth for my wife and I)
• Mortgage - 8% (Will be paid off this year)
• ESA’s - 5% (Maxed ESA’s for three kids)
• Utilities - 5% (Gas, electricity, water, trash, cable, etc.)
• Medical - 4% (Medical, dental, and optical expenses)
• Insurance - 3% (Home, car, term, etc.)
• Other Exp. - 2% (extra for income tax and other small categories)
• Work Exp. - 1% (work expenses are reimbursed but not included in my revenue)

What are the current financial issues you're facing (saving, paying off debt, etc.)?

Current net worth is just shy of $627,000.  Retirement accounts at $252,000, ESA’s  at $45,000, liquid assets at $98,000, fixed assets (including the house - $65,000 mortgage) $232,000.

I’ve been saving for retirement for 13 years and my Investment mix includes:  50% large cap, 25% small cap, and 25% international.  All, except my 401k, are invested in indexed funds through Vanguard.

I plan to pay off our mortgage in one lump sum in December.  Once the mortgage (5.375% 30 yr) is paid off, and savings is built back up to 12 months expenses, the extra will go towards the “retire early fund”. 

What are your plans for the future? (Retire early; build your career, etc.)?

I plan to remain in hospital administration until I can retire.  If my calculations are correct (and the market straightens out), I should hit critical mass at age 54.  Like FMF, I am considering an even earlier semi-retirement, but don’t have a good plan right now.  I would love to spend my semi-retirement/retirement helping others learn the power of creating and following a budget.

I would welcome any ideas as to how I can get more experience in assisting others with personal finance budgeting.

What's your best piece(s) of financial advice and/or your general philosophy on personal finances?

You where you are financially because of the choices you have made in the past.  If you don’t like where you are, take a good hard look at your choices and make some changes in the future.  No finger pointing or excuses, personal responsibility, accountability, and consistency is key to long term financial success.

Five Traits of the Very Wealthy

Yahoo lists five traits of the very wealthy. I've listed them below along with my comments on each:

The very wealthy have a plan. Most very wealthy people have a team of advisers and an investing strategy in place that should work even when the worst imaginary case becomes real. Small investors, too, should have a comfortable investment process that works in good times and bad.

While I don't have a "team" of advisors, I do use experts (CPA for taxes, lawyers for will, etc.) when needed. And I have an investing strategy as well -- as you all know.

The very wealthy live below their means. "Most of our ultrawealthy clients have a lifestyle that is well below their means," says Craig Rawlins, president of Harris myCFO Investment Advisory Services, which serves wealthy families. When you don't spend everything, he says, "you have a better opportunity to weather this volatility because you know there's a cushion there."

Ha! Told ya!!!! ;-)

Of course it's a lot easier to live on "only" $3 million when you make $5 million a year, but how do you think these people got wealthy in the first place? It certainly wasn't because they spent every penny as soon as they made it.

And the last statement is very true -- if you have a big cushion between what you make and what you spend then you're in a much better position to survive (and even capitalize on) economic uncertainty and the associated fallout.

For instance, in 2008 and 2009 when the stock market was plummeting, I bought a boatload of stocks (index funds) because I had the cash flow available. I did the same a few weeks ago when the market dropped again. Will these turn out to be good moves? I believe they will, but only time will tell for sure.

The very wealthy value cash flow. One of the most painful lessons of 2008 was the recognition that we need to keep enough in cash or liquid investments to weather a stretch when the value of everything else is in flux.

This is closely associated with the previous item, isn't it? In fact, isn't it almost the same thing?

The very wealthy focus on risk, not return. Larry Palmer, managing director, private wealth management, at Morgan Stanley Smith Barney, said he has never had a client say, "My objective is to have my family wealth beat the S&P 500." Rather, he says, clients focus on what kinds of risks they are taking with their portfolio.

The very wealthy are in a different position than most of us on this one. They already have their wealth and are simply concerned with preserving it. The rest of us (at least most of us) are building our wealth and need to take a bit of risk to get the returns we want/need.

The very wealthy hang on. The super-rich don't sell because they are fearful—though some may be selling right now for investment reasons, such as cutting the tax bite on holdings with big gains.

Exactly what I'm doing now -- hanging on, not panicking. Wonder if I can keep it up for another several years. :-) Who knew the recession would last so long anyway?

Overall, there are several good lessons we can all learn from the very wealthy. And if we follow them, we too will ultimately become members of the "rich club."

Six Secrets of Salary Negotiation

What Color Is Your Parachute? 2012: A Practical Manual for Job-Hunters and Career-Changers lists the six secrets of salary negotiation as follows:

• Never discuss salary until the end of the interviewing process when (and if) they have definitely said they want you.


• The purpose of salary negotiation is to uncover the most that an employer is willing to pay to get you.


• During salary discussion, never be the first one to mention a salary figure.


• Before you go to the interview, do some careful research on typical salaries for your field and in that organization.


• Research the range that the employer likely has in mind, and then define an interrelated range for yourself, relative to the employer's range.


• Know how to bring the salary negotiation to a close; don't leave it "just hanging."

I'm in a bit of a different situation than most people. Ever since my first post-MBA job, I've either used an executive recruiter to find a job or dealt directly with a potential boss who contacted me because he knew me or knew someone in my network. Each of these conversations always went something like the following:

• They called me or I called them asking about interest in a specific job.


• They described the job briefly.


• I asked a few questions about the job, the company, etc. and they answered them.


• I asked about compensation. TOTAL compensation (salary plus benefits). Even if they only had a ballpark number, I wanted to know it was worth my time to interview for the position. In addition, they wanted to know that I was ok with what they could offer (why interview me otherwise?)


• They told me the compensation numbers and I decided whether or not to proceed.

Now I know that this won't work for many people, but it certainly can when someone contacts you (it's harder when you contact them.) When they phone you and as you're getting information, ask about compensation -- what the position pays. This will save you a TON of time in case the salary is below what you'd ever accept.

And once you know the range, don't bring up the compensation issue again until the very end of the process -- once you know that they want you. It's at this point that you have the greatest negotiating leverage. They've spent a ton of time and money to get to this point and they want you BAD -- probably they want you to start work there tomorrow! It's now that you can begin compensation negotiations with the deck stacked in your favor.

If they bring up compensation during the interview process, here's what I tell them:

• My total compensation is $XXX


• I'm looking for a significant increase to this because I can deliver/actually am already delivering much more value than this.


• I like my current job and I'd only consider leaving if the new opportunity was amazing and if my compensation goals were met. (Even if you hate the job, don't let them know it. Make them think you love your current spot and are quite happy to stay there if need be. This also will give you more negotiating leverage.)

Using the above tactics has helped me achieve significant bumps in pay at almost every job move. Twice I was so successful at increasing salary that I was told they couldn't offer me more or I'd make more than my boss! (I'm assuming this was true, though they could have been lying, of course. The way it was said -- reluctantly -- made me think it was accurate.)

The process didn't work on one occasion, even though I was clear in detailing what I earned and what I expected to be paid in a new position. At the end of the process they tried to low-ball me, giving me an offer that was $15,000 below my current compensation (not to mention not giving me the 10% minimum bump I wanted.) They thought I was so bought into the job and company that I'd take a pay cut to work there. They were mistaken. I was unsuccessful at getting them to come up and they were unsuccessful at getting me to come down. So we parted ways (amicably, of course.) In hindsight it turned out to be a great move because I found another job that was 10 times better than the one I passed up.

I can see where they are coming from above when they suggest not mentioning a salary first. After all, you may low-ball yourself by naming a range well below what you could have gotten. Experience tells me that this is unlikely (that you make $40k now and someone wants to give you a $80k job -- unless there are highly unusual events surrounding the situation) and impracticable (you can only dodge the question so long and in so many ways until you look like someone who won't answer a question -- something you don't want to look like in an interview.) That's why I prefer the steps I've noted above.

I've used the above process to help me attain average annual increases of over 9% throughout a 20-year career, so something has to be working, right?

Your thoughts?

Renting a Potential Option for Retirement

MSN Money suggests that renting may be a better option when/if you decide to downsize during retirement. They list the main trade-offs between renting and buying as follows:

Do you like tending your own home, including gardening, lawn work and home maintenance? Or would you like to get out from under many of these responsibilities?

Do you like the flexibility of an annual lease that gives you the freedom each year of living wherever you want? Or do you prefer to be a long-term member of a community and stay in the same home for a long time?

Here's my take on these:

• Retirement is still a decent amount of time away for me, so anything I say from here on out is subject to change and is simply my current thinking.


• I do like to tend to the house. In particular I like growing roses and gardening (flowers/plants, not food.)


• That said, there are many yard/house chores I don't like: snow shoveling, mowing the lawn (my son will move out someday and I'll need to do it again), and so on. And then there are the costs of maintenance and repairs.


• I also like lots of space even if I don't use it all and I'm wondering if renting a (likely) smaller place would make me feel cramped. Also, where would the kids (and eventual spouses/grandkids) stay if they visited?


• I like being in control of my own living space. I can do what I like to the house. I'd need permission to do some things to a rental place.


• Our neighborhood is "decent" but appears to be declining (IMO) overall. Not far from our home are some semi-seedy parts of town that could encroach into our area over time. Will they or won't they? Not sure.


• One potential solution is to rent for the nice Michigan months (May through October) up here while going somewhere warm for the November through April time period. Then again, I'd be paying top rates to rent in each place -- and where would I keep my stuff? I'd probably have to have a year-around home/apartment/condo in at least one location.

As you can tell, there's still a lot to be decided. But I have time -- and I do like looking at all my options. ;-)

How about you? Have you thought about your housing options during retirement?

Our Credit Card Number Was Stolen

Last Thursday I got a call at work from FIA Services, the owners of the once-named Schwab 2% card (which I currently use as my "all other" card when I can't get a higher cash back rebate somewhere else.) It was from their fraud department. They had noticed some unusual charges and wanted to know if they were legitimate. (BTW, I knew he was legit from the information he had. In addition, I never gave him any personal info and he, in fact, was careful giving me any too. We simply discussed charges.)

I had received a couple calls like this in the past few years, but each time they were instigated by some unusual charging activity on my end (lots of charges in one day, high amounts of charging in one day, charges away from home, etc.) This time was different.

It appeared that three charges were suspicious and these are what drew FIA's attention to the card. After talking to the fraud investigator, I could account for all the charges but these three. That said, I didn't know what my wife had charged that day, so we needed to talk to her. He tried to call her with me on the line, but she was not home. I agreed to talk to her that evening and call them back.

When I got home, we talked and confirmed that the three charges were not ours. They were as follows:

• $1 charge to a charity
• $10 charge to an educational company
• $1,300 charge to American Airlines

I called the credit card company and they said charges like this are very common when the number has been stolen. Thieves try small test charges to see if the card is valid. Once they confirm it is, they then make as many big purchases as possible as quickly as possible. Looks like our thief was planning a trip.

The guy walked me through the next steps. I would be seeing both charges and credits for those charges on my statement. I'd also be getting a form in 7 to 10 days. I'd need to sign it and confirm that the charges weren't mine. And, of course, the cards would be cancelled and new cards issued.

I had four auto-pays set up on the card and asked if they would transfer to the new one. They wouldn't. Ugh. So I need to go through the pain of contacting the companies and giving them the new card numbers. Just something to think of for those of you who have multiple auto-pays -- be sure you have a list of who you have them with, how to contact them, your passwords, etc. handy in case you need to change them for something like this.

Next it was time for the clean up and to make a security check of our finances.

The next day I scanned all our computers (home and work) just to be sure our computers were secure. I also grabbed our credit reports (one for me and one for my wife) from AnnualCreditReport.com. I had been meaning to review our credit reports anyway so this gave me good reason to. I'll be pulling one of the free reports every four months now will keep a close eye on them. It's probably simply a stolen credit card and not ID theft, but I want to be sure and take no chances.

I also checked my online bank and investment accounts. It was highly unlikely that any of these were compromised, but it's better safe than sorry. They all appeared to be fine (BTW, I check each of these accounts at least once a week anyway, so I'm fairly on top of their status.)

This is the first time I've ever had a credit card number stolen (FYI, we had our cards, so it was simply the number that was stolen, not the physical card) -- and I've been using cards for almost 30 years now. My boss says he's had it happen three or four times in his career.

How about you -- have you ever had a credit card number stolen? What did you do? Or do you have any advice for me on what else I should do to be sure everything is safe and secure?

The Best of Money Carnival

The Best of Money Carnival is now up. Congrats to all participants and especially the winning post, Gold Versus Fiat and the Mother of All Bubbles.

Enjoy!

Five Best Ways to Look for a Job

What Color Is Your Parachute? 2012: A Practical Manual for Job-Hunters and Career-Changers lists the five best ways to look for a job as follows:

• Asking for job leads from: family members, friends, people in the community, staff at career centers -- especially at your local community college of the high school or college where you graduated -- 33% success rate


• Knocking on the door of any employer, factory, or office that interests you, whether they are known to have a vacancy or not -- 47% success rate


• By yourself, using the index to your phone book's Yellow Pages to identify subjects or fields of interest to you in the town or city where you want to work, then calling up or visiting the employers listed in that field, to ask if they are hiring for the type of position you can do, and do well. -- 65% success rate


• In a group with other job-hunters, a kind of "job club" or "job support group", using the phone book's Yellow Pages to identify subjects or fields of interest to you in the town or city where you are, and then calling up or visiting the employers listed in that field, to ask if they are hiring for the type of position you can do, and do well. -- 70% success rate


• Doing an inventory of yourself (doing extensive homework on yourself before you go out and pound the pavement) -- 86% success rate

FYI, the percentage numbers are estimates based on the author's experience.

It's interesting that none of these has ever worked for me (in fact, I haven't even tried the middle three) except the first one and the last (if you count preparing a detailed resume and developing specific interview questions as "doing an inventory of yourself.")

In the listing of all the jobs I've ever had, here's how I've found the jobs:

• Pre-College -- submitted an application (I guess this could technically count as "knocking on the door" of a business")


• College -- Networking through the school/financial aid office


• Graduate School -- Networking through the school/financial aid office


• Introduction to the Real World -- Campus placement office


• Second Job a Winner -- Executive recruiter


• Working for a Maniac -- Internal job promotion


• Promotion, Success, and Failure -- Internal job promotion


• I Get My Dream Job -- Sent in resume in response to an ad in a trade journal


• The Dream Job Turns into a Nightmare -- Same job as above


• The Dot Com Bubble Bursts -- Networking


• The Blame's on Me -- Networking


• An Interesting Transition -- Networking

One thing to note, I think the "best" ways to find a job differ based on the level of the job (fresh out of college versus senior executive), type of job (construction versus banking), area of the country (big city versus small town), size of company (Fortune 500 versus 5-person firm), and so on. If I was looking for a new job, my network and executive recruiters would be the first places I'd go -- and only one of these is on the list above.

What's your take on these? Have you tried any of them? Did they work or were they a waste of time?

Defining Biblical Generosity

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why.

Recently some of the Christian Financial Alliance members addressed the following: "In your own words, define biblical generosity."

Here's my answer:

“Loving your neighbor by using money to make his life better in some way.”

What I was trying to get at -- and probably needed to explain a bit more -- was that biblical generosity is an other-focused sacrifice. It's something you give up to help someone else, without care for what you might have been able to do with the gift yourself. When you can get to that point, you're being biblically generous IMO. 

I'm interested in knowing your take on this issue. How do you define "biblical generosity"?

And Yet Another Creative Way to Save Money

So far I've listed two creative ways to save money in Thinking Outside the Box to Save Money and Another Creative Way to Save Money. Now we have another. Here's a comment left on the latter post that describes what one reader did to save a good amount of money:

I was very close to reaching Companion Pass status on Southwest Airlines several years ago, but due to vacation wasn't going to travel on work and would miss the cut-off. My solution? I found a $39 fare to a nearby city and flew there several round-trips in one day, thus meeting the requirements for the Companion Pass.

What was my upside? My wife was able to fly with me free, on my same itinerary, for one year. She subsequently went on 14 trips with me she would not have otherwise, I gave 4 or 5 reward tickets to needy folks, and we all won big.

I spent maybe $200 on the round-trips to reach the Companion Pass level.

$200 spent for 20 or so trips (the ones his wife took as well as the ones given away). That's a pretty great deal -- especially since it's hard to find ONE flight for $200!

Anyone else have a creative idea they've used to save money?

FMF Sept Newsletter

Welcome to the Sept 2011 issue of the Free Money Finance e-newsletter!!!!!!

I have three newsletter exclusive giveaways this month. Below there are links to each of the giveaways (made known only to readers of this newsletter). Click on the link(s) of the giveaway(s) you want to enter and follow the directions there. Prizes include:

1. Box of Books

2. Another Box of Books

3. $50 SmartyPig gift card 

Good luck!

Win Another a Box of Books!

Welcome FMF newsletter readers! Here's a chance for you to win a box of personal finance books (the books included are here).

Here's how it will work:

1. All you need to do to enter is to leave any comment on this post. Be sure to leave your email address (no one else will be able to see it) when you leave the comment.

2. In a week or so, I'll select the winner at random and announce the winner on this post.

3. I will email the winner, get their contact information, and arrange for them to receive their prize.

As always, the standard rules apply.

Good luck! Post a comment below for your chance to win!

Win a Box of Books!

Welcome FMF newsletter readers! Here's a chance for you to win a box of personal finance books (the books included are here).

Here's how it will work:

1. All you need to do to enter is to leave any comment on this post. Be sure to leave your email address (no one else will be able to see it) when you leave the comment.

2. In a week or so, I'll select the winner at random and announce the winner on this post.

3. I will email the winner, get their contact information, and arrange for them to receive their prize.

As always, the standard rules apply.

Good luck! Post a comment below for your chance to win!

Win $50 from SmartyPig!

Welcome FMF newsletter readers! Here's a chance for you to win a $50 gift card from SmartyPig -- given either as a credit to a current account you have with them or as credit to a new account that you'll set up.

Here's how it will work:

1. All you need to do to enter is to leave any comment on this post. Be sure to leave your email address (no one else will be able to see it) when you leave the comment.

2. In a week or so, I'll select the winner at random and announce the winner on this post.

3. I will email the winner, get their contact information, and arrange for them to receive their prize.

As always, the standard rules apply.

Good luck! Post a comment below for your chance to win!

Have You Ever Taken a Salary Cut?

Here are four interesting stories of people who took salary cuts and how they managed through it. Which leads me to ask all of you the following:

Have you ever taken a salary cut? What were the circumstances? How did you cope/adjust?

Fortunately, I have never had to take a salary cut. As I've moved from job to job, I've always been able to grow my salary (as well as my overall compensation.)

That said, I was part of a company that had pay freezes for two years. The business was not doing well (as you can imagine) and in addition to a hiring freeze, no one got pay increases. I was highly compensated so it impacted me less than others (and I have a big cushion between pay and spending anyway), but it was discouraging knowing that you're doing the same job with less staff (when someone left, they weren't replaced) and earning the same amount of money. Eventually, I left the company and moved on with my career.

How about you? Have you ever taken a salary cut?

Star Money Articles and Carnivals for the Week of Aug 22

Here are some pieces I found especially worthwhile and some of the carnivals Free Money Finance was in this week:

• Festival of Frugality
• Cavalcade of Risk
• Carnival of Personal Finance
• The Best Degrees lists the top 51 degrees based on job prospects.

Enjoy!

P.S. Carnival Hosts -- If my post is in your carnival in a given week, please send me the URL to the carnival and I will include it in my weekly roundup.

How to Save $2,000 in the Next Year

Smart Money lists four ways you can save $2,000 in a year as follows:

• Switch cellphone plans. Save: $400 a year


• Shop insurance policies. Save: $200 a year


• Change (or ditch) cable. Save: $800 a year


• Get a better credit card. Save: $600 a year

Here's my take on these:

• My cell phone is paid for by my work. My wife has a Tracfone with loadable minutes, but we're thinking of getting her a new phone/plan and letting the Tracfone be a "rover" phone for the kids. Still lots of research to do here before we make a "buy" decision.


• I haven't shopped our insurance policies in quite some time. This is on my list to do.


• Ahhh, cable TV. I'll be writing more on this topic later, but for now suffice to say I have six months to make a decision on what to do.


• As you know, I am totally on board with the "make money by using a credit card" concept. I've been testing a few the past couple months and will be reporting my findings soon. But to give you a sneak peak, I recommend the Chase Freedom card and the Blue Cash Preferred card.

I'm not sure about their savings figures -- some seem high and some low -- but I think these steps could save/make an easy $1,000 even if you've done a fairly decent job to date in these areas. What's your take?

Five Worst Ways to Look for a Job

What Color Is Your Parachute? 2012: A Practical Manual for Job-Hunters and Career-Changers lists the five worst ways to look for a job as follows:

• Looking for employers' job-postings on the Internet - Only a 4 to 10% success rate


• Posting or mailing out your resume to employers - Only a 7% success rate


• Answering ads in professional or trade journals appropriate to your field - Only a 7% success rate


• Answering local newspaper ads - Only a 5 to 24% success rate


• Going to private employment agencies or search firms for help - Only a 5 to 28% success rate

FYI, the percentage numbers are estimates based on the author's experience.

I've tried all of these except for the private employment agency one (unless you count executive recruiters in this list -- if so, I've actually been quite successful with them). Of the four I've tried, the only one that has worked was answering ads in a professional trade journal. Doing so got my foot in the door and ultimately led to me landing my dream job (which later turned into a nightmare, BTW)

What's your take on these? Have you tried any of them? Did they work or were they a waste of time?

Save Money by Teaming with Your Neighbors

US News lists 10 unusual ways to save money. Tip #1 is as follows:

Share With Your Neighbors. When it comes to buying food or paying for things such as the Internet or Netflix, rally the troops (aka your neighbors) to save some money. Split the cost of Internet and Netflix with a few neighbors, buy food items in bulk then divide the food and bill, or rotate dinner-making responsibilities between different houses to save money on food expenses.

We recently benefitted (again) from this tip.

Several years ago the homeowners in our development banded together and bid out our garbage pick-up services. Waste Management was the winner, so we went with them and each homeowner saved somewhere around $75 a year versus the list price. But it was a never-ending fight to keep the prices down as WM tried and tried again to raise them (we had to call several times to remind them that we were part of the group "deal" and that our prices should not be going up.) Finally the homeowners got tired of this back-and-forth, and we recently re-bid out the services. A new, local player has emerged since we last priced out the competition and they came in $100 lower than Waste Management. So we all made the switch in June.

There are a TON of products and services that you can save on if you team up with your neighbors. A few ideas:

• Snow removal (for those of us living in the tundra)
• Landscaping
• Pest control
• Home repairs
• Yard equipment (borrow from each other)
• Bulk buys (good deals at Costco can be split among neighbors)

You get the idea. Anytime buying in bulk/as a group can save some money (which is often), teaming with your neighbors can ring up some big discounts.

I'm sure you can name many more. If you have something to add, please leave them in the comments below.

Big-Ticket Items to Wait on Purchasing

Yahoo lists the following as big-ticket items that you should wait to buy (because they're supposedly going to get cheaper in the near future) as follows:

• Travel
• Cars
• Wedding
• Retail
• Remodeling

Here are my thoughts on these:

• Travel - I haven't booked my January cruise yet and I'm hoping that the recent economic troubles/uncertainty slows down purchases (on the cruise itself, airfare, hotels, etc.) enough that prices start to fall. Then I'll book. I have target prices and am on the hunt for them all.


• Cars - I just bought a new car last fall, but my wife is due for a new one in a year or two. Not sure I'd buy earlier than that unless prices REALLY dropped big-time.


• Wedding - The piece notes that wedding caterers, etc. may be more likely to offer discounts these days. I'm thinking many businesses will be more likely to offer discounts these days.


• Retail - Another Christmas of 2008? Could be big sales this year as retailers struggle to compete.


• Remodeling - We have had some repair work recently done and I can say that the bidders got quite low during the process. If they're lower now, then they'll almost be giving away their services. ;-)

Personally, I'd prefer to have a robust economy, pay the going/competitive rate, and have prosperity for all. But since it seems like we're a ways away from that, those people who are now buying can at least take some comfort in the fact that they can shop around, wait a bit, and likely end up with some pretty good deals when all is said and done.

Turn Your Home into a Money Maker by Buying in the Right Location

Check out this comment left by a reader on my post titled More on Buying Vacation Homes:

I have family that lives in Augusta Georgia. They own a home that is close to the Master's Golf tournament. They own their home and live there year round, but they rent out their home every year for the Masters Golf tournament to businesses for the week. They typically net between $10,000 - $12,000 for their 2000sf 3 bedroom home for the week. They basically pay the majority of their mortgage from renting out their home one week out of the year! Home prices have skyrocketed in Augusta because of the Masters, but it might still be a worthwhile investment.

Wow! Imagine that -- you can rent out your home for one week and make most of your mortgage payments for the year! Or if you don't have a mortgage, you could simply pocket a cool $10k for a week's effort.

Of course this idea has limited ability to work since you have to be near a major event/desired location. But if you think of all the sporting events, entertainment venues, vacation spots, etc., it's not that far-fetched of an idea. You certainly can see how renting out your home for part of a year can make a lot of sense -- even if you "only" cover something like half or one-third of your annual mortgage payments.

I've been thinking of this idea as part of an overall retirement plan/strategy to move to a nicer part of the world. For instance:

• Purchase a vacation home somewhere nice at a good price (since prices are low now in many locations).


• Try to buy a place that has some track record of past rentals (either for events or vacationers) so you're not completely betting on something that may never materialize.


• Use the place personally as well as rent it out for several years, letting the rent money cover a major part of the mortgage. (Yes, you'd have to cover the rest as well as other home-owning costs.)


• Ultimately sell your current home and relocate to the vacation home full-time.

I know, still lots of "ifs" and unknowns in this plan, but it's not a completely unreasonable idea. It would take the right home in the right place, but perhaps it could be found.

Any thoughts on this idea?

Reader Profile: RF

The following is the latest post on my new "Reader Profiles" series. Each post in this series details the financial situation and challenges of an FMF reader. The purpose of this series is to help us all identify with people like us (in similar situations -- not all will be, of course, but eventually I'm sure you will find someone like you here), get to know the frequent commenters on the site, and hear some financial wisdom/challenges from people other than me.

If you're interested in contributing to this series, then drop me an email. I need more people to sign up! If you're enjoying this series, you need to contribute to keep it going. Ok, enough begging from me. :-)

Next in the series is FMF reader RF. He answered my questions (in red below) as follows:

Please tell us a bit about yourself.

I finished college in '92 getting a BS from Carnegie Mellon in Chemistry with a Computer science minor.   That was long enough ago tuition wasn't ruinous- between a scholar ship, working while in college and help from my parents I left with a few thousand in student loans.  While I was there tuition doubled, and has grown at an insane rate since.   I went to graduate school at Stanford for Chemisty -- my goal was to eventually become a professor, so if my replies on FMF ever seem like a lecture now you know why.

My research looked at molecular motion using femto second lasers,  it is a pretty obscure area but the year I graduated the Nobel prize in Chemistry went to Ahmed Zewail for his work on chemical reactions using femto second lasers.  If I had gone to Caltech I could have worked under him doing work very similar to what I did at Stanford.   I sometimes wonder how different my life would have been if I had done that, but sadly I didn't have a crystal ball back in 92.

As a graduate student in sciences I didn't have to pay tuition- Stanford had sufficient Teaching or Research assistant ships that covered the tuition and very basic costs of living (~18-20K/year).   I was pretty frugal so I even managed to save a few thousand/year to invest in a Roth IRA.  Learning to invest in the stock market was one of the really useful things I learned while I was in grad school.   The unfortunate thing was that I didn't learn about index funds- I was buying individual stocks, and unfortunately did fairly well enough for a number of years.   Why unfortunately?  Because in the long run I would have been better off sticking with index funds- and would have saved a lot of time and worry too.   I pretty much missed most of the internet bubble- I though the valuations on internet companies were insane so I avoided internet startups.  When I finally did buy one it was a roller coaster - doubling then losing almost all of its value. Fortunately I didn't sink a great deal into it, so it was an expensive lesson but not a huge financial setback.

By the time I graduated in '99 I was pretty burned out on science.  The rewards are few and the demands are great.  Maybe I’m strange I found spending all day alone in a mostly dark lab depressing.   Also, you have to be able to handle the possibility that years of work will yield nothing, even when you did a good job because you choose to research a topic that looked promising but wasn’t.

I interviewed with various companies but didn't find a lot of opportunities in chemistry- my thesis didn't have any direct industrial applications if I had been planning for an industrial career from the start I would have chosen differently.  

I turned down a postdoctoral fellowship at Livermore in their explosive division- I think that was a good choice, the environment was depressing:  I literally would have literally been working in a concrete bunker.   I also wasn’t excited about doing nuclear weapons research which is Livermore's primary mission.

I also turned down an academic post doctoral fellowship because I just didn't have the kind of drive an academic career requires.  There are a lot of people that are willing to give up all other facets of their life to follow the academic track.   I realized I just didn’t want that badly enough.

Instead I came to Austin, TX to work for National Instruments- I had used some of their hardware & software during my Thesis and it seemed like an interesting company to work for.   Overall it has been very stable employment with good benefits and a good working environment.  Some days I do miss doing cutting edge research but I can leave my work behind when I go home, and work reasonable hours allowing time for a family, personal finance blogs, and even some computer gaming.    I’m working in the R&D department doing software engineering.   I'm 41 married with two kids my son is 8 and my daughter is 4.

Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.).

I work while my wife takes care of the kids- I’m currently making $75K + bonus that might be a few thousand.

We live in Austin TX which didn't really have a huge housing boom (or bust).  We've been in our current home about ten years, before our son was born- we bought it for $156K it appraised at $172K a few years ago.  We still owe ~$95K on it (recently refinanced to 4%/15 year mortgage).

Retirement savings - I don’t think I will be comfortable retiring until I have at least the equivalent of $1M today ($2M in 20 years).  I would like to do a semi retirement at 55 or 60 working enough to cover costs without dipping into the portfolio or taking SS. I’ve kept up the savings pretty well I contribute 11% to a Roth 401K which currently has about $30K and contribute10% (4%+6% company match) to a traditional 401K which has about 100K . I contribute $10K to Roth IRAs for my wife and myself, our current balance is about $140K.

College savings -  I would like to save up enough for the kids to cover most of tuition at a state school without excessive loans.   I expect that would be about $50K for each of them. My son has about $13K saved up and I’m contributing $60/month. My daughter has a couple thousand and I’m contributing: $100/month to balance out that my son got more contributions when he was the only child.

Emergency Fund:  We have a few thousand of ready cash available and I have a very old life insurance policy that my mother started when I was a child that I could probably cover a year’s worth of expenses.   I don’t think whole life is a great investment, but after having it for 30+ years it is a reasonable safe investment as last year’s payout was 6%.

Other Investments - Employee Stock purchase plan (ESPP): My company has an employee stock purchase plan that gives a at least a 15% discount on company stock.   I’m contributing the maximum of 15% of my salary to it and then selling the stock as soon as I get the most favorable tax treatment.   This allows me to fund the Roth IRAs,  due to the downturn I have ~$36K of stock awaiting sale. I have ~$15K of Procter and Gamble stock in a DRIP account.

What are the current financial issues you're facing (saving, paying off debt, etc.)?

I want to have more money available outside my retirement accounts- for some longer term goals: to pay off the mortgage before the kids start college, and to potentially allowing for early semi-retirement.

I just refinanced to 15 year 4% mortgage.  I've set up a new TDameritrade account that I'm depositing the difference between my old payment and my current payment (~$270 month).  I’m investing in a mix of index funds that I can buy without commissions.  I'm targeting (30% VTI, 30% TIP, 20% VEU, 10% VWO, 10% VNQ) for this account. I plan to move some money from the ESPP stock and I'm debating selling off the P&G stock and moving it into this account as well.

What are your plans for the future. (retire early, build your career, etc.)?

In the short term I want to build my career, I'm doing the following things:

• Reading books on software development. This last year I read: Debugging the development process, Writing Solid Code, and 201 Principles of Software Development.


• Listening to computer science class podcasts while I drive. It's really great because you can get podcasts of lectures from the best universities for free. I've listened to an Algorithm's class from MIT and several classes from Berkley- their intermediate CS classes, a software engineering class, and a Compilers class.


• Improving my  communications skills- I've been in Toastmasters for several years and just completed the advanced communicator gold.   I also read Dale Carnegie's The Quick and Easy Way to Effective Speaking which was a great book.

The medium term say 5-6 years I’m most uncertain- I’m comfortable at my current job but the pay isn’t great.   We may also have a third child which would make me very unlikely to take big risks.

In the long term I might take a riskier job with the potential for great rewards or I might semi-retire working just enough to cover living expenses while letting the portfolio and SS grow.

What's your best piece(s) of financial advice and/or your general philosophy on personal finances?

Set up a savings and investing plan and stick to it.  I've automated the contributions and just keep them going.   When times look really bad, either stick to your plan or contribute MORE.   I increased my IRA contributions from 10% to 15% in the downturn and it has really paid off.

Save a Bundle by Keeping Your Dog Under Control

Here's a shocking stat from MSN Money:

Last year, the average cost of a dog bite [insurance] claim was $26,166, according to the Insurance Information Institute.

Ouch! That's a very nice new car!

A bit more on how insurance companies handle dog bites:

Some states give you an initial break -- a sort of "free chomp" allowance -- commonly known as the "one-bite" rule. In these states, an owner cannot be held liable until the animal's "vicious propensity" has been established, typically in the form of a first bite. Nearly two dozen states have adopted a form of the one-bite rule, most of them clustered in the western and south-central parts of the country.

So almost half the states have one-bite laws and the other half don't. I didn't see a list of what states do and don't and couldn't find it quickly on Google, but you probably can if you search a bit using your state's name in the search.

In addition to the cost of the bite itself, having a biting dog can mean other problems:

Regardless of your local laws, a dog with a checkered history can sabotage your chances of getting home insurance.

So, what's the solution? It's pretty easy actually:

"Your best bet to avoid this issue is to be a responsible pet owner," Paul says.

I see people walking their dogs all the time with no leash. To me, that's a recipe for disaster. They clearly can not control the dog and many bad things could happen -- the dog could dart in front of a car, he could attack another dog, he could bite someone, and on and on. Is it really that hard to keep a dog on a leash? Apparently so judging by the many that can't seem to do it. And apparently it's also difficult to pick up after your dog uses the potty, as evidenced by the droppings constantly left on my front yard. But I digress.

This post is simply a reminder to keep your pet under control. Doing so could save you some big money.

P.S. As I was writing this post, I found this site on "dog bite law". I got a chuckle out of it. I guess it's true that you CAN find everything you'd ever imagine -- and much you wouldn't -- on the web. ;-)

Lessons from Those in Extreme Debt

CNN Money has several stories of people in extreme debt (or at least what they classify as "extreme".) The people profiled have debt ranging from $20,000 to $522k in debt. FYI, $20k doesn't seem that "extreme" to me.

Here are the amounts the people are in debt and how they got there:

• $522,000 - Lost job in 2008 and not employed since. Tried to start a few businesses that didn't work out. Also bought some homes that appear to be money drags at this time.


• $58,000 - School loans and no job.


• $25,000 - Lost a business and then a job. (FYI, this person's story is particularly heart-breaking.)


• $200,000 - College debt and inability to find a job.


• $167,190 - School loans and inability to find a decent job.


• $8,000 (just declared bankruptcy to wipe out $100k in debt) - Lost job, husband died (and lost his income), and went back to school on loans (the current $8k.)


• $20,000 (it's hard to tell if they missed a zero or not -- he says he's spent $200k in the piece but Money lists $20k as the debt) - Funding a business

A few comments on these:

• The economy is taking a real toll on many people. I knew this intellectually, but these stories really bring the suffering to life. Many people are out of jobs and have been for a long, long time.


• For those of us employed, we should be thankful that we have jobs. I know I am.


• Where are the emergency funds? Where are the savings? I know the college students haven't had time to build up any net worth, but those 40 and above should have both large emergency funds as well as significant amounts of investments saved by this time. Apparently they didn't save while they had a chance (and yet they had nice homes with swimming pools) and spent all or most of what they had. Now they are in tough spots financially.


• That said, no matter what you have saved up, it's going to get rough if you're out of work for three years.


• People continue to make the "just go to a great college no matter what the cost and you'll get a wonderful job to pay off all your debt" mistake over and over again. People -- it's not like that! You need to match the costs of college with the expected benefits (salary when you graduate) to make college worth the expense.


• It's interesting that those in debt talk about being in "bondage" or that getting out of debt is "freedom" (maybe not those exact words each time, but the sentiment is always there.) Many people make fun of Dave Ramsey followers when they proclaim debt FREEDOM, but being is debt is a big, big burden. And being out of it is freeing indeed.


• The less debt you have, the better. The less debt you have the safer/more protected you are no matter what happens (like a job loss.) I know many FMF readers will debate the use of debt (arguing that it can be "good") and especially the thought that people should strive to be debt free, but there's no arguing that most of these people would be in much better positions if they had taken steps to be completely debt free before calamity hit them.

So, what are your thoughts on this issue?

10 Ways Not to Get a Job

US News lists 10 ways to annoy a hiring manager, but I think it's more like a list of 10 ways not to get a job. Their list:

1. Ignore application instructions.
2. Call to “schedule an interview.”
3. Be difficult to schedule a conversation with.
4. Follow up repeatedly.
5. Arrive late for your interview.
6. Arrive overly early for your interview.
7. Be unprepared for your interview.
8. Ask questions that focus solely on salary and benefits.
9. Call repeatedly and hang up when you get voicemail.
10. Angrily challenge their decision not to hire you.

Here's my take on these:

1. Fill out the application completely, but also do two other things: 1) Don't include sensitive information that's really not required if you think the company might not treat it with the appropriate care. For instance, I wouldn't give my Social Security number until we got well down the interview road. Why do they need it now? Ask them, and if you think the request is reasonable, then use your judgment. Otherwise, I'd leave it blank. 2) Treat any sections where you have latitude to answer as a chance to sell yourself and your skills (not in a cheesy way, of course, use a professional manner/tone.) Remember that getting a job is a sales-oriented process and use every opportunity you can to advance your effort.

2. Fill out the application and let the process roll -- don't try to get noticed by calling unless you have a warm contact (know someone who knows the hiring manager.) Otherwise you'll just be seen as a pest, and pests don't get hired.

3. You need to make the process as easy on the company as possible. This means flexibility when scheduling an interview and speed in response to emails, phone calls, etc. Remember, everything you do (or don't do) is leaving an impression. You're constantly under scrutiny, so be sure you're on your "A" game.

4. Be reasonable about follow up. If you call and leave a message, don't call an hour later to ask why they didn't call you back. Don't send an email and call immediately asking if they received your email. Use common sense and contact people as you would in a work setting. Being obsessive about contacts/responses leaves a bad impression -- it makes you seem desperate and out-of-touch, two things you do not want to convey to a potential employer.

5. Being late is a real no-no. I think 5 minutes behind schedule is the worst that's acceptable, but any later is a killer unless you have a REALLY great excuse (like you were mugged on the one-block walk from the hotel.) Best arrival time: 5 to 10 minutes early.

6. And being way too early is a big no-no too. People who arrive 30 minutes before the set time just make it awkward for everyone. As the article suggests, if you get to your destination early, chill out at a local coffee shop, in your car, in the lobby, etc. for a bit. Then you can arrive 5 to 10 minutes early once you're within the time zone.

7. As you know, I'm a big advocate of preparing in advance and rehearsing for an interview. IMO it's the single-most important thing you can do to help ensure interview success. So do it.

8. There will be plenty of time later to ask about compensation (FYI, you should have a feeling that the job will at least be in the ballpark of what you're looking for before you went to the interview.) So for now, focus on non-compensation questions -- like these.

9. Isn't this the same as #4? My thoughts are the same on both.

10. being a jerk when you don't get the job simply reinforces the fact that they made the right decision by not hiring you. Instead, here's what you should do when you don't get the job offer.

So, what's your take on these issues?

Reader Profile: AR

The following is the latest post on my new "Reader Profiles" series. Each post in this series details the financial situation and challenges of an FMF reader. The purpose of this series is to help us all identify with people like us (in similar situations -- not all will be, of course, but eventually I'm sure you will find someone like you here), get to know the frequent commenters on the site, and hear some financial wisdom/challenges from people other than me.

If you're interested in contributing to this series, then drop me an email. I need more people to sign up! If you're enjoying this series, you need to contribute to keep it going. Ok, enough begging from me. :-)

Next in the series is FMF reader AR. She answered my questions (in red below) as follows:

Please tell us a bit about yourself.

I am a single female in my mid-twenties.  I am a librarian at a public library in South Carolina.  I enjoy my job and my career – I’ve been at my current job for just a couple of months, but I’ve been working in libraries for about eight years.

I love to spend time with my friends and family – and I live fairly close to most of them, so that makes me quite happy.  I like to hang around outside, but it has been ridiculously hot and mosquito-ridden this summer, so I’ve spent far too much time indoors!

I enjoy watching a whole season of a TV show at once – it’s way more fun than stretching it out for a whole season.  Playing board games with my friends is something I love, but we’re terrible at finding a time when we can all play.  I have one cat with me in my apartment, and he is excellent company!  I like to read all sorts of things – here lately, I’ve been reading tons of blogs (thus having little time to read fiction).  I’ve been reading A Game of Thrones, but only a few pages at a time, so who knows how long it will take me to finish it!

Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.).

Well, it’s just me, so I’m currently living on my single income… which isn’t too fabulous, by the way.  Public librarians in the semi-rural south don’t really rake in the cash (less than 30K).  It’s enough to live on, though.  I know that I spend a little too much on housing, but I have a one year rental agreement, so there’s not much I can do about that for now.  Maybe next year?  Aside from that, I could definitely stand to cut my cable bill and not go to Old Navy so much.  Overall, though, I think I do fairly well for myself.  A lot of my cash flow is tied up in student loans, but I’ll get to that in the next section.

Right now, I have a paid-for car.  It’s a 2002 Toyota with over 150K miles on it.  It’s the car my parents gave me in college (which was ridiculously nice of them).  So far, I haven’t had any horrible problems with it… no major expenses.  But I know that cars don’t last forever and 150K miles is getting up there a bit.

I have a very small retirement fund.  It’s a 403(b) from my last job with under $9k in it.  I’m currently working on rolling it over into an IRA.  I’m currently enrolled in the state retirement plan.  I am contributing 6% of my salary, and it earns 4% interest.

What are the current financial issues you're facing (saving, paying off debt, etc.)?

I guess I already touched on these a bit.  There are a few major goals on my mind right now.  I have over $18K in student loans I’m trying to pay back.  All of those are from grad school.  I had two part time jobs in grad school, but I still lived off my loans a bit.  My undergrad degree is from a 4-year private school with a ridiculous tuition.  I was lucky enough, though, to get most of it paid for through scholarships… and my blessed parents covered the rest.  I paid for books and things with a summer job at the movie theatre and a work-study job in the college library.  Anyway, my biggest loan is $214/month at 6.55% interest.  The other is only about $30 at 3.51%.  I’m actually ahead on the smaller one, so I technically don’t even have to make the monthly payment.  I tend to just throw larger payments at it when I get a little extra saved.  I have another $350 on a credit card, and about $800 at Lending Club.  The LC debt comes from an unexpected medical expense from a year ago (before I even had an emergency fund).  The payment for that is $50/month.

I recently started some savings goals on SmartyPig.  I’ve saved enough already for my car insurance premium due in November and now I’m working on a car repair fund.  After that, I hope to start a “new” used car fund.   I know I’ll probably need a new car in the next few years.  I’m hoping my current car makes it to at least 200K!

Hmmm, retirement savings --  Well, like I said previously, I have less than $9K in a 403(b).  It’s from my old job, so I’m in the middle of getting it rolled over to an IRA.  My new job participates in the state retirement plan.  I put in 6% of my salary (with no employer matching, boo) and it earns 4% interest (not an investment account, obviously).  Once I get my other account successfully rolled over, I’m going to start contributing another 6% into that.  So, that’ll add up to 12% savings for retirement.  I would like to save more, but I’m going to start there and see how it goes.  I’d probably like it to be at least 15%.  Thoughts?

What are your plans for the future. (retire early, build your career, etc.)?

At this point, I don’t really have many plans.  I’m single, and I would like to be married with children at some point… but that’s not really something I can plan for (I’m not even in a relationship right now).  If it happens, it happens, you know?  So, I should theoretically plan for my future as I am right now, a single woman.

I don’t have any huge plans for my career.  I like where I am now but I honestly don’t know how I’ll feel about it a few years down the road.  I don’t know if I want to move up in my career or stay where I am.  I certainly could earn a lot more money if I moved up, but I don’t know if I’d like the responsibility that comes with the job.

Eventually, I suppose I’d like to own a home, but that’s in the distant future.  I have other financial obligations at the moment, so it would be years from now before I could afford that own my own.

What's your best piece(s) of financial advice and/or your general philosophy on personal finances?

Goodness, can I even offer any advice?  I think I need too much of it before I can offer any in return.  I don’t think I have any grand philosophy, either.  At least, nothing that that everyone hasn’t heard before.  Maybe, for some people, “spend less than you earn” is pure genius, but it doesn’t help me out much.  I’ve pretty much always done that (with a few slip-ups now and then), but spending 2 bucks less than I earn really doesn’t do me much good.  And some say, “pay yourself first,” which I also do.  That’s a pretty good idea (for me, anyway).  I guess I would say that finances are an important matter, so take them seriously…  but not too seriously.

The Best of Money Carnival

The Best of Money Carnival is now up. Congrats to all participants and especially the winning post, Learn to Negotiate Better Prices.

Enjoy!

What Do You Spend on Home Entertainment?

I'm entering my third year of "dancing with the devil", also known as "buying cable service from Comcast." I'll detail my dealings with them in a future post, but before I do, I wanted to ask you all the following:

What do you spend (per month) on home entertainment?

I'd like to know what cable (Comcast, Time Warner, etc.), movie (Net Flix, Blockbuster, Red Box), web service, etc. you use to watch shows/movies at home, how much you pay per month, and what services you get (HD, how many channels, etc.) -- or if you do none of this at all (or have an alternative strategy.)

I want to compare myself to the average FMF reader and see where my spending is versus yours. So if you'd let me know what you do and how much it costs, I'd appreciate it. (FYI, I'll be using this information for my upcoming Comcast update.)

Defining Stewardship

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why.

Recently some of the Christian Financial Alliance members answered the question "In your own words, define 'Stewardship'?"

Here's my answer:

"Stewardship is acknowledging that you’re a manager of God’s property that He’s entrusted to you, knowing that He’ll want an account of your performance someday and that eventually all you manage will be passed on to another to do the same.”

The other responses are interesting as well. If you want to see what others say, click through to the link above.

If you want to see more of my thoughts on this issue, check out The Proper Perspective, Living a Life of Genuine Stewardship, and Thoughts on Stewardship.

I'm interested in knowing your take on this issue. How do you define "stewardship"?

Another Example of Getting a Job through Volunteering

I've detailed how I got a GREAT job by volunteering and wanted to share another (though small) example of how you can find new work by volunteering to help charitable organizations.

Every summer my kids help a local church with their Vacation Bible School. It's not our church, but is a good one with a nice summer program near our house. The kids have historically helped by serving treats to younger kids, running games, and the like.

This year they found out that my son has the ability to run a soundboard (a skill he learned while volunteering at our church.) They were impressed with his work and told him that in the future they would call him for paid gigs like funerals and weddings. No, it's probably not going to be a fortune, but it will be some nice income for him and is something he wouldn't have known about (or been skilled at for that matter) if he hadn't volunteered first (FYI, he's looking at expanding into the video department at our church in the fall, another skill that may go somewhere.)

Volunteering is a great way to network -- and we all know the power of networking when it comes to growing our careers and making extra money. So here's a friendly reminder to volunteer. Not only will you be helping others, but you may be helping yourself to some additional income or a great new job.

Star Money Articles for the Week of Aug 15

Here are some pieces I found especially worthwhile this week:

• Prairie EcoThrifter lists ideas for selling a home faster.
• Financial Success for Young Adults has a review of Betterment.
• My University Money is having a scholarship contest.
• My Personal Finance Journey answers a reader's question about funding a 401k. 
• Little House in the Valley lists three ways to save on school clothes this fall.
• Free Money Wisdom lists 13 part-time jobs with benefits.
• The Digerati Life discusses time management.
• The Sun’s Financial Diary says Social Security is going to take a hit.
• Lazy Man and Money likes an Amazon feature.
• FrugalDad says to delay ownership on things you can't afford.
• BripBlap covers needs versus wants.
• My Dollar Plan is taking a practical vacation.
• Money Smart Life wonders what keeps you up at night.

Enjoy!

Help a Reader: Investing During College

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

I am a college student entering his last year of my bachelor's degree (with law school immediately following graduation). However, for the last year of my degree I am, due to unforeseen financial reasons, forced to take student aid to pay tuition. Since I am over 24 I receive quite a lot of financial aid between Pell Grants and different loan types.

This coming fall semester, I am slated to receive around six thousand dollars as a "refund" for the difference between my awarded aid and what was needed for tuition. Now, I am a relative newcomer to your blog (two to three month regular), and I have read a lot of what you (and other PF bloggers) have said about investing. But I am still not sure what the best investment route would be for this refund check.

My question to you is: Once I receive this refund money, what do you believe is the best way to invest it? Seeing as I have to repay this money once I am done with school (~ four years), is it best to go long term a la index funds, or are short term (couple years) investment a better idea?

I appreciate any insight you can provide on my dilemma.

What are your thoughts for him?

Five Bills Not to Automate

Yahoo lists five bills not to automate as follows:

• Mobile Phone Bills
• Insurance Payments
• Utilities
• Gym Memberships
• Cable Bills

Here's what I do with these:

• Mobile Phone Bills - My phone is paid for by my company, so there's no bill for me to handle.


• Insurance Payments - Do people really put these on auto-pay? I never even considered it.


• Utilities - I do pay for utilities with auto-pay. Their reasoning is that if you do this you'll miss looking at details of your bill and could miss some problems. I still get the bills electronically and look them over each month, so there's really no issue IMO.


• Gym Memberships - I have a membership at my local pool and they don't take credit cards or any sort of auto-pay, so it's not an issue.


• Cable Bills - I can't imagine a scenario in which I would give Comcast access to my credit card or bank account except maybe temporary insanity or coma. Their bills are wrong a good amount of time and dealing with them is tough as it is -- imagine if they simply sucked money out of my account in advance and I somehow had to fight to get it back. I'm guessing that would be a losing cause.

In short, I only auto-pay with companies that I trust. Everyone else gets paid one at a time as the bills are due.

How about you?

Financial Appearances are Rarely What They Seem

Here's a piece from US News that talks about avoiding money envy. The key? Realize that the extravagant lifestyles (or even "nice" lifestyles) most people have are funded with debt on a financial house of cards. They note:

What we don't realize is the amount of debt that is supporting other people's lifestyles. We naturally assume that other people can afford what they have and do, when in fact a majority of Americans report living paycheck to paycheck. Twenty years ago, we saved $11 out of every $100 we brought home. Now we don't save anything. Because most people don't talk openly about money issues, especially money stress, we're fooled into thinking it must just be we who are struggling, when in fact it's most people. And once you get beyond the poverty level, income is almost irrelevant: The more you make, the more you can borrow, and people certainly do.

Ha! Lots of truth here IMO -- based on the stats I've seen through the years as well as counseling people one-on-one. Yes, people may look "wealthy" but oftentimes that "wealth" is funded with debt -- or at the very least by a lack of savings (spending all that they earn and saving nothing.)

It's also true that most people spend more when they make more. Sad state of affairs, but it's what happens more often than not in my experience.

They go on:

I went behind the scenes and found out that things are not how they look. That's such a relief and makes it a lot easier to ignore what others have and do.

First, I went literally next door and asked my neighbors, whose life looked so cushy, what was really going on with their money. Somehow I never thought those Marc Jacobs clothes and trip to Paris were charged to a credit card, even though I knew the statistics about credit card debt. It shouldn't be any of our business, but finding out that on her side of the wall, my neighbor was going online constantly checking her credit card balance and stressing out over how to pay for those clothes helped me get over that she dresses more stylishly than I do.

Appearances are very deceiving. We don't see what's going on behind closed doors, but what I've learned, and surveys show, is that there's very widespread anxiety and stress over our personal finances, pretty much regardless of how much money we're making. When we find out we're in the same boat, we can start to calm down, be more rational about our money choices, and conquer our tendency to envy.

So the next time the "Joneses" next door leave driving that brand new BMW on the way to their two-week trip to Hawaii, just remind yourself that appearances are deceiving. Sure, they MAY have saved up in advance to pay for all they have. If they have, good for them. But odds are, they have not saved and are, in fact, funding their high-on-the-hog living through debt.

Consider this your financial reality check for the day. ;-)

Would You Go Back to School If You Could?

The Wall Street Journal asks if you would go back to school if you could. In other words, would you change what you studied (and thus your career) if you could do it all over?

Personally, I wouldn't because:

• I enjoy the field I'm in and can't think of another that I'd like better.


• My field has a good level of compensation and combined with point #1 above, if I went back I'd probably be doing something I don't like as well for less than I make now. That would be a lose-lose proposition.


• After many years of searching, I've finally found a company I love as much as my field of work. I can see myself retiring from my current company years down the road and never working anywhere else (unless I choose a part-time retirement job.)

So, how about you? Would you go back to school if you could?

A Reminder of How Expensive Some Cities Are

I've noted how I like to watch House Hunters, so when I saw this post about why watching it is bad for the author's finances, I had to check it out.

The article is quite humorous as he points out the difference between home costs and features in various places shown on the TV show and what they cost in New York City. Here's a set of quotes he highlights from a couple looking for a place in Texas:

My (least) favorite quotes from the first house ($550,000):

• It's not as big as it seems.  It's not quite 4,500 square feet.
• It's only 4 bedrooms, but there are a lot of "extra" rooms.
• I'm a little upset that it doesn't have a pool.
• When referring to the wine "closet": "It's no cellar, but it will do."

He then contrasts this with what someone looking for a place in NYC might ask:

By comparison let's list the top questions you ask and statements made about $500,000 houses apartments in my neck of the woods:

Do the roaches come with the apartment or are those extra?

Is that an airplane or a train passing by?  (the answer is most likely "both")

The following is all stated from the same physical location while spinning in place:

• Here is the "kitchen area."
• There is the bedroom area.
• There is the living area.
• The bathroom area is in the kitchen area.

Just so you know, the old lady across the hall cooks a lot of garlic and curry-based dishes - for her twelve cats.

And, of course, taxes and maintenance are another $2,000 per month.

It's a funny, funny read. Check it out if you have time.

The serious part is that the post highlights a fact we all know (and I "harp on" from time to time): where you live has a big impact on your finances over the course of your life. Those in especially high cost-of-living cities need to be sure they consider the real and substantial costs of living in a particular city as part of their overall financial planning/strategy process.

More on How to Protect Yourself If You Use a Debit Card

My post on How to Protect Yourself if You Use a Debit Card generated this comment that I thought was worth sharing with all of you:

I work in credit card fraud monitoring and I can share some tips for keeping your debit card safe. Fraud on a credit card is an inconvenience - we shut down the card and file on claim on the charges and you never have to pay on those charges at all. Fraud on a debit card can be devastating as the funds can take a while to get returned to your account and sometimes you have to go through more steps to prove that the charges aren't yours. Now that I know what I know about how card fraud can happen, I:

1. Never use my debit card at a gas pump. Setting aside the fact that some gas stations can put a hold of up to $100 or more on your account while the transaction is pending, gas pumps are one of the easiest and most popular places to place skimming devices that are used to read your card info and make a counterfeit card.

2. Never use the card in a transaction where the card leaves my hand/sight. If they have to run it in the back, they get my credit card not my debit card.

3. Never use the card to hold a tab open or as any sort of collateral (ie. they keep your card until you return the darts or pool cues at bar).

4. Never use my debit card at a stand alone ATM. If it looks like someone brought the machine in on a truck and dropped it off there, the risk is that they may have. If the ATM isn't built in and sponsored by my bank or another well known bank, I don't use it.

5. Don't use my card with small independent vendors. I am happy to shop at the local farmers market and support my community farmers but I won't use my debit card there. I don't think they are going to try and steal my money but they don't have the security resources that bigger merchants have and that puts my account at risk. Plus it saves them money if I just pay cash as they don't have to pay transaction fees.

6. Always pay attention to how the credit card machine looks. If it seems to be falling apart or held together with tape or looks tampered with or damaged in any way, I won't use my debit card there.

7. Always cover my hands when I enter the pin number. You know those pin head size cameras they always have on tv shows? They really exist. No one gets to see my pin number but me. It should also go without saying that putting your pin # on a piece of paper and taping it to your card is a really bad idea. If you absolutely have to write it down (not recommended), make sure it is locked up safe at home somewhere and not tucked in your wallet or purse. You would be shocked at how fast a thief can empty your bank account when they don't even have to bother guessing your pin number.

Merchants and banks take your security very importantly because it affects their bottom line as well. They want to keep your information safe and most do a great job. But it never hurts to help them on that front by using the card wisely and being vigilant about your own security.

Sounds like a decent set of safety measures to me. What do you think?

Dying American Stores

Yahoo lists eight once-great American store chains that are now dying as follows:

1. Sears
2. Dillard's
3. OfficeMax
4. Office Depot
5. The Home Depot
6. Foot Locker
7. The Gap
8. J.C. Penney

My take on these:

• Sears - Is it any wonder they are dying?


• Dillard's - I can't say that I've ever shopped at Dillard's.


• OfficeMax and Office Depot - We usually go to Staples because it's closer and I don't see much difference between the office-supply stores. And the only things I buy at Staples are those that are on sale - I'm not a regular shopper there.


• The Home Depot - Menard's is our first choice of home supply store and Lowe's is second. HD stores just seem old and dated to me. That said, they do have some rose spray that I can't find elsewhere, so I'll stop in now and then.


• Foot Locker - The last time I was in FL was 1995.


• The Gap - I have never shopped there.


• J.C. Penney - Penney's used to be a regular go-to spot for us as a family. But we haven't shopped there in years.

So, where do we shop instead of these places. Some of our regulars:

• Walmart - Good for cheap, basic staples.


• Target - Good for higher-quality basics (when you need them) and some clothing.


• Costco - Great for everything! ;-) We're there every other week or so.


• Meijer - We shop Meijer at least a couple times a week for groceries and pick up general merchandise there as well on occasion. We also often get gas at their stations since they are quite competitive -- even with Costco -- and I can get 5% back on my credit card versus 3% back at Costco.

How about you? Do you shop at any of the "dying" stores? If not, which stores do you like best?

Always Ask for a Raincheck

A few weeks ago Walgreen's had my favorite snack, Blue Diamond Almonds, on sale for $4.99 a bag. Since the almonds are usually $7.99 a bag, we regularly stock up when there's a sale (which Walgreen's has regularly, BTW). We had noticed the sale in the Sunday paper before church and decided to stop by Walgreen's after church and nab several bags.

After our service we stopped at the Walgreen's near the church (which was EXACTLY on our way home -- we would have driven by it anyway, so the stop was convenient.) We went in to buy several bags of the "roasted salted" flavor and several of the "smokehouse" flavor (I like the smokehouse taste, but eating only those is overpowering, so I buy these two and then blend them.) Well, they had plenty of the roasted salted version but were out of the smokehouse. We picked up four of the former and headed to the counter.

My wife asked if they had any of the smokehouse flavor in the back. They checked and they did not. So my wife asked for a raincheck. The lady asked how many we wanted a raincheck for. We said "five." She filled out the form, noting that the rainchecks NEVER expire. So now we can go in and buy our almonds at $3 off anytime we want (up to five packages.)

We piled back into the car, then hit another Walgreen's near our house on the way home (again, we used the path we would have driven anyway to get home, so we didn't spend any extra gas/effort to do this.) We went in, bought four bags of the smokehouse flavor so I could blend them with the others later, and went home. The next day I took all the packages to work where I store them in a cabinet until needed. The almonds have a "best when used by" date of May 2012, so there will be no problem in me finishing them off by then.

Just wanted to share with you that it's good to always ask for a raincheck. We could have easily said we'd simply check another store when the first store was out of what we wanted. But by taking 15 seconds to ask, we now have a sale we can use any time we like. Saving $15 (five bags at $3 each bag) in 15 seconds is a pretty good deal, IMO. ;-)

10 Things Your Parents Won't Tell You

Smart Money lists 10 things your parents won't tell you. Here are the ones that intrigued me the most:

1) "We're rich."

Surprise inheritances aren't uncommon. In a recent U.S. Trust study, 52% of parents with assets of $3 million or more said they haven't told their children just how wealthy they are, and another 15% haven't even said told them that they're well off. Why are they withholding? Most parents think they have plenty of time to talk about money later, and don't want the knowledge of wealth to be a burden, says Joseph Falanga, the president of the National Association of Estate Planners & Councils. There's also the fear that kids might become lazy or make bad choices in anticipation of a windfall.

Yes, there are many surprises, I'm sure, when kids find out what their parents are worth. And I'm sure it's on both sides of the equation -- some kids are surprised that their parents have so much and some are surprised that their parents have so little.

The point above made me think about the kids of the millionaires next door. Because the families live so frugally, I'd bet that most kids will be completely shocked when they find out how much their parents are worth.

Key questions for the parents will be how much to leave to the kids (versus giving it away, for example) and when to give it to them. Our current will has the money split between the kids and charities. The kids will get their portions over a decade or so with the last payout being when they are 30.

4) "It's my fault you're bad with money."

Parents often do a poor job teaching their kids about finance, say advisers. "If I could wave a magic wand and have one wish, it'd be that parents and kids could sit down and have a candid conversation about money," says Ted Beck, president for the National Endowment for Financial Education. Kids pick up on parents' financial actions, but it's not always clear to them what they should be emulating or avoiding. That has long-term financial consequences. The 2011 National Foundation for Credit Counseling financial literacy survey found that 42% of Americans picked up their money habits from their parents. Yet 56% of those adults do not have a budget, 28% don't pay their bills on time, 32% don't save for retirement and 33% don't save at all. Scarier: more than half would still give themselves an "A" or "B" grade in financial literacy.

Ahhhh, the reason most Americans are in such financial hot water -- they learned how to manage their finances from their parents. But the parents knew next to nothing about handling money and wanted to buy everything their greedy eyes found "fun." Hence they spent like drunken sailors to have the latest "everything" and are up in debt to their eyeballs. The kids see how it is done and repeat the cycle. Is it any wonder why the average American has such a poor financial standing?

Ok, so maybe I'm exaggerating a bit. But it's not far from the truth. Parents who know little about managing money (which is most people in the U.S.) do pass along that lack of knowledge to their kids through their examples. The kids see poor financial habits, think they are "normal" and "good", and practice them themselves. It's a sad state of affairs.

5) "You're ruining my retirement..." and 6) "...just like I'm going to ruin yours."

I had to laugh on the combination of these two. Which is worse, kids sucking money from parents for college and post-school support or parents sucking money from kids for retirement and long-term care? Ugh! It's a mess no matter how you look at it.

So what's the solution? Save for your own retirement and long-term care needs. Help your kids as you can/want with college and later in life. Keep overall spending low and save as much as you can and you should be fine.

What Not to Keep in Your Wallet or Purse

Yahoo lists ten things not to keep in your wallet or purse as follows:

• Social Security Card
• Your Passport
• Passwords/Pass codes
• A Non-Password Protected Phone
• Your Checkbook
• Too Many Credit Cards
• Too Much Cash
• Gift Cards/Certificates
• Jewelry or USB Devices
• Receipts

Here's what we do (between my wife and me):

• Social Security Card and Passport - Seriously? Does anyone carry these around? BTW, I like their tip to copy your passport when you travel and carry the copy.


• Passwords/Pass codes - Nope, neither of us carry these.


• A Non-Password Protected Phone - My phone has a "connect the dots" pattern to get it unlocked. My wife's Tracfone doesn't, but if we lost it it wouldn't be the end of the world.


• Your Checkbook - My wife carries hers in her purse. I rarely carry mine on me, but I do often have it in my briefcase when I travel.


• Too Many Credit Cards - We use three main cards at this time and carry them with us wherever we go since we pay for most purchases with a card.


• Too Much Cash - I don't carry any more than I'm willing to lose (like the article suggests) and my wife carries very little at all.


• Gift Cards/Certificates - My wife carries these for us, but again, if we lost them we wouldn't be devastated.


• Jewelry or USB Devices - We both wear little jewelry and don't carry USBs with us, though I do in my briefcase when I travel for work.


• Receipts - Really? We carry these all the time (I put them in my money clip.)

I think if you carry what's needed to get you along -- cash, credit cards, etc. -- and don't take along the obvious (Social Security card, passport, etc.) then you'll be fine in most cases.

What's your take on the list?

Applying for Jobs You're Not Qualified For

US News lists five job search habits to break. One of the items on their list is as follows:

3. Applying for jobs you’re not qualified for

While you should work toward attaining your dream job, that dream also needs to be realistic in terms of skills, qualifications, and experience. You’re wasting your time if you don’t meet the minimum qualifications for the job opening.

What to do instead: Look for jobs where you meet the minimum qualifications. Or, if you’re set on a specific type of position that you’re unqualified for, consider additional education or skills training to meet those requirements.

I agree AND disagree with this advice.

I agree that you are wasting your time if you apply for jobs that you're so under-qualified for that you'll never get the job. Some examples:

• The employer wants 20 years' of work experience in the field and you're fresh out of college.


• The employer is hiring for a highly technical degree that requires specific knowledge and experience, and your degree and experience are in a totally unrelated field.

You get the idea -- if it's so far out of the realm-of-reason, just move on. You're wasting your time in applying.

But I disagree that you should pass up other opportunities if you are close (though still under-qualified) and have other skills that appeal to the employer -- ones that close the gap in his mind.

I once got my dream job despite the fact that I had 30% less work experience than what they wanted. However, I did have an impressive national award (it sounded impressive, which was all I/they cared about, but it wasn't really that big of a deal) to my credit. I had also worked for well-known and admired employers in the past. I was able to successfully convince the employer that my shorter work experience was at least equivalent to what they wanted because of the companies I worked for and the results I had while there. If you want more details, click the links in this paragraph and you'll get additional insights into the process.

In another situation, the company I was working for wanted to hire someone with a college degree and five years' experience. We ended up hiring someone without a degree but who had 10 years' experience with great work-related accomplishments. The college degree requirement was waived because the guy was a clear winner who had proven he could get things done.

So my advice is that if you're close to having what the employer wants and have something else that he may value as much as the area where you're lacking, then go ahead and apply. IMO you have a good shot at being considered and you won't be wasting your time by submitting your name.

Agree or disagree?

The Best of Money Carnival

The Best of Money Carnival is now up. Congrats to all participants and especially the winning post, The science of building a diversified investment plan.

Enjoy!

Car Maintenance Tips that Pay Off

Yahoo has a video detailing car maintenance tips that pay off. Their suggestions:

• Follow your owner's manual. Only get oil changes when you need them (not every 3k miles like most mechanics suggest) and use the type of gas that gets you the best mileage for the buck (which is regular unleaded. This is, of course, as long as your manual doesn't say you need premium gas.)


• Tend to your "check engine" light when it goes off. Many times it comes on simply because the car's gas cap wasn't tightened enough.


• Wash underneath the car. Dirt and grime get on it (of course) and can be a problem in the long-term.

They also shared a couple of interesting points as follows:

• AAA estimates average annual auto costs as $9,000. This includes EVERYTHING -- maintenance, insurance, depreciation, etc. This is an estimate, of course, that's dependent on how much you drive. They estimate costs at 59 cents per mile if you want to calculate the costs for your car.


• They suggested that once a year you fill the car with a tank of high octane fuel. The guy in the video says that it cleans out your engine.

My thoughts on these:

• I follow my car's owner manual and get oil changes (synthetic) every 10,000 miles. My first two years' of service are free (my dealership offered it), so I don't know if I'll go back to regular oil (I believe my manual says I can use it now and then) once I'm paying for the service myself.


• My wife had the "check engine" problem with her gas cap for a bit of time. The light would then go off once we simply tightened the cap correctly.


• I don't think I've ever washed underneath a car -- isn't that what rain is for? ;-) Any of you do this?


• 59 cents a mile, huh? I'm trending towards 20,000 miles in the first year of having my new car, so that's a cost of $11,800. Yikes!!!


• I had never heard the "fill your car with high octane fuel once a year" suggestion before. Have any of you heard this? Do you do it?

Overall, cars seem to be fairly reliable if you simply take care of them. Read the owner's manual, do what is says, and you'll be fine in most cases IMO.

How to Balance Giving and Saving

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why.

Recently some of the Christian Financial Alliance members answered the question "How do you balance the biblical principle of saving up for the future and the biblical principle of giving generously?"

Here's my answer:

"Here’s how my pastor explained it to me (and I think it works): First of all, the tithe (10%) comes off the top. After that, any money given needs to be determined by the individual (or couple) after prayer. God calls different people to give different amounts, so there’s no “right” answer as to what should be given after the tithe.  Given this, I recommend starting with the 10-10-80 budget — 10% given away, 10% saved, and 80% on living expenses. As time goes on, people earn more, etc., the “10s” should get bigger and the “80″ should get smaller.”

This was the general consensus of the people responding, though most had a bit of a different spin on it. If you want to see responses from others, click through to the link above.

I'm interested in knowing your take on this issue. How do you balance the biblical principle of saving up for the future and the biblical principle of giving generously?

Another Reason Not to Quit Your Job Before You Have Another One

Several years ago I suggested that you should never quit your job before you have another one. A few months later I reminded everyone that very few jobs are worse than unemployment. Needless to say, I've done my part to encourage everyone to hold on even to a bad job until a new one is secured.

Now the Consumerist gives another reason not to quit until you have other employment -- it will be harder to find a job. Turns out some companies are not adding the requirement that you have to be currently employed before they will consider you for a position. The details:

A disturbing and disheartening trend for job-seekers is the spate of listings out there that say if you don't have a job, don't bother applying for this one.

While having long periods of no work on your resume have always been tacitly understood as being a prospective employer turn-off, now the job listings are being explicit. "Must be currently employed" or "Must be currently employed or recently employed" is a common phrase on online job listings, reports the New York Times.

Believe me, I know what it's like to have a terrible job that sucks the life out of you. I've been there before -- a couple times. But no matter how bad a job is, not working at all is much worse, especially as it drags on month after month after month. Stick with the terrible job until you find a great place to land, THEN make the jump.

Free eBook on Gold Investing

Just found this today: Sound Mind Investing has a new (and free) ebook on investing in gold. I haven't read it yet (though I did get a copy) so I can't comment on what I think of it, but I thought some of you might want to check it out.

I do trust and value SMI's perspective on investing, so I'm guessing that I'll agree with their take on what to do about gold.

And for those of you who are suspicious, no, I was not compensated in any way for posting this.

Reader Profile: SS

The following is the latest post on my new "Reader Profiles" series. Each post in this series details the financial situation and challenges of an FMF reader. The purpose of this series is to help us all identify with people like us (in similar situations -- not all will be, of course, but eventually I'm sure you will find someone like you here), get to know the frequent commenters on the site, and hear some financial wisdom/challenges from people other than me.

If you're interested in contributing to this series, then drop me an email. I need more people to sign up! If you're enjoying this series, you need to contribute to keep it going. Ok, enough begging from me. :-)

Next in the series is FMF reader SS. She answered my questions (in red below) as follows:

Please tell us a bit about yourself.

I'm female, 24, and almost done with a Master's degree in environmental science. My parents are both teachers (though my mom was stay-at-home until about 7 years ago), and although we never had a great deal of money growing up, my mom taught me a LOT about being financially responsible. I feel really blessed that I had parents who taught me sound financial principles, because I know a lot of people my age who never really learned how to manage money or set up even a simple budget.

Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.).

Because I'm a grad student in the physical sciences, my tuition is covered and I earn a living stipend of ~$1500/month through working either as a teaching assistant or research assistant.

I live in an area of California with an extremely high cost of living, but I've got a tiny studio for $550/month (reduced from $600/month after being a good tenant for a year). It's smaller than my college dorm room, and all I've got to cook with are a microwave and toaster oven, but I don't mind because I pay $200-$300 less per month in rent than most of the other graduate students I know.

The rest of my budget, including groceries, household supplies, phone, and a bit of spending money generally runs to $200/month. About half of that is for groceries, because although I cook all my food from scratch, eating healthily is important to me. Mostly I buy a lot of whatever fruits and veggies are on sale, and then supplement that with eggs, chicken, and other cheap protein sources. I also make my own bread, which helps a lot :)

This leaves me with about $750/month, which is broken up like so:

• Tithing: $150
• Roth IRA: $100
• Student loans: $500

I live extremely frugally because it's important to me to save for the future, and to quickly pay off my small remaining student loans, which are unsubsidized.

What are the current financial issues you're facing (saving, paying off debt, etc.)?

Hard work in high school earned me a full-tuition scholarship for my undergraduate studies at a private university, but I still had to cover room and board, which was $11,000/year. I worked in the summers and during the school year, but still had to take out some student loans because my parents couldn't afford to help me financially. I graduated with ~$15,000 in loans, but in the two years I've been in grad school, I've reduced that to ~$3000, and I'll have the loans completely paid off by the time I graduate this fall. I've chosen to aggressively pay off loans rather than contributing more to a retirement account because:

a) my loans have an interest rate of 8%, so interest builds up faster than it would accrue if I put my loans payments in an index fund instead.

b) I really want to graduate loan free so that I can make future plans based on what I actually want to do, rather than what is necessary to make my student loan payments. I'm toying with the idea of traveling for a year, and I couldn't do that if I had loans hanging over my head.

I do understand the value of saving for retirement early, so I started a Roth IRA during my senior year of college, and though I haven't been able to contribute as much as I'd like, it's up to about $3000.

I also have an emergency fund of $5000, because I think it's important to be prepared for unexpected expenses.

What are your plans for the future. (retire early, build your career, etc.)?

I've got a couple job prospects for after I graduate, but things are still quite uncertain at this point. If I can't find a job relatively soon after finishing, I'll probably take off to travel for a while, working as I go (I've got a dual citizenship that will allow me to get a work visa pretty easily in most European countries, which is very useful...)

Once I do settle down with a job, I plan to continue to live like a starving graduate student for as long as possible, so that I can continue to save most of my paycheck. Most of that will probably go to retirement savings, since I know that starting to save early makes a huge difference in the amount of interest that builds up over the years. I'd also like to increase my cash savings, because eventually I'll probably want to buy a house. 

My plans will obviously have to be adjusted depending on what the future ends up holding, but I'd love to retire early. Alternately, I'd be equally happy with a flexible job that may not pay a lot, but provides spare time enough to travel and pursue my hobbies.

What's your best piece(s) of financial advice and/or your general philosophy on personal finances?

I think my general philosophy for personal finances is based on contentment. A lot of the grad students I know complain a lot about how we don't make enough to live on, but I honestly feel like our stipends are generous. I know that by living frugally now, I'm setting myself up for a good financial future, so I don't mind that I don't have all the newest electronics or a pretty car (or a kitchen... that's actually what I wish for the most). Being content with what I have (and reminding myself that I'm quite well off compared to 99% of  the world) makes it so much easier to stick to my budget. I owe a tremendous amount to my parents for modeling this attitude for me growing up.