Reader mailbag

Tips and advice to readers on their personal finance questions.

By , Guest blogger

I had forgotten the rewards and challenges of having a newborn. In some ways, both the challenges and the rewards are amplified by also having a four year old and a two year old at home.

My son is 20, and is a straight A student at college but doesn’t feel that he knows what he really wants to do. Everything, academically, comes easy to him. (I know he doesn’t like manual labor. LOL.) How can he decide what he really wants to do with his future when he’s got a ’surplus’ of brains but a lack of motivation? (He actually asks me these questions, and wants to find a “passion” but hasn’t found one at this point of life yet.) We’re not wealthy, just conservatively ‘comfortable.’ I try to expose him to a variety of opportunities to explore, but he’s so ‘frugal’ (from us) that he doesn’t want to explore options as much as I would like. Do you have any suggestions??
- Carolyn

What does he talk about? What does he spend his free time reading about or learning about when there’s no requirement to do so?

Recommended: Business

Whatever that is, it’s your first clue as to where he should be headed. If he’s constantly following politics, for example, then he should delve into politics. If he’s constantly writing, then he should be a writer. If he’s constantly tinkering with things, then he might want to consider engineering.

One of the biggest shames of our culture is that we send kids to college who have no idea what they want to do with their lives, so they go and spin their wheels for years, racking up expenses and debts.

I live in a low-income urban environement and am looking for Personal Finance material that is directed at low-income folks. As I have begun to do some one hour classes I am realizing that the issues are very different. If you can point me in a direction that would be awesome.
- Andrew

Most of the resources designed for low-income people aren’t centralized at all. There is no “one stop shop” for such resources, as most resources are either created by small groups that don’t market themselves well or are written for a very broad audience.

One place worth looking at is MyMoney.gov. Again, some of the material there isn’t written explicitly for low-income people, but there’s a lot of good content there.

Also, CNN Money’s Money 101 has a lot of good resources, but you definitely have to pick and choose among them.

wondering how much you spend a week on groceries – prior to the new addition (congrats by the way.) And what you include as groceries (ie. would you include baby stuff like wipes).
We’re a family of 4 – 3 yr old girl and 1 yr old boy.
- Jordan

I calculated this a while back and found that our spending is roughly on par with the national average for a family of four. However, I think what we spend that money on is atypical.

We do a ton of things to reduce our spending – grocery lists, meal plans, and so forth – but we also buy things like fresh saffron, fresh morels, Maytag blue cheese, organic milk, grass-fed beef, and so on. I’ll do things like buy a bottle of brandy to aid in making coq au vin and include the cost of that bottle in our monthly food accounting.

Our “food” spending does include a few non-food items. I don’t go through grocery receipts and excise the three or four non-food items purchase, like a tube of toothpaste or something like that. So our true food expenditure is probably lower.

I have two almost maxed out credit cards with interest rates of 14.4% and 11.4%. I would like to get a credit card with a 0% balance transfer option so I can transfer/ close out one of them. I have applied for two so far and keep getting denied. Am I hurting my credit (which is good despite my amount of debt) by continuing to apply for different 0% cards? Should I just bite the bullet and try to pay them down at their current interest rates? I have been trying to pay them down (paying more than minimums) It just doesn’t seem like I am getting anywhere.
- Kay

Applying for a credit card lowers your credit rating by about 5 points for 6 months – here’s the details on a hard credit pull versus a soft credit pull.

I do find it a bit odd that you haven’t had any success at all applying for a 0% balance transfer option, though.

If I were you, I’d check my credit report at AnnualCreditReport.com (the one that’s actually run by the FTC and is actually free) and make sure there isn’t anything you don’t know about on that report.

I am a soon to be college graduate (2 weeks away!). I am on an active job search, but I haven’t had any offers yet. Right now, my plan is to live with my parents for a few months while I work an hourly job at a restaurant, save money, and keep searching for a job. My family has started to ask me what I’d like as a graduation gift, and I’m at a loss as to what to tell them. I used to be a gadget freak, and I still have a weak spot for those things but right now I’m doing fine with what I have currently.

Since I’ll be living at home and putting my current apartment stuff in storage, I don’t have an immediate need for anything apartment related. I’m having a hard time thinking of something practical that would help me in this transitional period of my life. Do you have any thoughts?
- Phil

Don’t go for stuff, go for experiences.

Instead of asking for a material item, ask for a ticket to De Gaulle Airport and a pass on Eurorail. Get your passport and backpack around Europe for a few weeks after graduation, just seeing things. It might very well change your ideas about the future.

Similarly, you could turn this into a volunteer project. Work at a Romanian orphanage for six months. Work in a small African village. These things are golden on a resume, plus they’ll give you a new perspective on the world.

This is probably one of your best windows in life to really grow as a person. Take advantage of it.

I am 41 and my wife is 27. I have no debt while she has over $100k – mostly student loans, a reasonable car loan ($5k) and no credit card debt. The loans range from 2% to 8% with monthly payments of $1050. We both earn $80k a year in secure jobs. I have about $200k in savings and she has none, but our 403b is quite generous: 12% of annual salary a year from our employer with nothing required from us.

I handle the finances and in past years I’ve worked down her debt with some success. Meanwhile she tried her hand at a doctoral program that added $27k to her existing debt. She has since dropped the program and those loans are now due for repayment.

My question is more philosophical than mathematical. How much responsibility should I take for alleviating her loans?

1) I can pay the minimums with her money, knowing it will take decades for her to be free of debt and her lessened income will impact our choices.

2) I can decimate my savings, leaving us both to start out at zero again, assuming I will never be able to make up that ground and will eventually become a financial burden to her in old age.

3) I can continue to do what I can where possible to pay down the debts and “buy” her loans on occasion to lessen the interest burden, thereby improving her situation while hampering my own ability to save.

Personality wise, she’s the spender and I’m the saver. She always assumes more money is around the corner, whereas I’ve been laid off and gone through the economic downturns both personal and global. She hasn’t given up on the doctorate either, just postponed it.
- Leigh

It sounds as though you don’t have merged finances at this point, which is fairly unusual for a marriage. It took my wife and I a year or two to get everything in line, but once we combined our finances, it was really a good thing.

If you’re truly committed to your marriage and your finances and life are bound together for good, then her debts are effectively your debts because they affect your household cash flow and savings potential. The sooner you get rid of them, the better.

If you don’t feel that confident, then there’s a marital issue involved that you should work through.

http://www.gulfbank.com/personal_checking_interest.html

We live in Baton Rouge (just moved here) and are thinking about changing from Regions to this bank. (as well as opening an account at a local credit union).

A 4.01% checking account is amazing!
- Trish

This offer is just like many other promotional interest rate offers. They look great until you break down the specifics.

The big catch here is that “0.10% APY will be paid on the entire balance in any cycle where the requirements are not met.” That’s an awful APY.

What are the requirements? The big one is that you must have a “minimum of 12 check card purchases” each month. I very rarely reach that number in a given month. If I do, it usually means that I don’t have a good grip on my spending.

Of course, not having a grip on your spending means overdrafts. And if you don’t overdraft but don’t use the card enough, you get only a 0.10% APY. For me, that’s too many requirements on my spending just to earn a bit more interest on my checking account.

Twenty year son wants to move out and in with a friend. Advantages and disadvantages of this? Friend owes him money and son does not have full-time career or job yet nor does the friend.
- Chris

If neither one of them has a full time career or job, how are the bills at this apartment getting paid? Food? Electricity? Rent?

I’ve got to assume that someone external is writing the checks for these things, and I think that’s a very bad idea. It sets up a pattern of financial dependence that doesn’t really give the person who is dependent any motivation to break free from. Why should they? They’re not working and the bills are getting paid.

If he gets a full time job, there’s nothing wrong with him renting an apartment with a friend and you might even give him a bit of financial help when he leaves. But an ongoing financial dependence is not a good thing for either of you.

I don’t understand why people buy lottery tickets. Talk about an awful investment.
- Andrew

Why do people gamble at all? There’s usually two reasons. One, it’s an enjoyable pastime for them – they love the game. Second, the reward curve is uneven, giving the player the potential to multiply his money. Unfortunately, the multiplication is usually zero, but most people are a bit overconfident about such things.

The big issue is, from a societal standpoint, that people who are able to step back and carefully think through such decisions generally do not participate in lotteries and instead invest their money elsewhere. At the same time, that skill of analysis helps them to earn more money in their life.

Yes, lotteries are not a good way to spend your money if you look solely at costs and returns.

How’s the baby? We want updates!
- Kellie

He’s doing quite well. He’s home from the hospital – as is Mom – and he seems to be doing well.

He currently has his days and nights mixed up, meaning he’s up a lot during the night and sleeps a lot during the day. We’re trying to use light signals to help with this, keeping him in bright rooms during the day and dim rooms at night.

He’s already a surprisingly sound sleeper – when he’s asleep, he tends to stay asleep very strongly until he decides to wake up. Our oldest child is a very light sleeper, but our daughter sleeps similarly deeply.

We like him. He’s a keeper.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag. However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

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