Reader Mailbag: Public Cell Phone Use

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Rebuilding a life post-divorce
2. Freelancing baby steps
3. Power of attorney question
4. Emergency fund or invest?
5. Does prayer work?
6. Getting your spouse to participate
7. Splitting bills with roommate
8. Student loan or emergency fund
9. Asking child to move out
10. The value of study abroad

A while ago, someone spent most of a movie on their cell phone, either texting or whispering into the phone. Normally, I don’t care, but this was in a movie theater, where everyone had paid several bucks to watch a film.

I finally asked the fellow if he wouldn’t mind not talking during the film and he utterly ignored my request after a quick glare in my direction.

Such situations really fill me with distaste and move me ever closer to simply not wanting to go to theaters when I could just watch a film at home with friends.

I’m 49, divorced and live on the west coast. I have two children, 5 and 8, who live with their mother in Europe. I have a GED, and am 70% through a degree in Criminal Justice with an online university, which charges $7500/yr for books and tuition. For a variety of reasons I have only worked 7 months out of the last 8 years, though I earned a six-figure salary before that as a mainframe administrator. Sadly, after living in Europe for several years I seem unemployable in the IT field, and am happy to seek a change anyway. I’d like a decent job and would be more than happy with something basic. At the moment I have the following assets left:

Cash – $7k
IRA – $83k
Roth IRA – $27k
Annuity – $19k
Credit Card Debt – $0
Sub. Student Loans – $7200

That’s not a lot of money for someone my age, but I have never been interested in owning property or even a car (I don’t have one). Me ex has a lot of money, so I don’t have mandatory child support payments.

Now we get to my question: I’ve come up with a plan to complete my C.J. degree by next October by taking 12 credits a semester, as I had a lot of transfer credit. In order to do this I will need to partially empty my Roth and take on some student loan debt as well. A full $6k of what I need to spend would just pay for health insurance. Since it would be used for education expenses, I wouldn’t be penalized for spending the Roth.

It’s unclear what state the economy will be in next year and by that point I will have worked only 7 months of the previous 9 years! The alternative to going to school seems to be a $9 or $10 per hour job in a warehouse or something, with no health insurance and a shared apartment. I don’t mind working (at whatever), but one needs some hope for the future. I am currently looking for a job to help defray my expenses.
– Philip

First of all, don’t worry about the things you cannot control. You can’t control what happens to the economy. What you can control is your own ability to maximize the value of your criminal justice degree.

What can you do to maximize that value? Hit a home run in your classes. Seek out internships. Ask questions of your professors and learn more about where their professional focus is. Build relationships with your professors and with your classmates.

Don’t worry too much about finding a job right now. Instead, build every possible bit of value you can into your 12 credits a semester. Work only if it fits around that, and don’t be ashamed to take a low-paying but easy job.

I don’t own a TV, a car, or a landline. My work pays for my cell phone and internet. I rent an apartment with a roommate. I rarely go out (maybe once a month, at most), and I don’t buy much “stuff.” (If I lived in the States I’d have a serious problem with bookstores, but I don’t, so all is good.) Ever since I started dieting my supermarket spending has been slashed in half. And in general I try to track my spending and am working on becoming more frugal. My two small dogs are my biggest non-essential expense. I need to pay for a dog walker to walk them at noon and for someone to come give them medication at specific hours while I’m at work. I’m 34 years old and single (unconnected, just for general background purposes).

Money-wise: I don’t have any debt (thank goodness). I earn the equivalent of $2150 (in Israeli shekels) a month. I recently started saving for retirement — I save 7% of my pre-tax salary, and I receive a company match. In addition, I’ve started saving about 12% of my post-tax salary — half in an emergency fund (currently have about a month and a half’s worth, but I’d like to have 6 months) and half in a closed 10-year savings account. I don’t know what I’ll do with the money in 10 years, but I’m sure it will be useful. Maybe I’ll need a car? Maybe a vacation? Who knows.

My point: It’s my dream to own an apartment. I hate dealing with landlords, I hate not feeling at home, I hate not being able to paint the walls and hang shelves and pictures without feeling guilty. All I need is a one-bedroom apartment for myself. I looked in the newspaper, and even the smallest apartment costs a ton. I calculated that I’d need to save about $750 a month for 10 years to have enough money for a down payment. (Am I calculating incorrectly? Let’s say a $300,000 apartment times a 30% down payment divided by 10 years divided by 12 months.)

I don’t have $750 a month extra. So I was thinking of taking on another job or working freelance (at what? I really don’t know). Until recently, I was waking up at 5:00 am and getting back from work at 10 pm, so it wasn’t possible. But now I get home from work usually by 8 pm. This week I got a random freelance editing job, and I’ve (re)discovered that I have no self-discipline to work from home. I waste hours before I’m able to sit down and work.

So I’m feeling pretty miserable. Any suggestions?
– Shawn

My suggestion is to find another place to work. Is there a library available to you, or a coffee shop where you can sit at a table and be productive?

It’s clear from your description that freelance work is a key part of the path you’re taking to your future. That means you have to focus on that work, and that also means you may have to give up some things to make it work (like your evenings). I gave up a lot of evenings in the early days of Money360 and I’m very glad I did.

Focus on doing the best freelance work you can. If you can’t get it done at home, look elsewhere for a place to work.

Background: My husband has been diagnosed, and is being treated for, Adult ADD. One major problem of ADD is a restricted ability to be disciplined, which particularly manifests in money management. Shortly after we married, he ran up a substantial debt, and I took over all money management for our family.This was prior to his diagnosis. This financial arrangement is not only okay with him, it helps him because it gives him strict spending guidelines and accountability. His counselor approves this as well.

I have a fairly serious health condition which is under control at the moment, but could become an issue at any time. My question is: Is there such a person as a “financial caretaker” or a profession that assists families to manage finances? Given my uncertain health situation, it makes sense (to me) to find someone who could step in should I become incapacitated. If I should become seriously ill, we would need that person more than ever because of medical bills.
– Megan

I think you’re looking for someone to give some degree of power of attorney to. In that case, the first place I’d look is within your family and closest inner circle. Who do you trust deeply enough to open this door to?

In either case, I’d suggest talking to your family lawyer about how to move forward in a way that protects your future. If you don’t have a regular lawyer, then I would ask among friends and family for a good recommended family lawyer to discuss the situation with.

This isn’t a situation to be taken lightly. Spend some time thinking about who you trust most, then a trustworthy lawyer and look at your power of attorney options.

I’m in pretty good (not great) financial condition. I’m $1700 away from paying off my debt (a student loan) and am planning to use the non-essential money from my paycheck as well as dipping into my savings (at about $2000) to pay it off at the end of this month. At the beginning of October, I should be debt free with about $1000 in savings my monthly budget (around $1700) in checking (and nothing else—no retirement or anything of that nature). It’s not a great position to be in, but I have a very steady job and it’s important to me mentally for the debt to be paid off. I’m two weeks away from my 27th birthday, single with no kids with a take-home pay around $2600 per month and live in a low-cost area of the country. The job I’m in right now does not carry benefits, so I’m responsible for health insurance and retirement contributions.

My question is probably one that a lot of people have: where, in your opinion, do I go next? I have three things that I realistically need to fund at this point: to build back my short-term savings (things that I want or need to purchase within the next year or so; I’ve dipped into this account to pay off the student loan, so I need to take extra money from my paycheck to repay the savings I’ve borrowed from), an emergency fund and retirement. After my monthly budget, I have anywhere from $800-$1000 leftover from my paycheck. Of that, $400 is earmarked for short-term savings (e.g. my brother is getting married next summer, so I’m saving $100 per month for the bachelor party), which leaves me between $400-$600 per month to repay short-term savings, start an emergency fund and invest in retirement.

My head tells me to pay back short-term savings and start an emergency fund, but now that I have no debt, I’m really itching to start investing. If you were in my situation, what would you do?
– Jordon

Built an emergency fund – your head is right. The reason for doing that is because if you do have an emergency, you’re either going to dive right back into debt or cash in that investment, quite likely at an inopportune moment (Murphy’s Law, anyone?).

I would get an emergency fund of $1,000 first. Then, I would make sure that your debt is paid off. After that, I would shoot for an emergency fund that could cover 3 months of living expenses. If you’ve done all that, then focus on investing for the future.

If you don’t have that emergency buffer, you’ll find yourself in a situation where you’re either dipping back into debt or you’re cashing in some of your investments. Either case is a big loser, so just get a good emergency fund in place first.

Do you think prayer works for causing positive change in life?
– Kelly

Absolutely – and it has nothing to do with anything supernatural.

Prayer works because it provides an uninterrupted opportunity to reflect on what’s important to you and where you want to go in the future. You pray for the things you care about, helping you to define what you need to be focusing on. Praying for a good outcome puts a positive image in your mind, helping you to work towards that positive outcome. In short, regardless of whether a higher power is listening, prayer can be a positive thinking tool.

As to whether praying for someone else makes a difference, I’m not sure that it does. If you already believe in an omniscient God (as most religions do), God is already aware of what you desire for an outcome of a given situation.

The best purpose of prayer, I think, is reflection. It gives you a way to talk through the problems in your life, and that’s very rarely a bad thing.

I am a professional credit counselor, and I have couples ask me all the time how to get the other spouse to participate more in their family finances. The truth of the matter is, I don’t know. I’m in the same boat. My husband is not interested in the finances. I pay the bills, allocate money to savings, pay off debt, and handle our portfolio, and after all of that is covered, I tell him what we have left for miscellaneous spending. I’m not even sure if he could answer simple questions like, “What is your monthly household income?” or “What do you pay for cell phone service?” I know that part of the problem is that I’m a control freak about the money – I’m not saying I want him to take all the responsibility – I’m too OCD about our finances to completely hand them over. All I want is him to be interested in how much debt we have, to show an interest in the bills on payday, and to help me track his spending instead of expecting me to figure it out from our online checking. He is getting out of the Air Force in 3 years, and my goal is to have all of our debt except the house paid off in that time. I think to make this work, I’m going to need his complete support. Any suggestions on what I can do to get him on board?
– Melissa

The challenge of this situation is that you’ve already framed your marriage in such a way that you’re simply handling all of the finances. To your husband, this simply means that Melissa is taking care of it and what I have to worry about is maintaining my income and managing my spending allowance.

Marriage is always a division of responsibilities. Some couples divide responsibilities in different ways. Are there some areas where your husband really steps up to the plate so that you don’t have to?

If you want to get your husband involved, start by talking about goals. What do you want to be doing in five years? Ten years? Transition those conversations into what you need to do today to get there. If you start by framing personal finance around things that impact his life (and, on its own, knowing the amount you’re paying for cell service does not impact his life), you can make progress in that direction.

Right now, I have a room mate, and we split the bills and rent. My room mate pays me in cash and then from my account I pay bills with online bill pay, and rent with checks.

Is there any issue in doing this?
– Alvern

The only issue I see is that you’re completely relying on your roommate to always come up with that cash. What exactly happens if he/she doesn’t come up with that cash?

If I’m understanding it correctly, you’re the one with your name on the lease and the bills. If your roommate stops paying, there’s no real skin off of your roommate’s back in that situation.

My advice to you would be to either get your roommate’s name on the bills or maintain an emergency fund that will help you cover the bills if/when your roommate doesn’t come up with the cash.

I am 25 years old, and after some hard work, I have paid off all of my credit cards, etc., and I’m left with student loans that total about $50,000. $35k are government loans that have been consolidated, while the rest are private student loans of various amounts that I can’t seem to find a way to consolidate. (Either it’s not possible, or I’m too dumb to figure it out, so far! It’s also possible that my credit score is too lousy for anyone to even talk to me about it.)

My question is this… I am considering whether I should start building a more significant emergency fund (the bare minimum being about $4200, which would be 3 months of living expenses, including minimum payments on my student loans) or if I should just try to save up about $1000 or so and then throw everything at the students loans until I at least get rid of the private ones?

Right now, the minimum payments on the student loans are so high that I can only put about $150 a month extra toward savings, or toward paying off the loans. I get occasional bonuses and overtime that I would of course add to that, but I don’t want to plan for that at this stage. I have had many disasters happen in the past few years that wouldn’t have put me in the financial tailspin that they did if I had just had a healthy emergency fund to fall back on. However, I’m also worried about delaying payments on my student loans for so long while I save up the emergency fund. The minimum payments are so high right now that if something happened to dramatically reduce my income before I saved up the emergency fund, there’s no way I could make the payments, and at least one of them warned me that I wasn’t likely to have another forebearance approved, no matter what the circumstances.

Any advice would be appreciated. I’ve stared at this problem until I’m cross-eyed, and I think another (more experienced) perspective would be extremely helpful.
– Misty

If you have worries about making ends meet in the future, your best bet is to build up that emergency fund as your highest priority.

Think of it this way: in a year, you might have had twelve months of smooth sailing and a well-stocked emergency fund. At that point, you do have the freedom to choose to pay down that debt or to keep that emergency fund.

On the other hand, if you pay down the debt and have a bumpy road over the next year, you’ll be in far more debt trouble than before.

Don’t let impatience get in the way of a smart choice.

I am 63 and recently divorced. My son is 33 years old and he still lives in my home, an arrangement that started when my wife and I were still married. He refuses to leave the house on his own unless it’s for a very specific purpose and then he’s anxious to come back home. He spends most of his time in his room with his door shut. I am not sure how to handle this situation. I cannot afford to retire while he still lives here.
– Jeffrey

The first thing you need to do is lay down some basic rules in this situation. For one, I would simply state that if your son wants to continue to live at home, he has to begin regular meetings with a psychologist.

I say that because a continuing desire to live at home into one’s thirties, coupled with a fear of ever leaving the house, indicates some psychological troubles that are best dealt with via a professional.

If your child is unwilling to do this, you have to make up your mind as to whether you’re going to evict him. I think, for both of your sakes, that eviction would be the best choice if he refuses to take any steps towards improving his psychological situation. Something needs to change here, for both of you.

Do you think a student should study abroad if it means taking on additional debt? I’m a finance major at a public university and would really like to study abroad for a semester or academic year. But, I’ll be financing almost the entire cost with federal student loans (Stafford, Parent PLUS). I don’t want to increase my student loans more than I have to, but I also know I can’t redo the next 3 years. It feels very “now or never”. I view the time spent abroad as an investment in my future with business being so global in today’s world. But I don’t want to use that to easily justify an additional $10,000-$20,000 of debt.
– Ryan

If study abroad is treated as merely a semester or a year of partying in another country, it’s not worth it. If it’s treated as a time to actually grow, build new relationships, and gain experiences and references that were simply not available at home, it is.

Things like study abroad – or, for that matter, a college education itself – only show off their true value if they’re approached by a person who wants to maximize that value, not by a person who wants to skate by or is just looking to goof off.

If you’re approaching this with seriousness, then study abroad is a good choice. If you’re looking at it as an expensive way to see what it’s like to party in some other country, then you might as well just party at home and save yourself some cash.

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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