Reader mailbag: Golf

I spent a good chunk of yesterday attempting to teach my children (four and two years old) the fundamentals of golf. The results were interesting.

The younger one, my daughter, thought the best way to get the ball in the hole was to pick up the ball and put it in the hole.

The older one would swing every time with as much power as his little body could muster and would either miss entirely or knock the ball quite far, often much further than the hole.

Maybe they need one on one lessons.

I am searching for an excel spreadsheet template, or similar product, that will produce an combined amortization for several “parents plus” student loans. We have a total of five such individual loans, and we make a single payment monthly to Dept of Ed. that is applied over the several loans. They each have different Int rates, and staggered starting dates, as we have not consolidated the loans related to our youngest, who has one more year of college remaining. I would like to start snowballing (as Dave Ramsey would put it) these loans, and would like to chart the best candidates for prepaying principal, if that is possible.

I have looked at MS at Home, Templates, page and asked this question on a forums page, but did not see anytype of response.
- Sandy

If you’re looking for just a debt reduction calculator, I’d look at the spreadsheet available from Vertex42, a site that just makes lots of Excel templates. I downloaded it and it seems at least close to what you’re looking for.

If you’re doing that, though, it’s vital that you also prepare an overall budget so that you have some idea of what you can realistically afford to put towards the snowball. The best free spreadsheet for that (by far) is Charlie Park’s PearBudget spreadsheet, which is really good.

Excel really can do many of the tasks that you might want to use Quicken or other software for if you don’t mind manually filling in the data.

It’s older parents with dementia. When older people start with dementia they can’t handle their finances like they used to (or maybe worse than they used to). They often will hide it too. I have personally seen this in some friends and also in our own family. They will run up huge credit card debt which they think they can pay but can’t. The credit card companies will then take advantage of them by calling and demanding huge payments by intimidating them. Then, often, they don’t even remember authorizing payments and can’t make it until next payday. They let sorry family members and friends take advantage of them (with “loans”) because of their generous nature or because, in their mind, they still have that unlimited income. Sometimes a family member will move in with them “to help them out” when they are actually helping themselves to their income and free-loading. If would advise any responsible child of an older adult to keep their eyes open for clues that this could be happening. It’s hard to get the parent to admit it and a pure nightmare to get it cleaned up.
- Cindy

This is absolutely true. I witnessed this in my own family within the last few years, as my grandmother began to slip into dementia a bit during her final year or two of life.

She began making lots of strange choices, spending money in very strange ways, and often failing to make ends meet at the end of the month after having no problem whatsoever doing so for decades beforehand. It caused untold problems.

The best thing to do to prevent this is to talk about it now, before dementia ever even has a chance to begin. Plan for this with your parents. Come up with a power of attorney arrangement that allows you to protect your parents from themselves when the time comes.

Please would you let your readers know how you’re progressing with your Rubik’s cube challenge. I was really intrigued when you first mentioned this in The Simple Dollar.
- James

I can do most of the solving of a Rubik’s Cube very quickly. I can solve a single face in about twenty to thirty seconds and line up the adjacent rows with about another ten. After that, I get really, really slow for some reason.

The thing is that I haven’t really mastered (or figured out) about half of the solution, but I’m really fast at the other half. I’m not really sure why this is, other than I need to practice a lot more mostly at the second half of the solution.

I practice with it on occasion even now.

What are your thoughts on pre-paying a mortgage if the person does not plan on owning the house for very long?

I bought my place in Nov. 2008 and plan on staying here maybe another 5 years. I currently owe $143,350 on a fixed 30-year loan at 6.375%. Lately I’ve had an extra $100-200 at the end of the month, and I am trying to decide whether to pay down the mortgage or invest the money. I have no other debt, have a very comfortable emergency fund, and am maxing out my Roth IRA. I am 27 and single with no kids, so I am comfortable taking some risk with the money. I feel to some extent like I should be paying the mortgage off, but it is not a huge stressor for me, and knowing that I will never pay it off entirely is not really motivating me to put more money toward it. I think I would be happiest with whichever route saves/earns me more money in the end.

What I would love your help with is calculating how much I could save in interest vs. how much I could earn by investing at a reasonable rate of return (either way, assuming $100/month for 5 years). There are lots of amortization calculators online but they all seem to show savings over the life of the loan, not a shorter period. I am struggling with how to calculate this.
- Andrea

If you put extra money into your mortgage, you’re essentially buying an investment that says “I return 6.375% a year (or maybe less, depending on your tax situation) but I am very illiquid.” In other words, it’s a solid, steady return, but in exchange for that, you don’t have the opportunity to get that money out very easily.

As a short term investment (five years would be short term), the stock market is akin to gambling. It’s truly impossible to estimate how much your five year return would be in a broad-based stock investment. It might be 0%. It might be 15% per year.

If you’re looking for a very stable investment over that time frame, your mortgage is probably your best bet. Other highly stable investments don’t return as well as your mortgage does right now.

My husband took a buy-out/retirement offer from his work, after 33 years of service. He’s 51 and has wanted to retire for about 25 years now. (semi joking)

His original plan was to find a part-time job earning about $5,000. per year, continue to pay some taxes and contribute to Social Security. From what we were told, if he does not pay into SS, he will be penalized when he reaches retirement age.

He is loving his life right now and really has no desire to find a job. Is it possible to pay into SS on your own? We live quite well off his pension and have ample money to contribute to SS. I can’t seem to find this info anywhere!
- Kelli

For your husband’s situation, the comment that he has to keep working in order to receive Social Security benefits likely isn’t true. You need to check out the annual document you receive from the Social Security Administration to make sure, but it’s likely that if he has been working full time for 33 years, he’s accumulated more than enough work credit to earn his full benefit when he retires.

You might want to read through this great Social Security primer from CNN Money for more information on that.

If he doesn’t want to work and doesn’t have a financial need to work, working just to pay more into Social Security isn’t really necessary.

I’ve begun the search for a used car somewhere in the range of $7-12K. One problem that I feel I will encounter is how to pay for the car. I fear that I may not be able to get a loan with a decent rate, or at all, because of the fact that my debt is very high, even though I’ve never missed a payment, I wouldn’t have a co-signer, and my FT employment history is very short at only 4 months. Do you have any suggestions for finding a decent loan with a decent rate for someone fresh out of school?
- Andre

My first suggestion would be to get a co-signer. I had a co-signer on the first vehicle I ever purchased (thanks, mom and dad!); without it, my student loan situation (and likely my burgeoning credit card debt) would have made such a loan a complete non-starter.

If you don’t have anyone who can co-sign the loan with you, your best avenue is to just keep building your credit in a positive direction right now. Keep making your loan payments on time (each time you do this and your debt goes down a little, that’s a positive). You should also make sure you’re seeking out a full time position in terms of employment, both for the higher income and for the stability.

I don’t know exactly what your credit looks like, but you may be eligible for a car loan now. You might want to check your credit report from the government and then use a FICO score estimator just to see where you’re at.

I am in my early twenties, and for some time now I’ve been dating this man and things look promising. What worries me about him is that he has a “spender” mentality- he’s had his parents’ financial support for most of his life (and his mom’s pampering), and his idea of “holding back” is not spending who knows how much on collector comics, etc. His paycheck is small. He’s listened to me about reducing his spending (eating out once every week and a half is an accomplishment), but the root of the problem seems to be that he likes to own stuff- something I can’t wrap my mind around. It is not enough to watch a movie, for example, but the more fancy the purchase is the happier he is (HD, blue ray, etc.) In a few months he is enlisting in the armed forces, something I hope helps. Regardless of how this relationship turns out, what can I do to help him overcome this destructive mentality?
- Katherine

Very rarely can someone else force a person to change their behavior or mindset. The need to change has to come from within.

Maturity might be part of the answer. He might also need to hit financial bottom at some point, or have his pampering cut off from his parents. Something has to change for his mind to change and if he’s able to survive doing what he does now, he really doesn’t have that motivation.

The military might help with this, but it also might not make one bit of difference. It depends on how his mind processes what he picks up there.

The best thing you can do is keep your finances separate for as long as possible and don’t bail him out of trouble. Yes, it’s a “sink or swim” mentality, but if you give him a life raft, he’ll think he can keep on “swimming” the way he always has.

I knew that I had some old debt sitting in collections but I had been ignoring them, focusing instead on the current debt I’ve had. I recently pulled my credit report so I could focus on paying down these debts and was shocked at what I found. I owe over $6,000 to one hospital for medical expenses from when one of my daughters’ was a month old, and $2,500 to the medical group and hospital system we are a part of.

The hospital debt is broken up into 2 collections. At the time, we had Medi-Cal (low income health insurance in California) who said if we paid the first $1,800 they would pay the rest. I don’t know if that still applies because it’s gone to collections.

The medical group is a lot of little debts, ranging from $50-200 with only one debt being significantly higher than that ($700). I honestly don’t know what they were for at this point. The medical group itself doesn’t seem to care much because we still see them regularly and no one has even mentioned how much I owe or that I owe.

I really want to take care of these debts, but I don’t know where to start. I don’t get harassing phone calls or letters about these debts. I’ve been told that I can settle for less than I owe, but since it’s the same companies for multiple debts, I’m not sure how they would settle. I really want to pay these off, but I don’t know where to start. Right now I could pay lump sums on a lot of the little debts, paying one off every month. There is no way that I could pay off the lump sum of the larger debts right now and I wouldn’t have a lump sum to pay the $6,000 to the hospital for at least a year.

Do you have any advice on what to do with all this medical debt?
- Jacqueline

I’m going to assume that you’re committed to paying these debts off instead of just trying to dodge them.

The first thing you need to do is go through your records and figure out what all of these debts actually are. Make sure that they’re legitimate and not based on identity theft or other mistakes.

Once you’ve done that, call up Medi-Cal and find out if the debt consolidation still applies. My guess is that it does not if they’ve sold off the debt to someone else, but I’m not entirely sure what the situation is based on this question.

After that, you’re probably using the right approach in just paying off each of these debts as you can afford to.

Good luck. This is going to just take some time and patience to resolve.

I’m in my late 20’s and currently between jobs. I have no debt, no big financial responsibilities, and $75K in savings. I’m also in a long distance relationship with my boyfriend of 3 years. He lives in Europe. We are trying to be together, but it is very hard.

I moved to his country for a year to be with him. I had a job that I liked, but it was low paying and not something I’d want as a career. So I moved home, worked, and saved some money. He is looking to move here with me, but he is not as mobile as I am. I also live in a city that has a high cost of living, so living here on 1 income is hard enough, let alone no income.

Now I’m considering giving up on my local job search and moving back to be with him. I am not 100% certain that he is “the one”, but he is important to me and I am willing to give it a shot. My problem is that I know it is not a financially-responsible thing to do. We have talked about it and he is able and willing to support me. But I read blogs like The Simple Dollar and have many financial goals for myself, and do not like to be financially dependent on my partner. I could earn more working here than living and working in Europe – but then I would be without him.

Is this worth it?
- Ginger

If you have $75K sitting in the bank, there’s no question what you should do: go. Go there, get a low-paying job for a year, and just spend that time figuring out if he is the one for you.

If you are in a situation where there is a life-altering decision in front of you and you have at least some economic stability, you should always take the road less traveled.

If you don’t, you’ll regret it for the rest of your years, and that’s not something that’s worth holding in your head.

A background on me: 28 years old, no wife, no kids, great stable job. I now only have two pieces of debt: a mortgage with a $165K balance @ 5.25%, and a $21K student loan that still has about 15 years left, but it has an interest rate of only 2.13%. I now have about $7K in my emergency fund, good for around two months of expenses. I’ve also got about $16K in a brokerage account. I currently contribute about 9% of my $90K base salary to a 401(K) and my company throws on an additional 3%, and I also contribute another 4% to a Roth 401(k). On top of my base salary I get an additional $30K to $35K a year in cash and stock bonuses.

As of right now I have a little over a grand left to spend each month after all of my expenses. My question for you is, what should I do with it? Should I bump my emergency fund up a couple months? Pay down my mortgage? Increase the money I put in my 401K or my brokerage account? Surely I shouldn’t pay off the 2.13% student loan, right? Any help would be greatly appreciated!
- Nick

Again, this is all about goals. Where do you want to be in five or ten years? Your answer to that question changes what you should do here.

Do you want to switch careers or go back to school in five years? If that’s the case, you want to hammer your debts hard, as reducing your monthly expenses is the best thing you can do for that, and bolster your cash emergency fund quicker.

Do you hope to be considering marriage and children? If that’s the case, cash savings or even investing would probably be the best thing to do.

Do you hope to be earning as much as possible and be shooting for retirement as early as you can? I’d have every dime possible jammed into retirement accounts and what you can’t jam into there jammed into brokerage accounts.

It’s all about your goals. Where do you want to be in five years? Figure that out first.

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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