The biggest highlight of this time of the year is the opportunity to spend time with people that you just don’t get to see that often during the year.

We have some friends that we rarely are able to see during the year because of conflicting schedules. Today, we’re going to have lunch with them.

Over the next few days, I’m going to see several other people that I see maybe once or twice a year and really look forward to seeing again.

That’s the point of this season, and that’s why I love it so much.

Q1: Pets, roommates, and repair costs
I have a question for you that you may or may not be able (or want) to answer. I’m 25 years old and about two years ago, I saved up and bought my first piece of furniture–a couch from a local upholstery store. I chose the couch from this store because my parents had bought one from the same store when they were first starting out and STILL have it now 23 years later–good quality if you ask me. Fast forward to February of this year and I’m living with a roommate who had just adopted a dog. Over the course of a few months, the dog started to chew on things around the house and I noticed that he started to work on the hem of my couch. I asked my roommate if she would mind keeping the dog in the crate when we weren’t around the house because I was worried that he might destroy my couch. For a while she did this. Then one day as we were both leaving for work, she decided to leave him out and put a throw over the couch saying that it would prevent him from chewing on the couch, even though I expressed concern. When we returned from work that evening, the dog had shredded the arm of the couch all the way down to the frame.

When I went back to the store to inquire about fixing this, I was told that if they had the same fabric in stock, it would only cost about $100. However, they no longer carried the fabric or could find any of the same fabric. The next option I was given was to remove the fabric from the back of my couch and use that to replace the arm, and just pick some random fabric to go on the back. The third option was to completely reupholster the couch, which would cost $500 for labor plus however much the fabric costs (anywhere from $15-25/yard).

My question is this: I feel like I’m stuck between a rock and a hard place. I saved up and used my hard earned money to buy a couch (it cost $1600) with the expectation that I would have the couch for years and years to come. I bought it new and am not really interested in having it look like a patchwork couch, otherwise I would have bought a used couch and fixed it up. I ideally would like to have been able to find the same fabric. Is it unreasonable for me to ask my roommate to pay for the cost to completely reupholster the couch since her dog destroyed it? If I had had the couch for longer, I would have maybe been willing to pay for the cost of a new fabric with her paying the cost of repair, but since I had the couch for less than two years, it was nowhere near being ready for new fabric. What’s your opinion? If my dog had destroyed something of hers, I expect that I would be responsible for cost of replacement (because my dog is my responsibility). But it makes me uncomfortable to ask her to pay close to $1,000. We’ve kind of tiptoed around the issue for a while now, but I’d like to address this sooner rather than later, and definitely before our lease winds down.
- Courtney

You are not out of line at all to ask her to pay to repair the couch. However, unless your roommate is a very good person, be aware that your request will likely have a negative impact on your roommate relationship.

Her objection likely won’t be to paying you for the repair. The objection will probably come in the high cost of the repair.

For example, I don’t think the total cost of every couch I’ve ever owned in my life adds up to $1,000. I would be scared to own such a couch because of the possibility of damaging it. I have actually not sat on the couches and chairs of friends because of the cost of it and the implication that I would be liable if I inadvertently damaged the couch.

Those types of feelings have a very strong chance of popping out in this conversation – that the presence of such an expensive couch made your roommate uncomfortable. How do you respond to that? It depends heavily on your roommate, but it’s something I’d think about before having the discussion.

Q2: Gift receipts
What do you think about taping gift receipts to the bottom of items given as gifts?
- Annie

I encourage it whenever possible. If you’re buying that person an item that comes from a store where it can easily be returned (like a department store), then you should give that person the option to do so.

For example, if I buy a DVD for a friend, I usually look at it as, “I bought them this DVD because I think they’ll like it. If they already have it, though, I do want them to have some DVD they would like.” Thus, it makes perfect sense to tape the receipt.

I extend a similar feeling to matters of taste. If I buy someone a vase because I think they’ll like it, I know that I might be pushing my tastes on them, so I’ll attach a receipt so they can pick out a home decor item that they would like.

I have absolutely no problem with someone returning a gift that I’ve purchased for them.

Q3: Why get married?
I am 25/f, never married, not in a relationship, no kids.

I am wondering about the nature of marriage. It seems to me that marriage is not about love – at least not ALL about love.

I have been thinking that marriage is about finding a suitable partner that you LIKE and see fit for the long term familywise. Am I wrong to think that, with regards to marriage, love is not the essence? As I get older and more experienced I find it harder and harder to “fall” in love – instead, there are many more other feelings – respect, security, help.

I am asking myself – is marriage like a business-contract in personal life? Like, you find a partner you can “work with” when it comes to creating a family, a person you can rely on and who can rely on you, but who you are not in love with – maybe someone you really like, someone to share your views on the world, someone to help you make your children happy?

I don’t want to sound like a person who doesn’t believe in love, but really, is a marriage based mainly on love? Can you really have love if you don’t have respect for your partner or if you are financially strained or if you and your partner are looking in different directions?
- Nona

I can’t comment on other people’s marriages, but I can comment on my own.

Sarah is the one person in my life that I can rely on completely. There is nothing in my life that I think or feel that I can’t or won’t tell her. Nothing. Because of that, she’s a constant part of my thought process on everything I do, from decisions about The Simple Dollar to who we’ll visit this Christmas season. The closest description I can give is that of a best friend, but it goes so far beyond any “best friend” I have had prior to her in my life that such comparisons are like comparing the moon and the sun.

Because of that deep reliance, I am quite willing (as is she) to incorporate her as a deep part of everything I want for my future. Simply put, my future isn’t a future I want if she’s not in it.

Marriage, to me, is simply a public way of saying that to everyone. I’m publicly telling others that Sarah is someone I trust that deeply and intend to spend the rest of my life with, for better or worse. I don’t take that pledge lightly, and I don’t intend to ever break it.

I think there are a lot of people who do not take it that seriously. I don’t know what marriage means for them.

Q4: Lonely Christmas
I’m going to be spending Christmas Day alone. While this does have a good side – no Christmas gifts to buy! – I am left feeling rather lonely and depressed about this state of affairs. Do you have any suggestions for making this day go any better?
- Marcus

It sounds like you want the “people” part of Christmas without the “gift” part of Christmas (at least in part).

If that’s the case, make the “people” part of Christmas part of your day as much as you can. Place a call to the people you care about most that day and wish each of them a wonderful Christmas.

Often, the reason people give gifts is to express that they care for someone in a way that they have difficulty expressing with words. I don’t think that’s an entirely bad thing, as long as the gift genuinely comes from the heart and doesn’t come from the Wal-Mart discount rack. If this causes you to re-think Christmas gifts, go get a few small items and then distribute them quietly and anonymously on the doorsteps or mail slots of people you care about on Christmas day, just to remind them that you care for them.

Another idea: spend Christmas day helping out at a soup kitchen or some other type of volunteer work. Every time I do such work, I find it very deeply fulfilling.

Q5: College athletic compensation
Do you think college athletes should be directly compensated beyond their scholarship?
- Rodney

I believe that the NCAA should not allow direct compensation of athletes for their play at the university.

However, I believe the NCAA should allow schools to sign athletes to personal service contracts that become valid when they graduate, enabling them to receive whatever compensation the university sees as being fair for promoting the university, appearing in university advertising, and helping with future recruiting.

So, for example, a prized athlete is considering going to school A. That player would receive a scholarship, but they might also recieve a contract from the school for the time after they graduate for personal services such as recruiting and school promotion.

This serves a lot of purposes. One, it helps to push away some of the underhanded dealing in college sports. Two, it does allow the player to receive compensation for their school using their likeness in future promotion after they’re no longer a student-athlete. Three, it encourages students to actually graduate instead of just leaving school and turning pro in their sport of choice, which is somewhat the point of college athletics (at least on paper). Four, it gives those kids some insurance on their talent – if you’re a great athlete, go to college, and get hurt because of that choice, you’ve just lost a huge portion of your financial future.

Yes, I’m sure top athletes would get ridiculous personal service contract offers from universities who want top-notch programs. On the other hand, those athletes will help sell expensive seats at the sports stadiums, help drive university merchandise sales, and aid in recruiting at a later time.

Q6: Preparing for a layoff
I’m looking at a potential layoff in the next few weeks and can’t help but feeling panicked about it, though looking at things on paper has part of me thinking we should be “fine”. I thought I’d send our basic numbers to you, in hopes that you could serve as an impartial judge of if I’m crazy to be nervous and panicked. Our combined income is 175K, 95K for my husband and 80K for myself. Our take home pay falls a little over 8K a month, and my husband contributes the full $16,500 to his 401K each year. (I had been contributing 10% but dropped to 1% when I learned of the likely layoff). The remaining balance on our mortgage is right at 290K and the monthly payment (PITI) is $2146. (Our original mortgage was 332K, we have been here 2 years, and our interest rate is 5.625% – best available at the time. No PMI as we did a buyout as we put 10% down.). Our total monthly expenses, including the mortgage but not including food, falls in around $3200 a month (includes things such as cable tv, xm radio, that I know we could cut if needed). We have no credit card debt, and our cars (a 2007 and a 2009) are completely paid off. I should also mention that we have 60K in savings, 20K in IRA’s, and my husband has at least 80K in his 401K, probably more.

The way I’m working things out on paper, even without changing his 401K contributions my husband’s take home should be a little over 4K a month, which would cover our $3200 a month in bills, which could be less if we cut some non-needed things such as XM radio. We wouldn’t be able to eat out a lot, or buy expensive groceries, but as long as he is employed we should be “fine” right? Plus I should be able to bring in $1200 a month in unemployment benefits as well.

I am actively job seeking and have gone on several interviews, though each company was promising they did tell me that despite the interview they actually don’t have positions available, just that they are looking to hire when they work out their 2011 budgets. That was discouraging as I was not aware of that going into either interview.

I am also able to move from my health insurance plan to my husband’s at a reasonable rate (essentially the same amount I pay with my company now) once the layoff occurs.

I realize many people are in worse situations and on paper this seems like it should work, but I can’t help feeling like this is going to be awful. I did go through my father being laid off in my early teens which was devastating for our family and probably the reason I am so panicked over this that I feel like things will never get better.
- Jennifer

It is going to be awful, but you’re in pretty good shape to handle it right now.

Job loss is never easy, no matter how much you prepare for it. It sounds as if you and your husband are in pretty good shape with regards to planning for it.

If I were you, I would cut those nonessentials. You’re not going to want to dip into that savings unless you have to, so I would ask myself, for each expense, whether that expense is really worth digging into your savings. Is XM radio really worth digging into your savings?

Remember, even in this situation, inevitable negative things will happen. A car will break down. A hot water heater will need repair. You’ll still need to be able to cover those things, and the best way to handle that is to trim the non-essentials for now.

Q7: Why Christmas?
I don’t understand Christmas at all. I mean, I understand it from the sense of giving things to your loved ones to show how much you care for them and I understand on some level the whole birth of Jesus thing, but why do we have a Christmas tree? Why do people put up lights outside their home?
- Erin

The Christmas tree’s origins are shrouded in the mists of time, but it’s fairly clear from what we do know that, like a lot of other pieces of “tradition,” it was incorporated into Christmas from cultural elements already existing in an area. There are indications of this in medieval Russia and Germany, plus there are stories of St. Boniface cutting down a tree in the Christmas season in “defiance” of Thor (a Norse god) sometime in the 700s. It’s more of a cultural heritage thing than a Christmas thing, though they are amalgamated together.

The idea of Christmas lights actually has a religious root, harkening back to early Christianity when a worshipper would place a candle in the window to signify that there was some service going on in this building. Over time, as the Christmas tree came into prevalence, the candles were moved to the trees. Electric lighting transformed that tradition into the modern one with lights.

In a modern sense, I view Christmas lights as a greeting, a way to say “happy holidays” or “merry Christmas” to anyone who passes by.

If you look at any mass social event, you’ll start realizing that the rituals are fairly odd and usually peppered with a very long history.

Q8: Diversifying retirement savings
When considering diversification of retirement funds, should I spread my retirement funds across separate investment banks, or is simply buying into a set of diversified mutual funds at one institution enough?

I have a retirement account at Vanguard, and I’m considering moving my fiancee’s retirement funds over there as well. Is having all of our eggs in one investment bank basket risking anything significant?
- Stephen

It’s not a bad idea to do this if you easily can.

Here’s why: if your investment house goes under (like, for example, Vanguard) and that house is protected by SIPC insurance (as most of them are), you’ll get up to $250,000 of your investment returned to you, most likely in the form of an account at another institution. Anything above $250,000 is likely lost. Note that this does not protect you against investment losses, just against the failure of your investment house.

For the end user, it’s much like FDIC insurance.

In the end, your best bet is always to diversify. Too many eggs in one basket is never a good idea.

Q9: Career in music industry
I graduated college with my bachelor’s in May of 2009, majoring in finance. Despite my education, I have made terribly poor financial decisions. I have $6000 of credit card debt, $20,000 in student loans, and $8,000 principal left on a 2003 Subaru Forester I bought used. I have been working for a year and half in Commercial Real Estate doing accounting, making a salary of $28,500. I lived with friends for a year and just moved home in September (the first smart decision I have made in years!). I am working to pay my credit card balance down as quickly as possible.

Now, relating this to your article… I currently have a job, but if I had a career, it would be in music licensing. I am fascinated with the concept of music as intellectual property and learning about digital copyright law. I have always been too afraid to pursue this and for the first time in my life, I have realized it is okay to learn about and enjoy what you like!

I have an opportunity to interview for an internal wholesaler position at a company in Nashville. My cousin works at the company and she offered to be a reference. However, she knows my ambitions are not long term. This is her career and I do not want my ambitions for change to affect her negatively in anyway.

I would much rather move to Nashville and work an entry level position at BMI, Sony, or another company then work in insurance. However, I am nervous about applying for these positions from Cleveland. I have often heard of HR representatives not considering resumes out of state.

As I see it, I have the following options:

· Take a job with the insurance company and relocate to Nashville, while network and looking for opportunities career wise.

· Pay off my credit card, save $6-7,000, quit my job, and move to Nashville to look for a career position.

· Pay off my credit card, and try looking for my career in Nashville from Cleveland.
- Jenny

Think about it this way: if your company is in Nashville and there are lots of good candidates in Nashville, why would you pay for someone to relocate from Cleveland? Why would you pay for an interviewee to fly in from there?

If I were you, I’d relocate to Nashville with a job in hand – your first option. You can then spend your extra time seeking out your dream job. I don’t think I would move there with no job opportunities in hand.

Chase your dream. You’ll never regret it, even if you don’t completely grab the brass ring.

Q10: Christmas carols
What’s your favorite Christmas carol?
- Amy

Let me put it this way: for most of December, the soundtrack to “A Charlie Brown Christmas” is pretty much on constant play around here.

I don’t have any particular favorite carols to sing, however. I am learning to play quite a few on the piano right now.

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.

View the original article here

Financial Review

Monday, August 15, 2011

Reader Mailbag: Family and Friends

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