Ask me anything #6

By glblguy

I give the readers of Gather Little by Little a chance to ask me anything. The only real rule is that I can decline to answer. I’ll do my best to answer as many questions as I can though. Have a question you would like answered? Just drop me a line!

Wendy asks:

We are selling a commercial property that we own with a bunch of family
members. The closing is set for early January, to maximize tax benefits. My
husband and I expect to receive approx $330,000 after taxes from the sale.

We have about $25,000 in debt, which we plan on paying off, and then we are
moving to buy a house. We are looking at homes in the $350,000 -$400,000 range.
I say to put down as much as possible, leaving about $20,000 in savings. We intend
to buy an entire household of new furniture, where we live now is
furnished. Is is smarter to put down whatever is left as a down payment, or to
put down less, and have a bigger savings account? I am a stay at home mom, and
want to keep our expenses low so that I can continue to stay home.

First congrats on being able to sell something and get such a great return! One thing you’ll need to consider is the down market right now. Not sure how much commercial properties are being impacted, but I know personally our house has been on the market for almost 6-months with no offers yet.

As you plan to, I would pay off that $25,000 in debt immediately. Now, whether you save the money or use it as a down payment depends. First off, I always recommend that people save 3-6 months in savings after they pay off their debt. This is right along with what Dave Ramsey suggests. If you already have that, than I would definitely use the rest as a down payment. If not, I’d save as much as you can, and use the rest for a down payment.

Another thing to consider is that I always recommend a 20% down payment. This is not only to give you some immediate equity, but also to avoid having to pay PMI (Private mortgage insurance). I’d just buy the furniture as you need it later. I think “fully furnishing” a house is often overrated, especially if you don’t need it.

Oh, stay at home mom or not, keeping expenses low is ALWAYS a smart financial move.

Sarah asks:

Because my husband is striving to right our finances and build our investments,
I am trying to be an asset in that endeavor.  I was wondering what your wife
does in regards to your finances? I know you guys meet together and discuss the
budget, but does she have any frugal tips that help your family?

Hi Sarah. Many of the money saving tips I write about come from my wife. As you said, my wife and I meet together to review our finance and plan our budget. We also discuss our finances and purchases together. We seldom ever buy anything more than about $100 dollars or so without consulting each other.

As for how she helps, her biggest frugal tip is buying close in the off season. We automatically save money into a clothing fund that she uses whenever she finds off season clothing at a HUGE discount. I have about 10 different Nautica t-shirts that we haven’t paid more than $5.00 each for.

This also includes flowers and trees for our yard. She waits until winter and then buys left over trees/plants at the local Lowe’s or Home Depot. She did this last weekend. She bought 3 Japanese maples for $30. All three were well over $50 each during the summer.

She also helps us out on the income side by blogging a bit on Review Mommy and selling some crafts on Etsy.

Thanks for the question!

The next question comes from Clarrissa who asks:

If you delayed going to college for one year what would you do or gain from it.?

Well, I wouldn’t. Why wait? Sounds like to me you aren’t sure if you want to go. If you take a year off, it’s just going to give yourself time to further talk yourself out of it. Go sign-up right now and start ASAP! Going to college is one of the most important things you can do. It will open doors for you that otherwise can be difficult to open. I can’t see gaining anything by waiting. “He who hesitates loses”.

The final question this week comes from Gary who asks:

I know the FDIC is raising the protection limit to $250,000. However, I heard that the fine print states that even though your money may be insured, they have up to 99 years to pay it back. Can you confirm or deny this? Anything else about the FDIC you can share with us?

Gary, I researched and researched this and couldn’t find anything about that. I sent an email to the FDIC as well, but have not yet received a reply. If I do, I’ll be sure to post it. The increase is only temporary and the basic insurance of $100,000 will return on 12/31/2009. Coverage for retirement accounts ($250,000) stayed the same and as not changed.

Have questions about your coverage? Visit MyFDICInsurance.com.

Photo by: TheTruthAbout…


8 Responses (including trackbacks) to “Ask me anything #6”

  1. Roger Hamilton Says:

    Great post! It is very interesting. Enjoyed reading it. Thanks for sharing. Hope to see your new updates soon.

  2. Nuggie99 Says:

    Here’s an article about the FDIC rumor.
    http://www.snopes.com/business/bank/fdic.asp

  3. Christy Says:

    I disagree with your last response. If someone is unsure about university, they shouldn’t throw thousands of dollars into something they aren’t sure of.

    I was pressured by one of my parents to go to university and I hated it. I was told by one of my prof’s that i would be the top student in my college, but I didn’t have the heart to tell him I was secretly miserable. Thankfully, I had enough saved working the previous year that I had paid cash for that year, but I think about what would have happened if we had invested that money – we would more than likely have our house paid off in our mid 30′s.

    Nobody should suck it up and go to university if they are unsure. I recommend everyone take the time to search their hearts and remember there are tech schools and other programs – find your niche.

  4. Ron Says:

    The link to ask you anything is broken with a 404 error.

  5. Kacie Says:

    To the woman who is house-hunting: I’d suggest setting a furniture budget now, and firmly sticking to it. Just pay cash for the stuff.

    If $20k covers six months of expenses, great! If not, set aside six months. I know the suggested range is 3-6 months, but you’re living on one income and the economy is unstable. I think it’s best to go for six months or more, if that makes you feel more secure.

    So, after deducting furniture costs and your 6-month emergency fund, you’re left with several hundred thousand dollars with which to buy a house.

    You mentioned that you’re shopping in the $350 – $400k range, but what about lowering your range first to see what’s available? I have no idea where you live, so that might not be a good option.

    And, be sure to take on a 15-year mortgage and pay it off ASAP. You’ll be completely debt-free soon! How cool is that?

  6. The Debt Helper Says:

    Some really fascinating questions, especially the one about how your wife views your attitudes towards personal finance, that’s a perspective I’ve not seen covered elsewhere before and yet it is so important

  7. Gary Says:

    Thanks for taking the time to look into the FDIC question! Love this blog.

  8. battery-stores Says:

    I like your style so much, I am your honest reader.

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