Questions About Bankruptcy, Cremation, Music, Philosophy, and More!

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. Time for bankruptcy protection?
2. Alternative options for cremation costs
3. Tough decisions in retirement
4. Technical writing options
5. What’s next after student loans?
6. Cheapest way to start journaling
7. Lump sum after house sale
8. Sudden retirement help
9. Why pay for music?
10. How to educate younger relatives?
11. Encouraging child into trade school
12. Easy to read philosophy

This week is spring break for my children, and as has been the tradition for several years now, they go visit their grandparents for several days during that week. At the same time, my wife usually visits her sisters, who both live in Wisconsin fairly close to each other, and spends a few days with them.

The end result? I’m home alone for a few days. I usually spend those days doing some work projects, hanging out with friends, and doing a lot of reading.

It’s kind of a boring “spring break,” I know, but I find other periods in my life for exceptional experiences and it all balances out. Instead, it becomes a mild “stay-cation” where I don’t push myself quite as hard with working and instead invest some time into hobbies, friends, and catching up on home projects.

Q1: Time for bankruptcy protection?

I am 30 years old and had my first child 2 years ago. This was not planned and this changed my financial situation. I was in debt before finding out I was pregnant but I was able to manage (I should say mask it) by working OT and making bonus. I had a high risk pregnancy and was put on bed rest in my 4 month of the pregnancy. Long story short I haven’t been able to recover since.

I currently have about $11,000 in credit card debt, $22,000 auto loan with a 24.49 interest rate, and I owe about $5000 in taxes between state and federal. My current take home pay is about $1525. My monthly expenses total $1370.

I was served with court papers from one of my credit companies and started to receive letters from bankruptcy lawyers. I have called the creditor and made arrangements so they won’t go through the courts and garnish my wages. I agreed to pay $200 per month for 6 months and $138 for the last payment. This doesn’t leave me any breathing room, but they wouldn’t lower the payment.

My thought was to file chapter 13 include the auto loan and taxes, this would give me one payment and lower my monthly output greatly. My concern is that I am currently attending classes at a community college and I will be transferring to Georgia State in the fall. I receive the Pell grant and this covers everything at the community college, once I transfer I will need loans to continue my education.

With all the above info do you think it’s smart for me to file Chapter 13 bankruptcy?
– Carrie

As things stand right now, you will probably have quite a bit of difficulty getting federal PLUS loans and private student loans for your education. You are a credit risk, regardless of whether you file for bankruptcy or not. So, unless you’re confident of getting federal student loans or have someone with great credit who is willing to co-sign on those loans, your future plans involving getting student loans in the next few years are likely already at risk.

Given that, I would probably consider bankruptcy protection given the amount of debt you have compared to your income and the fact that you’re already behind. This is a great article on how to find a good bankruptcy attorney; I’d follow that advice instead of signing up immediately with one of the people who has contacted you.

I want to reiterate that this is based on the information you’ve provided here. I am assuming that you are in a situation without significant family support, that the $1,370 in monthly expenses is something that can’t really go any lower, and that you’ve contacted all of your debtors already to try to work out better payment arrangements. If any of those things aren’t true, that changes the equation and you should hold off. If you have a lot of family support, talk to them frankly about your situation first.

Q2: Alternative options for cremation costs

In regards to your cremation costs question in [the last reader mailbag], I have a few suggestions:

Whole Body Donation Programs offer a way to donate one’s body for the benefit of mankind as well as to minimize funeral costs. The bodies are used for teaching medical students anatomy and basic surgery and are then cremated after one to two years and the ashes returned to the family or scattered at sea.

MedCure – National whole body donation program (47 states) that links donors to medical researchers and educators. Arranges services at No Cost including: transportation, cremation and return of cremated remains to family in 6 to 12 weeks. http://ift.tt/2nwvvBY Click on How It Works.

In Oregon where I live, both the Oregon Health and Science University’s “Body Donation Program” at http://ift.tt/2n0ZANy and Western University of Health Sciences “Willed Body Programs” (http://ift.tt/2nwv4HX offer donor programs. The former has small charges for transportation ($175) and death certificates ($20 for first, $15 for every one after that) and the latter does not charge in my area.

The national organization, Compassion and Choices, offers more information for many other items related to care and choices at the end of life at http://ift.tt/2n1glbd
– Kevin

Thanks, Kevin! These are some really worthwhile resources for anyone who is thinking about cutting down on burial costs, a topic that comes up every so often in the reader mailbag.

My only advice is that if there is a particular service you wish to use, please make sure that the service is identified in your will and that you revise your will regularly to make sure it reflects both your wishes and the current availability of that program. Also, keep in mind that your family is the one that is going to want to remember and memorialize you in some fashion, if they so choose to, so you may wish to at least discuss the matter with anyone who might be deeply upset at your passing.

As for me, I prefer that my remains be used to help people. I have signed up for organ donation and wish to have my remains used to help others in any way possible. If my family wishes to memorialize me, they can do so as they wish utilizing the personal items I leave behind and any ashes that remain after my body is utilized in some hopefully worthwhile fashion. Besides, in my own experience, I’ve found that things like being able to look at my grandmother’s journal are more meaningful than knowing her body is in the ground beneath a stone somewhere several hours away.

Q3: Tough decisions in retirement

Husband is 70 and I’m 68. He still works – half time – and I retired 3 years ago. Our combined income (Soc Sec, his income, and private pension {self employed}) exceeds $5000/month. Our expenses are about half that and we own our home outright. We now have almost $40,000.00 in a money market fund in addition to our emergency fund and another small savings acct. We are not big risk takers. I will need to begin taking payments out of my private pension in just under 2 years. Both in good health and would enjoy travel but are helping out with grandchildren. Our CPA (who shares our conservative, nonrisk taking attitude) has cautioned us to continue to save in our ‘retirement’. So, what do we do with that $40,000.00 and the $1,000 or more we can easily add to it each month? My husband, other than being an excellent provider and a saver, has an ostrich-like attitude toward finances so I am the primary decision maker. Would love to have some insights of what to do with all or some of this money so that it would be available to us in the case of need (health, for instance) but still earn more than the money market account.
– Anna

As soon as you begin to invest that money in anything that earns a better return than a savings account, you begin to add either risk or illiquidity to the equation. Illiquidity means that it takes more effort to get the money out of the investment than it does to get money out of a savings account.

For example, one thing you could invest in that would return a little more than those savings accounts would be treasury notes. You’d earn about 1% more than you would in a savings account and the money would be about as secure as a savings account, but you have to jump through some hoops to sell it, and those hoops might eat into a bit of your returns (usually, you have to go through a brokerage).

Real estate has similar problems – to get a return out of it, you either have to rent it or lease it or sell it and there’s significant risk involved, but the return is substantially higher. Stocks are in a similar boat, though they’re a bit easier to sell; however, they don’t have as much opportunity to earn some returns when you hold them as real estate does.

Basically, it comes down to how much risk you can stomach and how easily you need access to that money in an emergency, because the more risk you have, the more likely it is that over the very short term you’re going to be facing a loss with that investment. Risky investments usually only pay out well over the longer term. The answers to those questions depend mostly on you and your financial stability. If this is money you expect to not have to touch unless things drastically change, a riskier investment like stocks. If this is money you think you’ll need in the next year or two… I’d honestly just leave it in the savings account or buy something real safe with it like a CD at the bank or a treasury note.

Q4: Technical writing options

Do you know of any website to go if you want to start doing some freelance work? I would like to do some technical writing for my industry, but it seems like you can’t just sign up and start writing. You have to either take a full time job or spend the time to build up a business/following.

I am not a “technical writer” in my day job, but the skillset is very close. I last did any actual writing in college about ten years ago.
– Shawn

There are a lot of sites where you can get your foot in the door and do really low-end freelance work to build a positive reputation and figure out your writing process and workflow. A site like Fiverr is perfect for this; I’ve used it myself when I was trying to learn a skill and wanted a few small practical things to work on while earning a few dollars.

Another site to look at is Upwork, which is great once you’ve moved past Fiverr and are looking for some resume-worthy projects to show off.

Until you build a reputation and have some projects and relationships under your belt, you won’t earn a lot per project. However, if you consistently do work for one person or group, especially on Upwork, you can build a relationship with them – no guarantees, though.

That’s how I would get started with a technical writing side gig. In general, you are simply not going to get hired for a lot of money without building up connections or a following. This will at least earn you a little in the process of building up those things.

Q5: What’s next after student loans?

I have been aggressively paying down a ~$60K undergraduate student loan. During that time I also got an associate’s degree and most recently a master’s degree, both of which were mostly paid for by my employer at the time and no additional loans were needed. I expect to make my final payment on the loan in June. Even though I consolidated them and moved them to a private, low variable rate (2%) loan, paying it off aggressively is a huge psychological milestone for me.

Other than our mortgage, this undergraduate loan was by far our biggest debt. Once it is officially paid off, where should the extra cash flow go? Current debt is a $20K car loan @ 1.74% and an $18K car loan at 1.99%. We plan on selling our house this summer or next and buying another, with the sale netting us enough to cover the 20% down payment. Should we try to pay down the car loans, current mortgage, save for a larger down payment on the next house, or build on our savings? We currently have ~$35K in a savings account at 0.74%. Our retirement accounts are pretty much maxed out and we contribute $100/month to each of our children’s 529s. Your guidance is appreciated.
– Sam

You need to sit down and establish some personal goals for yourself. What do you want your life to be like in five years? Ten years? Be optimistic and somewhat wide-ranging in your views and add a lot of detail to those pictures of the future.

Give it some time. You don’t have to figure those things out today – in fact, you shouldn’t figure those things out today. Write down your thoughts in detail, then save it and come back to it in a couple of weeks to fix anything that isn’t ringing true.

This process will likely define a big goal or two for you in the coming years. That will give you a big hint as to what you should be doing with your money. For example, if it involves a risky career switch, then getting rid of your debts to maximize monthly cashflow might be a good idea. If it involves a big purchase, you might want to prioritize saving for that purchase.

Q6: Cheapest way to start journaling

Taking your suggestions (and suggestions of many others that I respect) to heart and going to start journaling. Have very little money. What is the cheapest way to start journaling?
– Steve

Go to a local department store and buy a composition book or other notebook. I think composition books are fantastic for one’s first foray into journaling. It should cost far less than a dollar. Get a pen or two as well – I recommend a Uniball 207 or Pilot G-2 gel pen because they just work and become so reliable that they somewhat become invisible in the process, and that’s what you want from your tools.

Go home, sit down, and write about whatever is on your mind. I generally don’t use any “journaling prompts” when I do this, but I sometimes incorporate self-improvement exercises when I write to see what they produce. Generally, I think of some issue that’s on my mind in my life, write down everything relevant about it that pertains to what bothers me, and then I ask myself why those things bother me, and then I ask why that answer is true. I’ll repeat that “why” trick a few more times until I dig down to something interesting, then I start thinking about solutions for it and writing down what comes to mind.

This is immensely relaxing and calming for me. It’s literally one of the most valuable parts of my day. I figure out why things are bothering me, what I can do to stop them from bothering me, and an actionable plan for dealing with those things. I’ve dealt with and resolved grief and anger and frustration. It’s absolutely invaluable for me.

Q7: Lump sum after house sale

My parents-in-law are in their late 40s, recently sold their house and are left with a lump sum of money after paying off debts. I’d like to recommend a good strategy for their retirement, since as far as I know, they have few to no other retirement savings. What would you recommend?
– Jim

My first suggestion would be that they open up a 401(k)/403(b)/TSP plan through their workplace and contribute to those plans. I’d suggest that they contribute 10% per year and put it in a target retirement fund that’s close to their retirement age, something like Target Retirement 2035 or 2040.

As for the money, my first recommendation would be that they first pay off any debts that they have with a significant interest rate – anything above 5% or so. Credit card debt should vanish. Car loans should vanish. You get the idea.

I would encourage them to put aside enough of that lump sum into savings after that to cover their next cycle of car purchases, even if their current cars are pretty new. They shouldn’t accelerate a car replacement, but simply be aware that when it happens, it won’t mean a new car loan.

I’d also encourage them to put aside enough for an emergency fund that covers two months of living expenses, to be tapped if something goes awry in their life.

If they still have money left over, they should open up a Roth IRA (assuming they’re eligible for it – if they make $100,000 a year or less, they’re fine) for each of them and use that lump sum to make equal contributions to each of their accounts – $5,500 each. Put anything left over aside so that they can give a full annual contribution each year for the foreseeable future.

That’s a very strong financial roadmap for that money. If they do all of those things, they’re suddenly on a path to a pretty solid retirement.

Q8: Sudden retirement help

I am 61, my husband 69. We are Christians and worked for many years in “Christian ministry” where the pay was very small. Savings never happened. We were both from frugal backgrounds and lived that way, but there was never money enough to save any, and no time to take on further work. Mistakes? Obviously. Hindsight is 20/20.

In the last 4 years we finally got out of debt and started saving….too little, too late, but figured any was better than nothing. We had hoped to continue for at least 3 to 4 more years in this same vein, but a massive heart attack felled my husband last November and he is now having to take forced retirement. And of course, we are not ready. At the end of this month, his job is gone, our health insurance is gone, and our life upended.

But here is my question. Husband does have a 401k with his employer of the last several years. Small, but it’s there. What do we do now? Take minimum distributions in another year when he has to? Take it out now and park it somewhere else? It’s with Fidelity. But if the stock market tumbles soon, we will lose some of this tiny amount that we had finally managed to save. We will need that money, possibly within the next couple years. I have seen no financial advice regarding people with retirement accounts who may need to get at them soon.

We need a financial blogger out there to give help and advice to the almost retired people who are often desperate and, if they’ve saved anything, need to know the best way to access, use, and not lose what they have. I’d write it myself if I knew more. We feel like we are guessing at best. The future looks grim. If we had it all to do over, we would do differently. But you can’t go back. What’s the best way to go forward?

(For the record, we are about to relocate closer to family and to a less expensive part of the country. We do not own a home — we are permanent renters. I will have to find another job, at my age, when we relocate. We live frugally. Husband is shifting to Medicare, me to Obamacare….and even these options are expensive. Husband cannot work any more. Lots of medical expense going on.)

Thanks for any advice you can give me, now and at any other time!
– Dawn

The honest, blunt truth is that our society does not provide very well for people in your situation who have spent their lives working and producing. Social Security and Medicare exist, of course, but they’re not strong enough solutions on their own to live anything more than a very bare-bones existence. In the past, it was expected that you would either work until you were very close to death or else you had a pension provided by your corporation (or, if you were in the top 1%, you were independently wealthy).

Most companies have killed pensions, so you either are expected to start saving early on in your career, build some kind of independent wealth, work until you’re near death, or live a very bare-bones life. Those really are the options that our elderly are faced with and if they haven’t made strong retirement-oriented choices early on, the choices are to keep working until near the end of your natural life or live a very bare-bones life on Social Security and part-time work. It’s painful to hear – and to write – but it’s the truth of the matter.

So, what can you do in your situation? Your best solution is to find work that you’re each capable of doing outside the home to earn some kind of steady income. It sounds like you’re in a better position for doing this than your husband is at this point, so once you’ve moved, look for a job of some kind to earn income. If your husband can do some work, he should find work as well, even if it doesn’t earn as much.

If you’re worried about the contents of the 401(k), you should change what the money in that account is invested in. Move it to bonds or to a money market. It won’t offer nearly as high of an average annual return, but it won’t be subjected to the volatility of the stock market. You won’t wake up six months from now to see that you’ve lost half of the value if it’s in bonds or in a money market. Call up Fidelity and see what you can do to get the money into something more stable.

Live frugally. Take advantage of having your family around to cooperate on things that can save everyone involved some money. Share a Costco or Sam’s Club membership and buy things in bulk and split them up amongst everyone. Have a lot of potluck dinners with family. Just take advantage of those synergies and you’ll save quite a lot.

That’s the path ahead from where you’re at, given what you’ve described. It’s not a bad life by any means, but it does have challenges. Good luck!

Q9: Why pay for music?

I don’t understand the value of paying for a service like Spotify or Pandora. Why would anyone ever pay for music when you can just listen to it on Youtube for free?
– Angie

For one, most of the time when you listen to music on Youtube, each song is prefaced by an ad. You can try using ad blocking software to get around it, but that’s imperfect as well and it also strips away any value that the musician might get for their efforts.

For another, streaming videos constantly is hard on one’s data plan. If you are using mobile devices and don’t have unlimited data, Youtube is going to gobble it down pretty quickly.

For heavy music listeners, throwing a small amount of money each month at a service like Spotify or Pandora eliminates or highly minimizes both of those problems and makes it much easier to find music you want or discover music similar to what you like (Spotify’s better at organizing, Pandora’s better at discovery). For lighter occasional listeners, Youtube probably fits the bill just fine.

Q10: How to educate younger relatives?

I’m now 54. For most of my working life I thought that saving for retirement meant that you saved up a bunch of money, retired, and then spent it and thus you were just kind of betting on when you would die because if you spent all of your money you were in bad shape. I did save along the way but I just figured I would work until I was almost dead so I didn’t worry about it too much.

Now I get it and I want to retire as early as possible and I’m socking away my money like crazy. I get now that the money you save will earn money on its own and that it is possible to retire early and basically just live off the income of your retirement account and never hit the balance and basically have money for the rest of your life as soon as you hit that point.

Why did no one explain this to me? I had mentors but none of them really laid it out like that to me.

I see young people in my family and children and grandchildren of my friends making that mistake. How can I reach them?
– Adam

The thing is, unless they’re open to advice, you can’t reach them. You’ve heard the old saying: “You can lead a horse to water, but you can’t make him drink.” That saying might as well have been written about personal finance advice. People are really only open to it on their own terms. You can’t make them “drink” the advice until they’re ready, and you can’t force them to be ready.

The best thing you can do is make sure that they have good information in hand when the time comes. I’d buy them each a good strong personal finance book as a gift when you have an opportunity – something like Your Money or Your Life would be good. Tell them to tuck it away somewhere and read it when they’re starting to feel on shaky ground regarding their finances.

I’ve found myself giving those types of books to people as graduation gifts quite often these days (often with a $20 bill tucked in the middle somewhere).

Q11: Encouraging child into trade school

My son is a hard worker but doesn’t really click well with school. It’s because of his effort that he gets largely As and Bs. He likes fixing things and working with his hands. I am strongly encouraging him to go to a trade school but literally everyone in his school is telling him to go to college and that he’ll fail if he doesn’t. So he feels really unsure about what to do. Do you have any advice for him that I can share or for me when talking to him about careers?
– Ozzie

I am a HUGE advocate for trade schools and it sounds like your son is a good fit for that option. They reward people who aren’t really good classroom learners but are hard workers and self-starters and that means they managed to get through school fairly well even though it didn’t click with them.

College is a default choice for a lot of people and a lot of guidance counselors, but it is not a one-size-fits-all solution nor should it be. Many people wind up going to college and not finishing a degree because it didn’t work for them and then they’re facing a ton of debt, or else they finished a degree in a field that they hate and also have a ton of debt.

Trade schools cost far, far less and get people out there working in a trade very quickly. They might not hit the financial peaks that some college degrees can give you, but you can earn a very good living in a trade and you’re not facing a huge pile of debt, either. I think it’s a very good path for many people after high school and it seems like it would fit your son perfectly.

Q12: Easy to read philosophy

Do you have a recommendation on an easy-to-read philosophy book? Love reading your articles when you get philosophical but I have tried to read books on philosophy and they are really dense and wordy. What’s a great philosophy book that’s easy to read?
– Noel

It’s very hard for me to gauge this answer because I don’t know what you’ve read that you consider “dense and wordy.” There are definitely philosophy books I would describe that way, but there are some that I think are quite approachable for some readers and pretty dense for others – the one that immediately comes to mind that rides the fence is History of Western Philosophy by Bertrand Russell.

If I were to pick out one philosophy book that broadly covers the field and is pretty easy for almost anyone to read, I’d probably point to Sophie’s World by Jostein Gaarder, which is actually a novel. Here’s the “back of the book” description: “One day fourteen-year-old Sophie Amundsen comes home from school to find in her mailbox two notes, with one question on each: “Who are you?” and “Where does the world come from?” From that irresistible beginning, Sophie becomes obsessed with questions that take her far beyond what she knows of her Norwegian village. Through those letters, she enrolls in a kind of correspondence course, covering Socrates to Sartre, with a mysterious philosopher, while receiving letters addressed to another girl. Who is Hilde? And why does her mail keep turning up? To unravel this riddle, Sophie must use the philosophy she is learning―but the truth turns out to be far more complicated than she could have imagined.”

From there, I’d suggest following up on any ideas that you found interesting by visiting their Wikipedia entries. Wikipedia is great for an introduction to a topic, which is exactly what you want at that point when you have a one-sentence idea of something but want some more detail.

After that… it really depends on what strikes your fancy. Keep reading, though, and keep thinking. It never gets dull if you keep asking questions borne of your own curiosity.

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.

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