Welcome to Ask the Bills, where every two weeks Helaine Olen answers readers’ questions about their most nagging personal finance and financial etiquette dilemmas. Seeking advice on a money issue? Email email@example.com.
I’m almost 40. I moved to Utah two years ago for a temporary job that turned permanent. Once I was secure, I moved closer to work, to a basement apartment that costs $800 a month. Then in 2015, I became ill with depression. I used up all my sick and vacation days and went on leave. My church helped me with food and rent, but I had to dip into my savings. This past April I was fired from my job, and I went through what little savings I had left. After several months, I landed my dream job. I love it, but there’s a problem: It pays $31,000 a year, $11,000 less than my previous position. My insurance and transportation costs have gone up significantly. I’m contributing to my 403(b), trying to save $100 a month in a savings account, and also paying back a loan from my mom with $50 per month. I also have about $10,000 in credit card debt. I made a deal to pay interest on my private student loans for the next two years, and I am on an income-based repayment plan for my federal student loans; since I work for a nonprofit, they’ll be forgiven when I make 120 consecutive payments. I took advantage of a zero interest rate transfer and am not paying interest on my credit card balance.
I’m stressed out about money. Every paycheck seems to disappear before the next week is out. This week, I’m going to need to survive with $10 in my account. I’m still using the credit cards. Both of my cats had emergency trips to the vet this summer, including a $560 visit for one who got a long piece of grass up his nose and down his throat. I’ve also had to use the credit card to pay for groceries and a Costco membership—they sell cheap gas and cat food. I don’t buy weekly lattes, I ended my monthly car-wash pass, I switched to cheaper cat litter, I don’t eat out. Now it’s Christmas, and I don’t know if I can afford to buy more presents for my family, because I don’t want to go into more debt. But here’s the rub: The dream job is not close to where I live. I really, really want to move. The two-hour daily commute is draining. Working at home is not an option until I’ve been at the job six months. Plus I really enjoy the office. And I feel it’s time for a change. I need an apartment that gets sun. What do you think?
Everything seems so simple when we’re growing up: Do what you love, we’re told, and it will all work out. Then we get older and often take on debt to attend college and graduate school. For some people it all goes according to plan. But many of us have a rockier journey. In some cases, we discover that what we thought we would love professionally, we don’t even like. Sometimes we suffer layoffs, or the industry changes or contracts. (Hi journalism!) Other times, we discover that what we do love doesn’t pay. That seems to be the problem here.
In David Copperfield, Charles Dickens summed up one of the iron-clad rules of personal finance:
Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
In other words, you’re almost 40 years old and you’re not earning enough money to support your rather reduced lifestyle. There is no magic bit of advice that will make that not so. Instead you’re faced with a decision: How much are you willing to give up to continue working at this job you love so much? There’s nothing wrong with wanting better things, not to mention not wanting to stress over cat food, vet bills, and rent. We can tolerate dark and dank basement apartments in our 20s (I speak from experience!) but in our 40s, the vast majority of us find that grinding and depressing. “What good’s bohemia when you’re merely poor,” sings Mack the Knife in The Threepenny Opera’s “Ballad of the Easy Life.” It’s a line (and a song) that only gains resonance as you age. Many of our friends have nicer things, and we want that for ourselves. And that’s OK. We’re human, after all.
That’s not to say I think you should jettison your job and seek work in the financial services or tech sector. But I do think you need to contemplate the long-term trajectory of your current position and field. Will the pay eventually increase? Does it give you benefits—either monetary or intellectual—that other positions do not? Are the trade-offs worth it, both now and in the future? The loan forgiveness after 10 years that you’re eligible for, courtesy of the federal Public Service Loan Forgiveness Program, is a major benefit. I wouldn’t take it lightly.
As for the move: Yes, long commutes are horrible. I think you should plan to relocate—but not just yet. Given your work history, I would suggest you not look at other apartments until you’ve been with this employer for at least a year. As you’ve no doubt learned, there is nothing worse than moving for a job and then getting laid off. But when you finally get ready to sign a lease for a living space closer to work, make sure it has sunlight. As for those Christmas gifts, don’t increase your debt for the purchase of some quickly forgotten geegaw. Instead, offer a few select loved ones something like babysitting or pet-sitting or home-baked cookies. Everyone can make decent cookies from a box.
At 50, I am a nontraditional undergraduate student. I will soon complete my B.A. degree in American Studies, with a concentration in jazz studies. Most of the jobs I’ve held in the past have been in the arts and music industries. As I prepare to re-enter the workforce, I’m worried about my prospects for income and employment as an older graduate. I’m also ready for a change in my surroundings. My companion and I are strongly considering relocated to the San Francisco Bay Area. (My partner works in a hospital and is very employable.) Everyone has warned me about the exorbitant cost of housing there, perhaps even more expensive than my hometown of New York City. For this reason, I am considering the value of being armed with a second degree, likely in education. I fully realize I will probably need multiple streams of income. My plan would be to get full-time employment in an administrative or creative position in the arts or at a university, plus work as a musician and entrepreneur in the legal cannabis industry. I’m not expecting a Silicon Valley paycheck. I assume I would earn between $40,000 and $50,000 and then $70,000 to $90,000 with a master’s. This is, of course, all speculative. Who knows what can or will happen in the future? All I can do is prepare. So do you think it would be advantageous in terms of income for someone over the age of 50 to return to school for a second degree? Or would limited job prospects make the return on investment simply not worth it? Admittedly, none of this is my life dream, but there is the reality of paying rent in an ever more prohibitively expensive world.
You’re 50, preparing to take work that’s not your life dream, because of money. Little wonder you’re daydreaming about the Bay Area, where, I’m guessing you think, the creative environment and beautiful vistas will somehow make up for all this.
Stop right there.
Whatever you do, you and your partner should not pick up and move to the Bay Area without a job in hand, preferably two. And even then, I would think it over really carefully. It sounds like you’re planning what 12-steppers call pulling a geographic. You think you’re going to move to a new city, enjoy a low-paying but steady career in the arts, with a sideline in the growing cannabis industry, and heck, maybe you will. But even if all works out, you’ll still be yourself, not totally happy with the compromises you’re making in middle age, except now you’ll live in the most expensive rental market in the United States. This is not going to improve your life. It’s going to make it a lot harder and likely force you to make even more compromises. Families with two decent incomes are struggling to keep up in San Francisco. Do you really think you could do better?
As for the second degree, I’ve got one question: Do you like teaching? You didn’t say. This may not end well, as you’re quite aware. You don’t have 40 years to make good on the money spent on the degree. You might not even have 20 years. Most people do retire before the age of 70, and frequently it’s not by choice. At the same time, teaching can be a viable career path for the not-so-young worker, if not one that’s as steady as you seem to think. Attrition is an issue, with about 17 percent of all newbie teachers leaving the profession within five years of entering it. If you’re only doing this for money, it’s quite possible you’ll fall into the group. On the other hand, this could be a good call if you actually like the day-to-day experience of working with children. Teaching is frequently a friendly environment for career changers. I would suggest if you’re interested in the profession, look at less expensive alternative certification programs, and apply to initiatives like The New Teacher Project Teaching Fellows. Finally, if you borrow money to pursue this degree, at least only take on loans from the federal government, so they’re eligible for income-based repayment plans.
My company matches charitable contributions up to $1,000 a year, and I’ve maxed out for 2016. I still have some donations I want to make, and I know some of my co-workers aren’t going to max out on their contributions. They’ve said I can pay the contributions through their work charitable accounts to get the company match, but I’d put it on my credit card. Can I claim those charitable contributions when I file my 2016 taxes?
What a really terrific and giving person you are! I assume you checked with your equally generous employer, and the powers that be generously agreed you could do this, right? If they didn’t, I wouldn’t even try it. Yes, about 65 percent of Fortune 500 companies offer their workers some form of philanthropic match, but they offer them with the expectation that the employee taking advantage of the match is the person actually making the contribution. If you didn’t get permission and your employer finds out what is going on, it might take it the wrong way and discipline you as a result. I know you are thinking you are doing good because charity, but in reality this is no different than any other workplace fraud, even if the cause is a better one than filing a false expense report. Either way, someone is ultimately pocketing funds he or she are not entitled to receive. If in the future you are seeking matching funds, let me suggest you take advantage of Giving Tuesday, when many major donors will agree to match the day’s donations at their favored charities. As for your other question: the Internal Revenue Service requires a letter of acknowledgement from the charity you donated money to if the amount given is $250 or more. Since, presumably, you would be donating the money in the names of your co-workers so that they could get the match, it’s quite possible there would be no write-off for you.