June 2012 Questions & Answers


C Wrote:
I love your shows, especially Princess. It's great to watch these people get a reality check! My question is how is the percentage for Transportation decided for your life pie and budget? While all my friends are driving new leased cars, I took the bus until I was 23. I didn't want to buy a car until I could pay for it all in cash, I ended up getting a great little 2005 car just last year, and paid cash, so I have no car payments. But I spend about $190 per month on insurance (because I am young and a new driver). I also spend $160 per month on gas (I work in the same town I live) and save $30 per month for repairs and maintenance. This puts me at 19%!!! Instead of the 15% you recommend.

I am a recent graduate (with no debt I might add), but I work in an entry level position so I don't make fantastic money at this point, and I know they percentages/amounts are based on how much I make. How can I possibly cut this down to 15%? I thought I was doing everything right.

Gail Says:
Chill chickadee...if you have no consumer debt, you have another 15% in your pie you can spend any where you want, and if that means a little more to transportation, that would be fine. The pie isn't cast in stone. The rule that is in stone is Don't Spend More Money than You Make.


S Wrote:
I hope you answer this question for me. We are expecting our 1st child in July. We are excited yet nervous. We have been working on paying off our debt by using the method of paying most of our money for debt repayment on the debt with the highest interest rate and making smaller payments to the others. We will have paid off another this month. YEAH! Freeing up $130. My question is, is it better to put that money into saving for the mat leave months (we are saving $300 a month now) or continue with paying off the debt. This will put $205 a month on our next highest bill. Or put $100 on the bill (still more then the min payment of $30) and increase our saving by $105.

Gail Says:
Without seeing your full financial picture, I can't answer this question. But you can. How much money are you going to have when you go on mat leave? Will it be enough, or do you HAVE to save that $130 now to make mat leave work? If you will have enough (because of what you've already saved and what you'll receive during your mat leave as income) then you can snowball the money to your debt. If there's no way in hell you'll make it through mat leave without saving more money, save it.


J Wrote:
I made the mistake of lending money to a friend a few years ago (I know, I know, shame on me)! We are financially stable, for all intents and purposes debt-free, and at the time of giving the loan we were rather flush as my husband had just gotten a huge bonus. I've never asked for a payment or interest (shame on me again) and now it's been almost 3 years and I haven't seen a penny.

I sent my friend an email asking for her to start making payments on the loan and she replied (after almost a week) that she was in the process of trying to refinance the loan and would get back to me soon. That was two weeks ago.

So I'm figuring this is a case of it being a very, very expensive lesson because I'm now doubtful that I'll ever see the money again. I'm getting the "I told you so" glare from my husband (which I totally deserve) but my question is, should I go after what's owed to me more aggressively or just accept that this was a very, very, VERY stupid mistake? Feel free to castigate me…everyone else has! Sigh.

Gail Says:
Did your friend sign any loan documentation saying how much was borrowed? If not, you don't have any recourse legally. If so then you may be able to take your friend to small claims court, but kiss the friendship goodbye.

I tell people that loans to friends and family are GIFTS. If they give you the money back, it's a win. But if you lend to friends and family and they don't pay you back, you're prepared because in your mind you were GIFTING the money.

As for the castigations and glares, I think you've had enough of that. Chalk it up to a lesson well learned, and give your hubby some extra-extra to make up for your mis-placed trust and his loss!


N Wrote:
I have a lot of admiration for you. You are a bright, intelligent and funny woman. Your suggestions and ideas have helped me enormously in the past few years. I have followed you on TV, as well as your books. I have put in place many of your suggestions, techniques and proposed plans. I have also shared with many of my friends some of your wisdom and knowledge. Thank you for the great work you do.

Here is my question to you. My step-son of 21 years old has recently passed away and in his will he had relinquished all of his assets to his uncle. I would like to know the following: In my current will (which was completed prior to his death) I give everything to my kids equally if my husband and I both die. If anything were to happen to me and my husband, would my step-son's uncle have any recourse of action on any inheritance that would have been part of my step-son's share or will our money/assets just be distributed to our two remaining children?

I just want to know if we should redo our will.

I appreciate you taking the time to read this question. Hopefully, I will hear from you. I do understand that you have many questions to answer and therefore I am hoping for the best.

Gail Says:
I can't answer this question because it depends on the way your will is worded. I suggest you take your will to a lawyer who specializes in estate planning rand ask for advice. You may not have to redo the will if the existing wording eliminates any children who predecease you from the estate. Estate issues are very specific in their wording, so don't diddle around with this.


M Wrote:
I have a bit of an odd question for you. What percentage is too low to spend on housing when you have enough money? I'm planning to live with a couple friends and we all have decent incomes, so that drives down the cost a LOT. I'm thinking of luxury apartment housing, which because of our situation is still only about 23% of our after tax income and I'll be able to put all the extra money into debt repayment (college loans only). The problem is my friends are only focused on saving money, and they are thinking about getting the cheapest housing possible (in a high quality county but I'm still concerned) at about 17% of our income. I'm worried about noise, vermin, and criminal activities and feel that going cheaper would end up being more expensive in terms of sanity and health, whereas they are only thinking in terms of square feet.

In summary, I was wondering for people who are doing fine financially what would be a good minimum percentage for housing, especially given our case where 17% is cheap housing and 23% is expensive.

Gail Says:
I have NEVER been asked this question before. There is no minimum. Having said that, if you are uncomfortable with where your friends are choosing to live, it might be time to part ways. Some people prioritize the damndest things. If you don't feel safe, if you're stressed out, then finding new roomies may make more sense. You can't diddle with other people's goals or priorities; you can only manage your own.


A Wrote:
My husband died last June and had no will. Things are quite a mess and I just got my income tax done and owe a lot of money due to an RRSP. My question is can this RRSP be reversed as it did not get rolled over to me and I had to claim it as income.

Gail Says:
The RRSP did not have to be cashed out. It could have been transferred tax-free to you and you would only have to pay tax on the money you then took out at retirement. I don't have enough details to tell you how to fix this. You're going to have to engage a professional to see if you can undo the mess. Sorry.


K Wrote: Thank you SO much for changing the way I look at, and use money! I stumbled across an episode of 'Til Debt Do Us Part a year or so ago, and all of a sudden a light bulb went off. I was in debt, spending money I didn't have, and didn't understand what was really going on. You were the first person who taught me HOW to manage my money, and I am inspired by your message. Thank you so much - I now live on cash, track my spending, am paying off my debt, and most importantly, know who I am besides just a consumer.

Onto my question...I recently purchased a home with my boyfriend and am wondering how you recommend keeping our money separate while managing household expenses - and even everyday items. We have totally separate bank accounts except for one joint account opened specifically for the house. I'm a saver, he's a spender and I just don't feel comfortable merging our financial lives totally to the point where we are one entity. Is that unrealistic? Thanks in advance for answering my question. If you don't get to me, its ok - I just ordered a copy of Its Your Money from my local library so I hope the answer is in there!

Gail Says:
The way you're doing it is PERFECT. Joint account for joint household expenses and separate accounts for EVERYTHING else. Well done. Keep it up. If you want further reassurance, go and read: http://gailvazoxlade.com/blog/archives/2877


F Wrote: My question is regarding Spousal RRSP. How soon after a withdrawal can a spouse contribute to the Spousal Plan again? Is there a waiting period?

I do know that you have wait 3 calendar years before withdrawing. That is, no contributions can be made during the year you withdraw from the plan or the 2 years prior. I also read in your books that it is better to contribute in December than the 1st 60-days of the year.

Gail Says:
There are no rules governing timing of a contribution, except for the regular RRSP rules. So you can start again with the spousal plan the next year. The rules only govern withdrawals.