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Questions About Loan Forgiveness, Skilled Nursing, MLM Networks, 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. Military student loan forgiveness
2. Retirement options without Roth IRA
3. International banking troubles
4. Making business ideas a reality
5. Building my MLM network
6. Cost of skilled nursing
7. Using HRA in retirement calculations
8. Stolen cash
9. Large purchases on rewards cards
10. Starting out with IRA
11. Keeping credit card open
12. Cheap shipping

During the months of June, July, and August, our family is going camping at least four times. We’re camping in state parks, (likely) a national park, and on private land as well.

This isn’t extraordinary for us in the least. In fact, this is a pretty normal summer for us. Multiple camping trips are completely normal and actually make up the backbone of our summer, with Sarah off of work, our children out of school, and with my flexible work schedule. We often camp during the week to avoid crowds, so the parks are usually practically empty and we have all of the trails and other features nearly to ourselves.

Thankfully, we have the whole process down to a fine art. Everything we need for camping is stored in a few boxes, so we literally just have to grab those boxes and go (and stop at a grocery store for a few items). At the end of a trip, everything just gets repacked into those boxes.

We camped this past weekend. We didn’t even start packing to go camping until after 6 PM, we camped in another county, and we still had our campsite fully ready to go with a fire going before dark.

Like anything in life, the more times you do it, the smoother it all gets.

Q1: Military student loan forgiveness

I am currently active duty in the coast guard. I have about 5k in student loan debt from before I joined. I was wondering if there were any student loan forgiveness programs that I am eligible for since being in the military?
– Tom

There do seem to be multiple programs to help military members with student loans, but only one is clear and easy to find.

Military members are eligible for the Public Student Loan Forgiveness Program, which enables your public student loans to be forgiven after a period working in a public service job (of which the military is considered to be one).

There are additional programs, but they are really hard to find documentation about. You’ll want to start by looking at this document from the Department of Education about loan dismissal for military members, starting on page 34.

Good luck! Check out www.thebillcoach.com  for more information on student loan forgiveness programs.

Q2: Retirement options without Roth IRA

I am working as a consultant with a company. My company doesnt have any 401k option. So whatever is earned, it directly comes to me with obviously tax cuts and all. I thought a Roth IRA is a good option for me so started with that. But this year when it was turn to file taxes it looks like that my income bracket doesn’t allow me and to stop that. So currently what are my options for my retirement plan ? I can put around $200-300 / month aside.
– Kerry

If you’re earning enough to be above the Roth IRA eligibility ceiling, that means you’re earning well into the six figures per year, and if you don’t have any sort of plan through work, your options are limited.

If you are single or if your spouse doesn’t have an employer-based tax plan, you can use a traditional IRA in much the same way as a 401(k) plan. You’ll be able to deduct the amount you put into the IRA and then pay taxes on the withdrawals when you make them in retirement.

If that doesn’t work for you, your best bet with such a high income is to simply save in a normal taxable investment account. Just choose investments that are smart in terms of taxes – like broad-based index funds – and you’ll be fine. You’ll receive dividends occasionally, but you can just roll those over and pay the very small amount of taxes on them (they’ll be qualified, so the tax rate will be quite low) out of pocket.

Q3: International banking troubles

I feel as though maybe my husband and I have gotten in over our heads. We are self employed, own rental properties and recently signed a purchase agreement to buy a condo in France.

We have friends who live in France and bought a second home here in the states. They use it strictly for personal use, as Europeans vacation more then we do here in the states. They seem to have navigated banking here fine. While visiting France, we fell in love and decided we’d like to own a condo there if it were the right price.

Anyway, we are running into issues figuring out how to bank here and there. Our first major hurdle is wiring funds. Because they use notaries not title companies, funds go into a sort of treasury account held by the government. My bank does not know how to wire funds to their account. They are telling me I don’t have all the correct information.

Currently I only need to wire the deposit of £5000. If I am having issues now, with a small amount, I am worried about how I will wire the purchase price of £100,000.

HSBC would be a great possibility, however their minimum balance requirements are pretty stiff. Not to mention, I am a little nervous about having a large mount on deposit in a foreign country. I know people do it all the time, but I am sure they have more disposable income than we do.

We are going to need a checking account in France, for depositing rental income and expenses, ie: utilities, etc. Ideally, we would like having the convenience of seemless transferring of funds back and forth as needed without high wire transfer fees.

Maybe I am asking for champagne on a beer budget? Any suggestions?
– Connie

In general, Europe has stiffer banking requirements than the United States does, which is why your friends found it much easier to buy property in the United States.

That being said, you were on the right track with using HSBC to handle all of this. International banks that operate in both your country of origin and your destination country are going to be a very big help when you’re going through procedures like this. They’ve done it countless times before, so it’s old hat for them.

I’d spend some time evaluating many of the big international banks. Citibank, for example, has a reputation for making it easy to wire funds internationally. Take a look at Chase, CapitalOne, Schwab, ING, and others, too. You’ll probably find a bank that meets all of your needs quite well.

Once you’ve chosen a bank, I’m pretty sure that those large banks should make this type of process pretty easy.

Q4: Making business ideas a reality

I’m scared of telling people my business ideas because I’m afraid others will use the my business ideas to do them themselves. What can I do to find help to create my ideas a reality?
– Aaron

The number one most important thing you can do is document, document, document. I’d start by going to the library and checking out some books on business plans, then do your best to flesh out a plan on your own. Then save this document and store it somewhere safe, preferably offsite, in a dated file, so you can prove that you had this idea at a particular date. I have some DVDs in the bank with some of my ideas on them so that I can prove they were mine if I ever need to do so.

If you’re talking about sharing your idea with another business, I suggest forming a company around your nascent idea and getting a trademark.

When you talk about someone with an idea, be as vague as you can. Give only the minimal information necessary to convey what your idea is and keep most of the idea to yourself. If they want to know more, then have them sign a non-disclosure agreement – you can get a lawyer to prepare one for you.

Another important step is to do your homework with regards to who you’re talking to about your ideas. Don’t talk to someone you barely know – find out exactly who this person is, who that person represents, and what their reputation is to the best of your ability.

Q5: Building my MLM network

I want to know more about how to build my MLM network.
– David

My number one tip when it comes to building a multi-level marketing network is to not build one. Instead, run as fast and as far away from the whole concept as you can.

You’ve already hit upon how MLMs make money – they don’t make it through selling product, they make it by adding people to your network and convincing them to sell product. This only works if you assume that there are infinite people out there willing to sell that product – but there isn’t. Most people avoid it like the plague, and those that do get sucked in tend to not sell very much and end up primarily selling to their friends, which might generate a few bucks for you but leaves the whole enterprise with a bad taste in a lot of peoples’ mouths.

Take the time and effort you would have devoted to building up an MLM network and invest it in something else. Build a legitimate business for yourself. Try selling real estate or insurance, for example. You’ll have much better success with that than you will with recruiting people into a MLM.

Q6: Cost of skilled nursing

When calculating how much money you’ll need to in order to retire (for however long that ends up being), why don’t the amounts typically include the cost of skilled nursing facilities or full-time residential care needs? My wife works for a medical group and pointed out that her elderly patients all eventually need this type of care at a certain age and that it is not covered by health insurance (I was surprised to learn this). Apparently, the cost of these types of facilities can be really expensive – as much as $70k/year. Sometimes a family member caring for someone in this situation can work, but some medical conditions require professional care. Clearly, this significant cost is a huge thing to plan/budget for when considering how much money one needs throughout one’s retirement, but I haven’t seen it reflected in many of the scenarios that discuss how much to save. Any thoughts?
– Angela

There are a number of reasons. First of all, it’s a very unpredictable expense. Many people never find themselves in this situation at all. Because of that, buying long term care insurance – which is the type of insurance that would cover this – tends to be relatively low on the priority list.

Because it’s a fairly low priority, because it isn’t even needed in many cases, and because of the expense of long term care insurance, many people simply forego that step. They simply don’t buy a policy.

Many people can barely afford to retire – or can’t afford to retire at all – even without considering long term care insurance. When you add in the cost of long term care insurance, it tips the balance even further away from retirement for many people.

In other words, in the big scheme of things, skipping over long term care insurance often appears to be an acceptable risk for people.

That’s really the story of personal finance. What’s an acceptable risk? If we try to cover every single potential risk for ourselves, we’re going to be spending a ton of money on contingency plans and insurance. The approach most people take is to simply figure out the biggest risks and cover them and not worry about the smaller risks, though the line between “big” and “small” risk varies for everyone.

Q7: Using HRA in retirement calculations

Since my wife uses my insurance instead of her employer’s, her employer makes a monthly contribution of around $500 to a HRA on her behalf that will be available to her after retirement. My question is: How would you factor this amount into retirement planning since it can only be used to reimburse medical expenses? In the past I’ve just treated it as a tax-free account in retirement calculators, but I think this may be incorrect since there are rules on how the money is spent. Any advice?
– Maxwell

I think you have two options.

One is to not include it in retirement planning at all, since it is money that you may or may not be able to use. In this perspective, you treat the money as a “bonus” if it turns out that you need it.

Another way to use it is to include it up to the level of an average couple’s health care spending in retirement. It is usually recommended that people save $10,000 per year for each year that they plan to retire before enrolling in Medicare at age 67, so if you’re going to retire at 62, you should figure $50,000. After Medicare, there will still be some costs which are hard to estimate given the seemingly constant changes to the Medicare program.

If you’re not going to retire until you’re eligible for Medicare, I probably wouldn’t include the money. If you’re retiring before Medicare eligibility, I’d probably count $10,000 per year that you’re retiring early.

Q8: Stolen cash

If I left my money clip on the bar at a club and someone took the money out and left the credit card what can I do?
– Megan

The cash was taken and the credit card left behind because the cash is untraceable. In all likelihood, someone saw a money clip on the bar, snagged the cash, and left the rest of it there in the hopes that you wouldn’t notice it for a little while, giving them plenty of time to just vanish and basically eliminate their chance of being caught.

Unfortunately, you probably can’t do anything. It’s essentially impossible to track down stolen cash, especially if you leave a money clip on a bar and someone takes the cash. Since there is no evidence left behind in any way, you’re basically out of luck unless someone happens to be honest at that club.

Having said that, the one step you can take is to contact that club and see if there is a chain of honest people that can get your cash back to you. I wouldn’t bet on it, but the world does contain a lot of honest people (unfortunately, it takes just one dishonest person here for you to never see your money again).

Q9: Large purchases on rewards cards

I am young and just starting out and have never bought a home or a condo. I have decided that I would be more comfortable foregoing mortgages and waiting to have 100% down in order to buy property. I realize this may take a long time but I figure that I will need the flexibility to move around for years to come. Until that time, I will either live with my parents or rent an affordable place.

I am also a fan of responsibly churning credit cards for rewards when I know that a large purchase will be coming up. I have scoured the internet and haven’t been able to find the answer to my question.

Let’s say that in the future, I have a no limit credit card. Is there a way to buy a house with a credit card and pay off the balance at the end of the month? If this is possible then I would be able to get quite a lot of rewards points.
– Anna

If you can find a realtor that will enable you to make this transaction and your credit card allows such a large single transaction to go through, you probably can earn a lot of rewards using this strategy.

Unfortunately, unless you’re very wealthy, you’re not usually going to find a card that’s going to allow this. Even cards that are “limitless” will likely put a halt on a six figure transaction on a credit card.

Q10: Starting out with IRA

I am 23 years old and finally financially responsible enough, with a little money saved up (around 5k) to consider investing. I read Michael Gardon’s article on the best IRA Accounts of 2016 and have decided it’s time for me to open an IRA. After reading through the article as well as the Betterment and Wealthfront reviews I am leaning towards Wealthfront to get started with. I know for a fact I can get 2-3 people also signed up and funded so I am looking at 20-25,000 managed for free. Is this the best option for me or for my first IRA should I go with something more traditional like an E-Trade account or even my local PNC investment banker?
– Neal

It really depends on what you’re looking for or you need from the management of your IRA. Are you looking for someone to hold your hand and walk you through everything step by step? Or are you more comfortable with a large degree of self-management?

Basically, the more help you want, the more you’re going to pay. Although it may not seem like it on the surface, the “more you’re going to pay” usually comes about in the expenses related to the funds you’re investing in, which means that your returns are going to be slightly lower over time. While the difference between, say, a 6.5% annual return and a 7% annual return might not seem like much, it turns out to be a lot over time, especially given your age – you have a lot of years until retirement.

I usually encourage people to forego the extra help and get an IRA that doesn’t have much active intervention in order to save money. That’s why, of the avenues you mention, I’d be most in favor of the E*Trade route, though I would specifically use Vanguard instead of E*Trade as I prefer their investment options.

With an account like that, you’re going to be doing most of the homework yourself, but when you actually invest, the investments are going to be better long term options. This moves some of the work onto your plate – you have to spend the time to learn about investments and know what you’re doing. However, having that knowledge is going to be useful for the rest of your years.

Q11: Keeping credit card open

If I open a credit card with finance capabilities and pay it off in the introductory time period. Do I have to keep using that card once I pay off the balance in the time period or will it hurt my credit to have it open and not keep making finance purchases of $100.00 or more?
– Deann

The biggest benefit in just leaving a credit card open is that it can help establish your credit history and it can help a little bit with your overall debt-to-credit utilization ratio, both of which are factors for your credit score.

So, the first thing to ask yourself is whether this is your oldest credit card. If it is, then you should hold onto it until you have another card that’s been open for several years (at least four, I’d say). If it’s not your oldest credit card or if you have another card that’s been open for several years, this doesn’t matter.

Another factor is the debt-to-credit ratio. Do you currently carry a balance on other cards? If so, is it close to the credit limit on those cards? If you rarely carry a balance on other cards or if that balance is low, keeping this new card isn’t going to make a difference; it’ll only help if you keep a high balance on your other cards.

If the new card isn’t helping with your credit score, there’s really no reason to keep it open. Having a card that’s sitting around unused and not helping your credit score is nothing more than a route to potential identity theft and other misuse. I’d cancel it in that case.

Q12: Cheap shipping

I need to ship personal effects from Vegas to Staten Island, NY What do you recommend? I’m on a tight budget.
– Victor

It depends on the volume and weight of the personal effects, really. It also depends on whether or not you’re also going.

If you’re shipping, say, the entire contents of a house, then you’ll want to look at something like U-Pack, which is a trailer that you pack up yourself and then it’s hauled across the country. If you’re also going, renting a moving truck and driving it yourself should be on your plate.

If you’re shipping on the order of 100 pounds of stuff, there really aren’t any cheap options if you’re not going as well. You will need to shop around with the package shippers like UPS, FedEx, DHL, and so on to see their rates. If you are going, the best way to do it is to pack it in very large suitcases and take a flight with Virgin Airlines, which allows you to check a large number of large bags like this.

The smaller you get, the better the postal service gets, especially their parcel post rates. Again, I don’t know how large or small these personal effects are, but there’s a good chance that if it’s just a few items, sending it in a package via parcel post through the US Postal Service is your cheapest option.

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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