Pay Dirt is Slate’s financial advice column. I have a question? Send it to Lillian, Athena and Elizabeth here. (It’s anonymous!)
dear push dirt,
My mother has been unemployed since she married my father. She has gone from having a good job in her own country to being a housewife. I’m grateful she was there when we were growing up and I think my dad was until he decided to get out of the marriage; They divorced last year. I tried to go back to work several times throughout my childhood and adolescence, even as a budding adult. But my father dissuaded her most of the time or I felt guilty. It doesn’t help that she only holds old qualifications from her home country and has no records of her schooling.
This leads me to the problem. My mom has fallen victim to quite a few multi-level marketing/pyramidal schemes over the years. She likely lost thousands of dollars and learned there were scams. She is not a character to be fooled easily, but she will fall in love with a close relative or friend, invest in the “business” and try to get friends and family to join. She believed that she is finally earning her own income and helping her kids/family as well.
She stayed away after one of them failed badly, but a close friend was trying to get her to invest in cryptocurrency and some other international investment ventures after my mom had money problems in the divorce. Friend means good, but they have more financial and investment experience in addition to their business ventures. If they lose money, they will be in a better position to recover it. mom no.
Recently, I’ve heard my mom is joining Zooms and listening to videos about opportunities for “lifestyle” changing technologies that will allow her to work from home or make passive income. The last one I heard sounded fishy. I researched the company and yes, they were linked as a crypto Ponzi scam. How do I explain this to my mother? After the divorce, she has very little money, receives a limited pension (which is another story in itself), and has to find a new place to live. The idea that she might invest a few hundred or thousands of dollars again hurt me as a child. What do I do?
—try to avoid another pyramid
Dear Avoid Another Pyramid,
I understand your concern for your mother. She’s precisely the type of person MLM targets: immigrants, stay-at-home parents, and especially low-income women. MLM shares many of the same psychological practices as cults, which makes talking to people caught up in MLM groupthink that much more difficult. Followers tell them not to listen to “negative” people, even family members. Even if you’re trying to share your concerns with a loved one, many don’t want to hear it 99 percent of sellers lose money in an MLM venture Because they are told not to think negatively. A lot of Cryptocurrency is facing a massive decline, I hoped that would scare off less experienced investors. Unfortunately, it has caused some Pyramid schemes focus on cryptography To double the difficulty of hiring.
How you handle this with your mom depends on your relationship. If she generally appreciates your input, you can express concern about her potential projects and ask if you can help her research them to make sure they are safe. Since she’s already sworn off multi-level marketing after a bad experience, you can express your desire to protect her from another blowout. You can even offer to help her look at the numbers – this is an opportunity to do some research of your own so you can prove that she isn’t a good payer. In general, these are good ways to evaluate all business opportunities and investments:
Do you fully understand this investment and how it works?
How does this project make money from you? Is it from the profits of a publicly traded stock, from the sale of a product, or from recruiting other people?
—Do you have information about this investment from a reliable external source, or only from the employer and the company?
– How are those who sell it to you compensated?
—Do you know about the past performance of this investment from your own research?
– Does he promise an incredible comeback?
Would you invest in this if a friend didn’t sell it to you?
Good starting points for these conversations are formal questions and warning signs of Federal Trade Commission And Securities and Exchange Commission Intended to help identify MLM scam. Unfortunately, I’ve seen firsthand the financial devastation (and resulting divorce) from cryptocurrency pyramid schemes. People could avoid a lot of economic damage if they simply asked this: Am I Is that true understand this investment?
If your mom is interested in protecting herself, you can watch some content about the dangers of this Multi level marketing And Crypto assets Together (this documentary series, LuLaRich Especially eye opening). I wish you luck in getting your mother off the bottom of the pyramid.
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dear push dirt,
When is it too late to invest in a Roth account? I’m 35, have worked for the federal government for 11 years, and currently have $260,000 in my federal retirement account. I get maximum contributions and get the full government match. The government offers a Roth option, but I’m not sure if it’s too late for me to use it and if I should keep paying into my traditional, but already powerful, account to keep that account growing. Is it too late?
– Is the grass greener on the dung side?
Dear is the grass greener,
It is certainly still possible to contribute to a Roth account at age 35. (It used to be that you couldn’t contribute to some retirement accounts after age 73, but now that’s allowed, In most cases, if you are still working.) The general question of whether you should use a Roth or traditional tax treatment in your retirement account has more to do with your tax situation than with your age. If lowering your gross income works for you at the moment (that is, you live in a high-tax state for work and have a high income), but you expect your income and marginal tax rate to decline at retirement age, traditional is a great option.
But the Roth has its upsides, especially if you expect a small state pension in addition to your TSP. The important advantage of a Roth is that your winnings grow tax-free in the account (and withdrawals are not taxed as long as they are Conditional withdrawal), and Roths have more flexibility to withdraw without penalties before retirement age. Since some Roth funds can be a valuable tool in retirement planning, consider at least part of your money in a Roth TSP, even if your income is high (especially if you earn a lot). To take advantage of a Roth IRA).
I often recommend a combination. If you want to stick a foot on either side of the Roth and the traditional fence: You can contribute to both types within your retirement account as long as your combined contributions fall under the annual limit ($22,500 for the TSP Program in 2023). Keep in mind that any employer contributions from your agency will always go to your traditional TSP balance. But this way you don’t have to choose!
dear push dirt,
Is it worth it to be honest with an ex-co-worker? For context, I was working with a know-it-all. However, they struggled with performing simple tasks and treated the notes as something that was not meant for them or a reason to threaten to leave because they could not muster basic office courtesy. They are eventually fired and seem to be on some kind of crusade against the company, acting as if they were seriously wronged – but they were actually lucky to have their job as long as they did. They were combative from the start, condescending to their co-workers, and constantly making mistakes that they would ignore. They are very smart, but I can’t imagine an environment (other than one where they are in complete control) where they are likely to be happy or not drive everyone around them crazy. As their former manager, who is also no longer in the company, does it make sense to tell them, “You’re the problem, you,” but nicely?
— do not recommend?
dear do not recommend,
Don’t make unsolicited comments to someone you don’t work with anymore. There is nothing to gain from this. This person will discover that they are the problem or continue to feel unfair in the world. They were actually kicked out, which is a blow to anyone’s self-confidence. If that doesn’t cause introspection, I doubt your input will. Please save your time and energy; Don’t look for opportunities to give feedback to someone you already know who receives feedback poorly.
dear push dirt,
Is there a point in paying off a zero percent loan early? I’ve had two and a half years on the car loan, and it’s zero percent for five years. My monthly payment at the time of purchase was $489, so I set up automatic payments of $500 for the week before the due date and haven’t thought about it since. I recently had a big bonus at work around the same time I received a small inheritance from my grandmother and invested most of it but was thinking of paying off the loan with part of it (about $12,000). For me, the peace of mind of not having a loan is very attractive. But is it stupid to use that money to pay off a loan that doesn’t cost me anything? Should I continue to make my payments and have extra money to invest (or use it to have some fun)? I’m otherwise financially healthy and my emergency fund is already comfortable, so there’s no need for it there.
—There is no point in holding an interest-free loan
dear no use,
There are more mathematically efficient ways to use the money than paying off a zero percent loan, but if it will give you peace of mind and won’t deplete your emergency reserves, go for it. Just make sure you don’t have any fines on your car note for prepayment. Personal finance isn’t just about math – it’s also about behaviour. If it gives you the peace of mind to pull out that auto loan, then I give you permission to write a big check and free yourself from it.
And you’re in luck, because I can also make a mathematical argument for this. While you could invest a total of $12,000 in a higher-yielding investment, higher returns come with higher risks and a long time horizon before you see a return. By paying off the car, you reduce your monthly expenses over the next two and a half years, which opens up flexibility if you have a loss of income. Alternatively, you can reallocate the $500 per month you’ve been paying for your car Average cost in dollars. This turns the car payment into an investment in your favor – but offers you flexibility if your situation changes. So go ahead and buy peace of mind by paying off the car, then direct that $500 a month toward another financial goal.
More tips from Slate
I have a 4 year old – let’s call her Alice – and an 8 month old baby girl at home now. I am a firm believer in the principle “your child is not giving you a hard time – he is having a hard time”. I have always and consistently performed the process of “checking, listening, and thinking” with Alice. But all of that has gone out the window recently.