Ask Dr. Per Cap

Dear Dr. Per Cap: 

Game shows look like easy money.  Any advice for someone who wants to win TV cash?

Signed, Trivia Buff

Dear Trivia Buff:

The closest I’ve come to a television game show is sitting on my couch barking out answers to Wheel of Fortune in between mouthfuls of potato chips, but I do have a friend who competed on two different game shows – the mega popular and long running Jeopardy, and more recently a show on the Game Show Network called Master Minds.  She’s got crazy amounts of knowledge and shared behind the scenes insights from Jeopardy.

She first explained that contestants on Jeopardy shoulder some pretty steep out-of-pocket expenses.  Her episode taped in late summer but the audition process leading up to the show began months earlier with an online trivia test. She was then offered an in-person audition in a choice of cities.  She chose San Francisco due to its proximity to Anchorage, AK where she lives and works for a Native led non-profit.  However she had to cover all of her own travel costs for airfare, hotel, meals, and she had to take a few days off from work.

At the audition she took another trivia test and participated in a live Jeopardy game to see how well she and the other aspiring contestants performed.  She left unsure but was happy when notified a few weeks later that she’d been placed in a pool of potential contestants.  But it was made clear there was no guarantee she’d actually be selected to appear on Jeopardy.

She then waited a few more months for the exciting news – she’d made the cut for an upcoming episode of Jeopardy scheduled to tape in three weeks.  Of course, this required another flight to the lower 48, all on her own dime, and a two night stay in L.A.

Interestingly, game shows tape multiple episodes per day so she brought several outfits to the studio, and here’s where it gets fun.  She was pitted against a director of marketing and corporate relationships from Washington DC and a pharmacy student from southern California.  She smoked them both, winning over $24,000 in a thrilling display of knowledge and brainpower that would make even Yoda proud.

Unfortunately, her next game wasn’t quite so amazing.  She led most of the game but lost in Final Jeopardy.  Although still managing to take home another $1,900 for her effort.  But there was a catch.  She wasn’t able to “take home” her total winnings of more than $26,000.  Instead she had to wait for both shows to air almost two months later and then another three months after that before she received a check in the mail.  The waiting game was part of a confidentiality agreement that stated she couldn’t utter a word about the show until it aired.

Taxes were another issue.  Because she wasn’t paid until after January her earnings were reported on her following year’s tax return.  She also had California state income taxes withheld from her check.  Meaning she had to file a California state tax return to receive a refund.  A task she wasn’t accustomed to as an Alaska resident who isn’t required to file a state tax return.  But an even larger issue was the estimated federal tax she had to pay because there was no federal withholding on her winnings. She wisely paid this quickly to avoid a big tax bill later.

Interesting note – taxes can create more challenges for game show contestants who win prizes instead of cash.  Because they’re required to pay income tax on the market value of prizes, some people end up having to sell their prizes just to pay the taxes.  

Overall my friend did really well as a Jeopardy champion.  She was able to win more than enough to cover two trips to California, pay tax on her winnings, and still had plenty leftover to pay some bills and have some fun.  But she made it clear there are probably easier, less stressful ways to earn a five figure payday, and a person can’t bank on a game show as a source of income.  They’re more like a fun hobby that might pay off someday.

She also shared that when auditioning for a game show you’ll often be ruled ineligible to play if you’ve appeared on a previous game show within the last year, so it’s not like a person can just bounce from show to show competing.  It’s also not enough to be a walking Google search engine loaded with obscure trivia factoids.  Producers are also looking for contestants with personality and charisma.

And oh yeah – she said the late Alex Trebek was just as warm and friendly in real life as he appeared on TV.   Hope to see you on a game show someday too! 

Dear Dr. Per Cap: 

While trying to file my taxes online last month, my return was rejected by the IRS with an automated email that read “Date of birth does not match name on file.”  It instructed me to contact the social security administration but I can’t get a hold of anyone there by phone.  What should I do?

Signed, 

I Know My Birthday

Dear I Know My Birthday:

My first thought is that someone might have stolen your identity and used it to apply for either a social security number or benefits.  Pull your credit report immediately at annualcreditreport.com and review it closely for any new accounts you didn’t authorize, a new personal address, or any other suspicious activity.

Another potential problem is an employer who incorrectly listed your social security number on a tax form.  An error like this could result in a discrepancy in the IRS database triggering the email message you received.  So double check any W2’s or other earnings statements you received in January to make sure your social security number and other personal information are listed correctly.

Unfortunately, it can be like pulling teeth to reach a real person with many automated telephone help lines these days so your best bet might be to visit a social security office in person.  Offices are located in all major U.S. cities and many smaller ones as well.  Click here to find one near you and depending on where you live – hopefully, you won’t need to drive too far.

When you go, bring a government issued ID along with your birth certificate because you might need to apply for a new social security card.

If you haven’t done so already, you’ll also want to apply for a six month extension to file your federal and state tax returns.  This can be done for free using the IRS Free File Program.  Please note however, that if you expect to owe taxes you’ll want to send an estimated payment for that amount as soon as possible.  If you wait to pay until you’re finally able to file, you’ll owe interest. 

I realize issues like this are a serious pain in the tail.  Making matters worse is that you’re probably not the one at fault, but you are the one who has to jump through the hurdles.  Hope this all gets squared away quickly.

Dear Dr. Per Cap: 

What’s the best way to ask for a raise?  I like my job but the higher cost of living is making it tough to get by.

Signed, 

Needs a Raise

Dear Needs a Raise:

Think of a pay increase request like any other negotiation – two people or parties both advocating for a want or need.  One key strong negotiators share in common is that they think just as much about what the person sitting across the table is bargaining for as they think about themselves.

Put yourself in your boss’s shoes.  While it’s true that high inflation is squeezing many employees to demand larger paychecks, it’s also true that many employers are worried about a looming recession, higher interest rates, and other economic woes.  These are very real concerns and many businesses and organizations are responding by trimming costs, especially salary and wage hikes.

Realize also that your boss might face pressure from higher ups so your approach must be professional, fair, and realistic.  Most pay raises fall into one of three categories – seniority increases, merit increases, and cost-of-living increases  Seniority increases are generally based on the length of time a person has been employed.  Merit increases consider job performance and skills, and cost-of-living increases are why I might need a second mortgage to buy a carton of eggs.

Present your need for a raise if possible by drawing from all of the above.  While a higher cost of living is your primary concern, also think about how long you’ve been on the job and when you got your last raise.  If it’s been a few years, mention that.  Same goes for merit.  Are you better at your job now than before your last pay raise?  Have you acquired any new skills or completed training that makes you a more valuable employee?  If so, make it known. 

Make a compelling case for that higher cost of living.  Everyone knows food and energy costs are sky high but it’s not enough to complain.  Take the time to document your higher monthly expenses.  Make a simple spreadsheet or just write a list of your costs for rent, food, gas, utilities, and other expenses.  List your old cost for each expense next to the new higher cost and calculate the difference.  This way you’re giving your employer a paper trail that’s hard to ignore.  You might even want to share photocopies of bills and proofs of payment.  Remember – the more facts and documentation you provide – the better.

Now make the “ask”.  If you can prove that across the board your cost of living has increased 10%, that’s a number to negotiate for.  But maybe start a little higher by asking for a 12% raise so you have some wiggle room to get to 10% if there’s push back. 

Finally, be realistic.  Last year the average pay increase for U.S. employees was 6.5 % and for 2023 the average pay raise employees expect is 6.7% based on information shared by a national payroll firm.  Keep those figures in mind and hope you get that raise!

Dear Dr. Per Cap: 

I can handle higher prices for food and rent, but the cost of a vehicle, even a used one, is out of control.  What’s a single mother supposed to do for transportation these days?

Signed,  Needs a Car

Dear Needs a Car:

Growing up in the 80s our family drove a Toyota Camry that cost about $13,000 brand new.  That wasn’t cheap either, when the price of an average new car was under $10,000.

Click ahead to 2023 and the average price of a new car is almost $50,000.  A five-fold increase….really?

Yeah, it is totally out of control and the only way the math works for a lot of folks is by either leasing or signing up for an ultra-long loan, like the 96 month car loans that some lenders offer.  For most car buyers I can’t in good faith recommend either option.

In recent years used car prices have also skyrocketed to an average of over $25,000.  There’s no easy solution other than just saying no to vehicle ownership.  I know it might sound crazy, but is it possible for you to get by without a car?  For people who live fairly close to work, school, a grocery store, and other vital destinations it’s not as off the wall an idea as you might think.

I’ll use myself as an example.  There are many weeks in which I only drive one day – usually an early Saturday morning trip to stock up on groceries and run other errands.  With so much business done online these days and free shipping it’s possible.  Factoring in bus fares, other public transportation, and an occasional Uber ride still costs a lot less than a car payment, insurance, and gas.

But I get it.  What if you live on the rez or someplace rural?  Or do you need to travel back and forth on a regular basis?  Or maybe you spend a lot of time shuttling the kiddos to activities?  The no ride lifestyle might get old quickly.  So another option is a good used car that won’t break the bank.  

The National Consumer Law Center has a program called Working Cars for Working Families.  It operates through a network of local non-profits in twenty-nine states that offer affordable vehicles for eligible families.

Basically, it works like this.  People who donate used cars get a tax break.  Local repair shops then volunteer their time and expertise by inspecting the cars and making necessary repairs.  The vehicles are then sold to families at an extremely reduced price.  There’s a Working Cars for Working Families partner in the town where I live that sells their refurbished cars for only $500.  It also offers deeply discounted repairs for drivers who can’t afford to fix a car they already own.

To learn more check out the Working Cars for Working Families website.

Dear Dr. Per Cap: 

I stopped paying on my student loans during the pandemic.  Is it true I have to resume making payments soon?

Signed,  Professional Student

Dear Professional Student:

If you have federal student loans as opposed to private student loans, which more than 90% are, then yes.  Beginning August 30^th the freeze on federal student loan payments and interest will end.

The historic student debt forbearance which started as one of many efforts to reduce financial hardships caused by Covid was a welcome break for many current and former college students.  As a result more than 40 million borrowers haven’t had to make any federal student loan payments while no interest has accrued on those loans in over three years.  Moreover, all federal student loan accounts, even those that were in default, were placed in good standing.

The freeze has been extended nine times since March of 2020 but a condition of the new debt-ceiling deal, that had lawmakers in Washington deadlocked for weeks, requires student loan borrowers to get back on track with payments.

Because only about 1% of borrowers kept making student loan payments during the payment freeze, there’s bound to be some payment shock going forward.  Therefore start factoring these costs into your monthly budget sooner rather than later.  It’s also a good idea to sign into your student loan account online or reach out to your federal student loan servicer to check on the status of your account, your payment amounts, and due dates.  The August 30^th start date might also not directly apply to you depending on your payment schedule before the pause.  So confirm when your first new payment is due.

Another important consideration is the student loan forgiveness plan that’s been on and off the table for the last two years.  The proposed plan, which offers up to $10,000 of federal student loan debt relief and up to $20,000 of relief if you received Pell Grants, is currently off the table.

However, all eyes are on the Supreme Court, which is expected to issue a ruling on the plan this summer.  Anything goes then, so don’t bank on your student loans being wiped clean just yet.

Another interesting development beginning next year pertains to a new law passed in late 2022 that will allow employers to match an employee’s student loan payments with 401-k contributions.  That’s a nifty way for some borrowers to pay down their student loans while at the same time invest for retirement.

Since the beginning of the year, there have also been some big changes to income driven student loan repayment plans which can lower payments for some borrowers.

Take some time to review your options over the next month or so.  You’ve got time to prepare so take advantage.