What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Facebook alienation and human interaction
2. Save or pay debt?
3. Thoughts on inheritance
4. Privacy and blogging
5. Slow student loan repayment?
6. Parenting blogs
7. Loan or no loan?
8. Savings versus complexity
9. A “getting started” checklist
10. Third child

For those of you who don’t know, Kickstarter is a website where people or groups can pitch a project for funding from the public. For example, you might have a game you want to publish, a book you want to distribute, or something else.

The site allows people to ask the public for support of their project. For that support, supporters are usually given some sort of reward: a signed copy of the book, an early release copy of the game, and so on.

Kickstarter has become my (no longer so) secret passion of 2011. I love the entrepreneurial spirit. I love the great ideas people come up with. It’s just fun for me to browse the projects and watch human ingenuity and creativity at work.

Q1: Facebook alienation and human interaction
Earlier this morning I was reading an article on the New York Times (source: http://www.nytimes.com/2011/12/14/technology/shunning-facebook-and-living-to-tell-about-it.html?_r=3&hp=) about people who refuse to use facebook. Their reason is that in this modern day and age, they feel its actually driving a wedge between their closest friends and themselves. Where once they would call one another, now they shoot a quick message on facebook. Instead of calling to announce something, they would just post an open message announcing it. After giving it some thought, I actually agree with them a lot. I know you frequently write about the value of friendships and relationships, so what are your thoughts? Do you think that social media like facebook helps, or hurts our relationships with other people over time?
- Dale

From my perspective, Facebook is roughly as personal as a phone call. With a phone call, I can’t see the person and I can’t share an experience with the person. Quite often, I find myself leaving a voice mail, which means the conversation isn’t synchronous. Phone calls do have the voice element to them, but as with Facebook, you’re still chopping away big pieces of communication when you can’t see someone.

Both Facebook and phone calls are trumped by face-to-face interaction, though. With that, you get the full experience: you can see the person, you can hear the person, you can share ideas, and you can share experiences.

For me, the sole purpose of Facebook and phone calls is to lead in some way to face-to-face interactions. It’s nothing more and nothing less than that.

Q2: Save or pay debt?
I live in Costa Rica in central America, I’ve always lived here and probably will always live here so there’s no going back to usa to live or retire.

I’m married and have two kids a 3 and a 9 year old, our currency is the costa rican colon, and the exchange rate is approx. 510 colones to a dollar.

My financial situation is this. (All the money I’ve translated into dollars for ease of explanation, but we use colones.)

My salary is 4000 dollars per month take home pay this is after taxes and retirement (a pension plan), my wife brings about 2100 dollars a month after taxes and retirement, our living expenses including mortgage and car payment, school for the kids, food, entertainment etc is about 2500 dollars/month.

My savings are about 36000 dollars in cash, my debt is 33000 left on my home with a loan at 14% (the rate is high because is in colones not in dollars) with 14 years to go, mortgage is about 500 dollars a month, also a car loan of 28000 dollars at 6% (this is actually in dollars, I know our rates are insanely high) with 8 years to go and a monthly payment of 455 dollars including insurance. I have no cc debt or any other debt.

I am able to continue saving about 1800 dollars a month, I know that there might be a chance (50%)my income will go down to about my expense limit in early 2014, this means I’m going to be able to cover my expenses but not save, only about 200 dollars a month.

Also education for my kids is not very expensive here, Medical school for instance can be about 20000 dollars for the whole career, I’m also saving about 100 dollars a month toward college for my kids.

My question is this. Should I:
(1) continue to save $1800 every month (I can get about 8% in a CD, our stock market its not good)
(2) pay down my house (which I don’t intend on living for the rest of my life as it is, I want to either buy a new one or completely remodel mine in a period of 3-5 years, my house has about 100% equity which means that’s worth double what my original loan was)
(3) Pay down my car loan (In Costa Rica the cars depreciate not as bad as in the usa but pretty rapidly)
(4) A combination of the above, and if so in what %
(5) Or something else
- Ron

If I were you, I’d follow a very simple plan.

First, I’d set aside about $1,000 for an emergency fund. This would help you in the event of a personal crisis or other such issue.

Next, I would take the rest of your savings and apply it to eliminating debts that are above the 8% you can get in a CD. I would start with that 14% mortgage. I would just eliminate the whole thing with your savings.

If you have all of your debts eliminated that have an interest rate higher than the CDs available to you, then I would return to a focus on savings. As long as you’re getting a return that’s higher than the interest rate on your debt, keep saving. If your debt interest rate is higher, pay off debt.

This will get you into the best financial shape for the future, I think.

Q3: Thoughts on inheritance
I was just wondering…how much of the the economy and growth in the U.S. depends on inheritance (in your opinion)? People dying, other people getting their money/house, adding value to it, then passing it along when they die? And I don’t mean millions of dollars in inheritance–even smaller sums like a few thousand dollars. I feel that I hear an inordinate amount of stories from people who are only able to have a down payment for a house or fund their child’s education due to an “unexpected” inheritance from a late family member. Is that really how money works from a bird’s eye view?
- Jessica

I think that receiving an inheritance from a parent or grandparent that passes away is a fairly common thing, and that people who receive such windfalls often put it towards a major purchase, such as a house down payment.

I think the entire process of parenting, from the birth of the child to the death of the parent, is a transfer of wealth and other resources from the parent to the child. Obviously, there are things that an adult child can give back, particularly late in the life of the parent, but the largest transfer is from the older to the younger.

That’s always been the case, I think. Since the earliest civilizations, resources have been kept within families. Farms, homes, and other assets were passed from parent to child and on down through the generations. What you see with such inheritances is just the modern version of that.

Q4: Privacy and blogging
You mentioned that you shut down your popular parenting blog due to “privacy invasion issues.” Can you tell me about some of those issues — specifically, what advice do you have for other bloggers who are trying to maintain a balance between being open/transparent and protecting their privacy?
- Ellen

In 2005, I started a parenting blog as I prepared for the birth of my first son. I continued it after his birth for a while, into early 2006, when I made the decision to take it down. There were a few personal threats made toward me and my child that went beyond what I consider normal internet “trolling.”

My suggestion to new bloggers is twofold. First, never post anything on your blog that you would not be perfectly comfortable with a stranger knowing about you. Hand in hand with that is to be extremely careful about what you post regarding people besides yourself. I often edit specific details of people I know and specific situations in order to protect the privacy of people I care about. The Simple Dollar isn’t about invading the privacy of people.

Second, get a thick skin. If you start writing about yourself and gain any degree of popularity, people are going to come out of the woodwork to say negative things about you, often unbelievably negative things. People can and will try to hit you where it hurts. Most of the time, they’ll use a curtain of anonymity to do it. My advice is to just ignore most of, if not all of it. There are sometimes valuable things that are said in there, but if it’s truly a valid concern, it will become apparent in other ways.

Q5: Slow student loan repayment?
My fiance is moving from San Francisco to New York in a month to begin grad school. I had hoped to move with her but I don’t want to change companies and my ability to move with my current employer is in doubt. As a result, I will be moving back in with my parents for perhaps as long as two years when she will graduate and move back to SF. At that point we would get our own apartment again.

I was planning on saving a good chunk of money to help pay down her debt, or save enough to reduce the amount she would have to borrow in her second year. At the very least I was thinking I would be able to pay a big chunk of her debt (15 to 20K) right as she exits school. I was explaining this to a friend recently who said I should research because I may be able to write off loan interest.

My question is two parts; 1) Is my friend’s assumption true and is there upside to paying off debt slower? and 2) Is it better to not spend that money on paying down debt so we can use it toward a down payment on a small 4 to 6 unit apartment building (my dream) or our first house (more realistic). I’d expect we might look to buy a home in as soon as 4 to 5 years.
- Leo

If I were you, I’d hold onto the cash until you’re ready to buy a home together. One big reason is that you’re entering what is going to be a challenging period for your relationship.

Long distance relationships are very difficult to maintain – I’m speaking from experience here – and you don’t want to have invested a lot of money into paying off your partner’s loans only to find that your relationship has not survived.

If you do find yourself together after this period, then I’d sit down and figure out what your shared goals are and what your realistic job opportunities are. These will provide you the clues you need to decide what to do next.

Q6: Parenting blogs
Question for you – do you have any parenting blogs that you read on a regular basis? I’m a new parent, and now and ex-pat, and am looking for a few to keep me motivated in that part of my life.
- Kristy

I had a lot of parenting blogs that I used to read that slowly went defunct over time. It’s very hard to keep the fuel behind a focused blog over a long period of time.

The one blog I’ve enjoyed for a very long time that’s still going strong is Parent Hacks, which I occasionally link to in my weekly roundup. I find useful tips there all the time and I often find myself searching through the archives for ideas.

I don’t read most of the “big” parenting blogs that people often mention.

Q7: Loan or no loan?
I am going to school for my MBA (Master’s of Business Administration). My work has a policy to where they will pay for my schooling, but I have not heard a definate answer one way or another. The VP has approved it but the President has not, and until the President approves it, I may or may not get reimbursed for it. My dad has offered to pay for school until work pays me back, if they do so. If not, then i’ll owe my dad for the tuition. My dad is about to retire in the next few years, so I feel bad taking a loan him, especially since if work does not pay for school, it’ll take me a couple years to pay my dad back. My question is this: should I take my dad up on his offer or go ahead and take out a student loan to cover the remainder of my MBA? Oh and a few other things, my dad “gifted” me first semester’s tuition already. I don’t have a whole lot of credit either. I am working on that with my first credit card this year. A secured card. I have zero debt. Would a student loan boost my credit? is it worth the risk, if work doesn’t pay for school? Or should I take the “safer” route and take out a loan from my dad?
- Ed

First of all, I wouldn’t borrow money from your father who is on the verge of retirement. I’m sure that he’s quite willing to loan you the money, but this is a time where you need to stand on your own two feet and not inject a lender-borrower relationship into your relationship with him.

That being said, if I were you, I’d probably directly ask the company president about the situation before I do anything else. If he denies it, then you’re working for a company that doesn’t stand by their word and I would start looking elsewhere for work, because they’re likely to change their mind about other things, too.

If you’re forced to take a student loan, that’s not necessarily a bad outcome. Student loans do help your credit. They can just feel like an albatross around your neck after you graduate and get your first post-graduation job.

Q8: Savings versus complexity
Over time I’ve picked up specific credit cards that offer a 5% discount at specific locations, two airline cards, and three general cash back card (1% on everything plus 5% on rotating categories). In total I have 10 total cards and charge roughly ~$1000/month combined on the cards. So over the course of a month I can “save” between $10 and $50, but I add a lot of complexity to having to pay multiple cards at the end of the month and I worry that any “savings” that I get will be eaten up by the first mistake I make when I miss making a payment. The additional time isn’t major (maybe 15 minutes a month to pay the bills online) but how do I put a cost on the mental energy that that keeping track of this requires. I have a spreadsheet where I record all of my spending (and have for the past 3 years, a marketer’s dream) so I know what needs to be paid every month, but that doesn’t stop me from worrying that a mistake will still be made. I really think that I need to find a way to look at this issue just beyond any potential financial savings, any advice or suggestions?
- Martha

If this is causing you significant stress – and it seems to be – then it’s not worth the $10 or $20 a month that you’re saving due to this plan.

If I were you, I’d simply decide on the one card that seems to rack up the most rewards for you based on how you spend, then just use that one card for everything. I would then close most of the other cards, keeping only the card I’ve had for the longest (to help with credit history).

For me, playing such games has never been worth the time or the concern about mistakes made.

Q9: A “getting started” checklist
I’m about to graduate with a bachelor’s and go to law school. I’m also about to get married. Up until this point my parents have been so supportive and generous even to a fault. As a consequence I haven’t thought too much about money or done much about it. Considering I’m going to be really on my own soon I was wondering if you could offer a concrete checklist for people who are just starting out. I think this would be helpful for a lot of people.
- Jim

One could write a “checklist” a mile long in this case because there are so many variations and contingencies in the type of situation that you describe here.

If I were you, I’d hit the library and check out a few books targeting your position in life. Two books that immediately come to mind are Automatic Wealth for Grads by Michael Masterson and Smart Couples Finish Rich by David Bach.

On top of those, I’d also read Your Money or Your Life by Joe Dominguez and Vicki Robin. It’s the book that changed my life in terms of my finances.

Q10: Third child
I read a few of your articles and found them very interesting! we are also trying to pay off debt AND decide about a 3rd child. I notice you decided to stop at 2 but then changed your mind? What did it?
- Jessie

Sarah and I had long ago decided to have all of our children relatively close together in age so that they would feel roughly like peers as they grew older – or at least have a sibling or two that they could consider a peer.

Sarah had a very close relationship with her sisters, particularly one that was born less than two years after her. I had a more distant relationship with my siblings, mostly because the closest one to me in age was nine years older than me. We wanted a dynamic more like the one she had with her siblings.

As time passed after our second child, we just kept talking about this subject more and more, and we basically decided that if we were going to actually ever have another child, we were either going to do it now or never do it. I think the immediacy of it convinced us to just go for it.

Got any questions? Email them to me or leave them in the comments and 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 hundreds of questions per week, so I may not necessarily be able to answer yours.

Saving Pennies or Dollars is a new semi-regular series on The Simple Dollar, inspired by a great discussion on The Simple Dollar’s Facebook page concerning frugal tactics that might not really save that much money. I’m going to take some of the scenarios described by the readers there and try to break down the numbers to see if the savings is really worth the time invested.

Marie writes in: My grandfather was not a wealthy man, but he always told me to buy the best quality I could afford, it will last longer. When I was in my early 20′s I purchased a professional hair dryer for about $250.00. This was in the mid 90′s. So that’s about $20 a year so far. I feel like I am already ahead considering a $20 hairdryer never worked for a year. What products are worth spending money on…and I find when possible buying industrial or professional grade products last longer.

Marie makes a great point, albeit one that’s hard to quantify exactly. I’ll try to dig into it with a few examples, but suffice it to say, it’s really only worth paying significantly more for reliability if you use the item all the time. Of course, if you’re rarely using the item, why buy it to begin with?

Take my kitchen knives, for example. Sarah and I received a good (but not great) kitchen knife set as a wedding gift in 2003. The primary knife I used from that set was the chef’s knife. After about two years of steady use (steady meaning roughly every other day), the chef’s knife was nearly unusable. I could get it moderately sharp immediately after a sharpening, but the blade would lose what little edge it had by the time I was finished chopping a single carrot. The end result was that I was burning significant time sharpening and honing this poor knife, not to mention the extra time spent actually chopping the food plus the mangled food that resulted from this.

I then invested in a single high-end chef’s knife, an $80 Global knife. I still use it every other day, but now I hone it perhaps once a month and haven’t sharpened it in three years. I’d estimate this knife saves me five minutes over the other knife every single day.

Here’s the thing: most people would simply shrug their shoulders at five minutes compared to the $80 cost of a knife. However, over the course of three years, five minutes every other day adds up to 2,738 minutes. That’s about forty five and a half hours I saved not having to deal with the knife. That means my cost per hour saved by that knife is about $1.75.

Now, let’s say I only used a chef’s knife once a month, but I still saved five minutes each use from a better knife. Over three years, that’s 36 uses, which at five minutes each adds up to three hours. My cost per hour in this case is about $27.

Clearly, in the first case, the knife was worth it, but in the second case… not so much. The difference between the two is one thing and one thing alone: frequency of use.

So, take Marie’s case. Let’s say she uses her hair dryer daily. She finds that after 350 daily uses, her $20 cheap hair dryers fail. On the other hand, her industrial dryer has withstood 7,000 daily uses (roughly) and is still going. For her, the industrial dryer is worth it.

Now, let’s look at me. I dry my hair maybe once a month. My hair is short and most of the time, a vigorous towel drying and a comb gets me where I want to be.

For me to burn out a $20 hair dryer, I would have to use it 350 times, as per Marie’s estimation. If I use it once a month, that means I would have to use the dryer for 28 years before it would reach that 350 use level.

For me to reach Marie’s use level on an industrial hair dryer, I would have to use that hair dryer, at my current pace, for 583 years.

Simply put, it’s not cost efficient for me to buy an industrial hair dryer. It probably is for Marie, but it’s not for me. What’s the difference? Frequency of use.

It is absolutely worth your while to own a quality, reliable version of an item you use every day (or close to that). You’ll save a lot of dollars (and/or a lot of time) over the long run in such cases. However, when you start looking at less frequent usage, the math is going to start working against you.

My daughter got incredibly ill on Monday evening. She was completely lethargic and was losing liquid as fast as we could give it to her. We were considering taking her to the emergency room.

Tuesday morning, she’s completely fine. She spends the entire day jumping on Dad’s lap and singing songs and jumping on Dad’s lap and playing dress-up and jumping on Dad’s lap and doing puzzles.

Her resilience is beautiful.

Survival of the Fittest in the Workplace and Myths about Fairness I’m a believer that you should always view yourself as a freelancer at work. You should give value to the organization you work for, but you shouldn’t be controlled by them, either. (@ squirrelers)

Quashing the Self-Improvement Urge My counter-argument to this interesting argument is that if you don’t focus on improving, you will eventually be replaced by someone who will. If you’ve reached a place of security and comfort, then that’s no big deal, but a lot of people aren’t in that place. For me, I enjoy getting better at a skill, which is icing on top of the cake. (@ zen habits)

Avoiding Competitive Shopping for Fun and Profit Even if you got a bigger deal than the other person, you still spent money for something. Businesses don’t exist if they’re losing money on such transactions. (@ get rich slowly)

“I Am Here” Sometimes, those are the most valuable three words you can say. (@ seth godin)

Jane Black recently wrote a fascinating article for The Atlantic entitled “Fast Food’s Dirty Little Secret: It’s the Middle Class Buying Burgers“:

For years the conventional wisdom has been that fast food is poor people’s food; that, thanks to government subsidies that ensure cheap calories, the drive-through is where people who can’t afford the “good” stuff — organic, grass-fed, etc. — go to feed their families on a budget. Why else would anyone eat that stuff?

But a new study to be published in the Journal for Population Health Management reveals the dirty little secret of the American middle class: It’s not cash-strapped Americans who are devouring the most Big Macs and Whoppers, it’s us! According to the study, a household earning $60,000 a year eats the most fast food, and one bringing in $80,000 is actually more likely to have it their way than one with $30,000. Suddenly, last year’s news from the Centers for Disease Control makes sense: Nearly half of obese adults in this country are not poor but middle-class, earning at least $77,000 for a family of four.

Why?

What actually drives families to the drive-through are two simple truths. First, it’s convenient. Fast-food hours accommodate odd shifts and offer playrooms to appease screaming children and give moms a break. And, after years of calculated expansion, the restaurants are everywhere we are — in office buildings, department stores, rest stops, schools, Walmarts, airports, even hospitals — which makes fast food America’s default dining-out option. Second, people like the way fast food tastes. No matter how often or how loudly food crusaders preach about the nasty and ecologically disastrous bits that end up in those burgers, fast food’s carefully calibrated mix of salt and fat is hard for many to resist.

To put it simply, people don’t roll up to McDonalds and order a double cheeseburger off of the dollar menu because it’s cheap. They do it because it’s convenient and because it is engineered to taste good.

It’s not even cheap, either. As Mark Bittman points out:

In fact it isn’t cheaper to eat highly processed food: a typical order for a family of four — for example, two Big Macs, a cheeseburger, six chicken McNuggets, two medium and two small fries, and two medium and two small sodas — costs, at the McDonald’s a hundred steps from where I write, about $28.

I can make a much better meal than that at home for far less than $28.

So, what’s the point of all of this. The point is that convenience is often the driving factor for people when they make spending choices. They will spend more money and sacrifice other factors such as healthiness in order to maximize convenience.

This is actually a completely understandable thing. If you’re trying to manage a busy career, start a side business, have community responsibilities, and have a spouse and children at home (a situation that sounds awfully familiar to me), convenience can be an enormously important factor. If there’s a way to shave some time out of a daily routine, that usually directly translates into a bit more sleep or a bit more quality time with their family or a bit of simple leisure time.

That’s why I believe that one of the best frugality tactics is to heavily incorporate convenience into your frugal methods. Two examples:

One thing Sarah and I often do is make meals in advance. We’ll either freeze them so that they can easily be pulled out and tossed in the oven, or we’ll package them up in such a way that they can just be tossed into a pot (preferably a crock pot) and cooked with minimal effort. We’ll often assemble a bunch of meals for the next week or two on a weekend afternoon. We’ll do similar things with convenience foods like frozen burritos, too.

I often like to use premeasured soap for washing dishes and laundry. It’s actually really convenient to do this. All you need is a squirt bottle that emits a significant volume per squirt. Then, just figure out how many squirts you need for a load using the actual measurements recommended on the package. So, for example, if it takes two squirts to fill up your laundry detergent cup, then you can just use two quick squirts into the washing machine. This saves money in a very subtle but very real way: we tend to drastically overuse laundry detergent, so a squirter helps out with that problem and causes less detergent to be used per load.

I could go on with many, many examples of this: programmable thermostats, online banking, seasoning packets, and so on.

The key thing to remember is that in the midst of a busy day, convenience will usually trump frugality. If you know that in advance and can make it so that the convenient choice on that busy day is also the frugal choice, you’re going to see some significant savings over time.

Saving Pennies or Dollars is a new semi-regular series on The Simple Dollar, inspired by a great discussion on The Simple Dollar’s Facebook page concerning frugal tactics that might not really save that much money. I’m going to take some of the scenarios described by the readers there and try to break down the numbers to see if the savings is really worth the time invested.

Erin writes in: I have a question for your “Saving Pennies or Dollars?” series. It’s about dried beans, like pinto, great northern. Would it be worth the time to buy dried beans and can them myself, or am I better off just buying the cans at the store when they are on sale. I have a pressure canner and a simple recipe for canning my own beans.

First of all, it’s pretty easy to find canned beans at the store for $1.50 per can or even a bit less than that. Canned beans are not a particularly expensive item.

Having said that, you can easily find dried beans for $1.40 per pound or less.

So, how much does that equate to? Beans approximately double in weight during the cooking process due to the absorbed water. A 15 ounce can of cooked beans, in other words, equates to about 7.5 ounces of dried beans. Thus, the cost of an equivalent amount of dry beans is about $0.65. You’ll save about $0.85 per can cooking them yourself, in other words.

However, that accounts for just the cost of the beans. If you wish to can them, there is significant cost to the canning process – a pressure cooker (for non-acidic items), a large pot (for water-bathing acidic items), jars, lids, and rings are all required to make this work, and these items all eat into the $0.85 per can you’re saving by canning yourself.

Lids can vary greatly in cost. If you want reusable plastic lids, you’ll be spending about a dollar each to get started, but you can reuse them a few dozen times before dings begin to make them not work, bringing the cost down to $0.03 per use. Other lid options have a lower initial cost, but are one-time use.

Jars and rings often come together for approximately $1 apiece in twelve packs. Again, you’re going to reuse these things many times, so the cost quickly goes down into the range of $0.05 (given my own history of breaking jars, 20 uses seems like a reasonable number).

A pressure cooker is going to be your big cash outlay. You can get a decent pressure cooker for about $40, which should last you a long time. Let’s say you use it 100 times with 6 jars each, though. That’s still a cost of about $0.07 per jar for the canner.

These costs quickly knock down the savings you get from canning. In fact, it’s going to take several batches of canning for you to reach a point where you’re breaking even on the supplies compared to buying cans of the food in the store.

If you notice, the cost per jar for each of the items above assumes a lot of uses, so if you’re only canning a few times a year, it’s probably not cost effective to do it.

From my own experience, I find that the time invested per jar canned across a lot of different things is about eight minutes. In other words, if I’m canning six jars of something, the time to actually can the items versus just making the items and putting them in the refrigerator is about forty five minutes or so.

Now, if I’m saving $0.65 per jar (the $0.85 in savings from using my own beans minus the $0.20 in costs for canning) and it’s taking me eight minutes per jar, I’m saving about $4.88 per hour of canning. Frankly, it’s not worth it at that price for me just as a savings method. There is savings there, but not enough to make up for the lost time.

However, the food quality is a factor, too. I’d far rather eat a food item I canned myself than a canned food item from the store. The quality of garden-fresh salsa I made myself and canned versus a jar of salsa from the store is huge, for example. The same is true for almost anything else – including beans.

So, are you doing this to save big money? No. You’re saving a little, but not a lot. You’re doing this because you’re turning out high-quality food for your pantry and saving a little bit of money, too. For me, that adds up to a worthwhile deal.

A few months ago, a friend of mine bought a used car to replace his worn-out beast from the mid-1980s. I was impressed when he told me he had paid cash for it. I was even more impressed when he told me how he bought this used car.

His method was simple. He didn’t go to a dealership or shop on the internet for his car. Instead, all he did was stick with the same local car repair service for the work done on his used car. When it began to really fail, he simply asked the guy who ran the repair service if he knew of any reliable used cars for a good price. The guy did and he was happy to help a good customer get connected to the person selling that car. A few days later, the replacement car was his at a very nice price.

In other words, rather than asking for a direct discount (which would have cut into the car repairman’s bottom line), he asked for an indirect discount, which didn’t affect the car repairman’s bottom line at all. Because of that, the repairman was much more willing to help a regular customer.

What makes for such an “indirect” discount? Simply ask for help in a field related to but not the same one as the field the expert is in.

I’ll give you an example. One of my winter projects has been to paint a bunch of pieces for a board game that my wife and my friends and I play regularly. The pieces that came with the game were gray and bland and I thought it would be fun to learn how to jazz them up with some color.

I didn’t know anyone who was familiar with how to do this, so I stopped by the hobby shop in my town that seemed to be the closest to this field. It’s a shop that I’ve purchased items in before, so I knew the staff there.

I simply asked them if they knew anyone who was into painting miniatures that might be willing to help out a beginner.

It turns out that one of the people working at the shop did this as a side hobby. He proceeded to go out to his vehicle, get a box of painting stuff, come back inside, and give me a half hour tutorial on the spot for painting figurines. At the end, he gave me a couple bottles of paint and a brush to get me started, as well as a printed page of URLs for the web resources he uses in that hobby.

All I had to do was ask for indirect help.

Whenever we’re stuck with a need of some kind, we tend to first think of the direct sources to fulfill that need. If we need a new car, we think of a car dealership. If we need a new computer, we think of an electronics store.

Quite often, though, we’re better off asking for indirect help through the sources that we’ve already built a relationship with. If you need to replace that used car with a bit newer one, why not start by asking the repairman that you already trust? If you need to replace that computer, why not start by asking the guy who fixes your computer for you?

With indirect help, you might not immediately get the solution you need. After all, you’re asking for help outside of their area of expertise.

However, you might also find an unexpected amount of help from someone who doesn’t have a profit-making interest in your arrangement. They just want to keep you happy and continue to build the relationship they have built with you, and if they happen to have access to great opportunities that they can share with you, it’s something that results in a win for both of you.

Never be afraid to ask. The worst thing that can happen is “no,” which is pretty much the same result that you have if you never ask at all.

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Investing in a taxable account
2. Pushy mother of child’s friend
3. Buying furniture
4. Going back to school
5. The burden of care
6. Idle computer energy drain
7. Consaidering a job change
8. Low interest debt?
9. Secret Santa difficulty
10. Road trip music

Sometimes, when you see someone you once spent a lot of time with but haven’t seen in a while, the interactions can be awkward.

At other times, you’ll fit together like nothing ever changed.

I’ve experienced both in the last few days.

Q1: Investing in a taxable account
I match my employers contribution of 5% in my 401k (started last year I’m currently 29). I’m planning to open a Roth IRA with Vanguard on my 30th birthday. I have a checking account with Charles Schwab which includes a brokerage account the question is what kind of funds do I invest in? My 401k has an asset allocation of 30/70 Pimco Total Return Bond Fund/Spartan 500 index fund, for the Roth I was thinking of using a target fund, but I’m clueless as to how to use the Schwab brokerage account, I was interested in something that would give me passive income. I’m 29 with a 401k, Schwab brokerage account, and soon to be established Vanguard Roth IRA and I’m earning about $30k/year, less than $180 in debt, and maybe $7k in precious metals, my emergency fund is less than $300 but I’m working on it. What do you say? I started late but am I on track? I’m tired of spending I want to be a saver. Again what do I invest in a taxable account? Thanks
- Ron

The first thing I’d do is figure out what my goals are. Why are you saving? Do you want an early retirement? Do you want a well-off retirement? Do you want a nice home in ten years?

Investing without a goal in mind is like spending four years at a university without a major. You’ll have accumulated a lot, but you won’t necessarily be ready to take the next step.

I’d suggest figuring out your goals before you do anything else. A taxable investment account may be a big part of achieving those goals, but it’s not a goal in and of itself.

Q2: Pushy mother of child’s friend
I left my job earlier this year to stay at home with my two daughters. I left a well paying career because of stress and in order to spend more time with my girls. I’ve taken on a number of volunteer roles as well as enrolled in a co-op preschool with my youngest daughter which takes up two days of my week. Suffice it to say that I’m busy during the week. My older daughter has a friend at school who really likes to come over and spend time at our house so much so that she routinely asks if she can come over after school. This bothers me because I’ve always believed that you wait to be asked over to someone’s house.

Recently, the friend’s mother has started asking me to watch her daughter for several hours at a time sometimes multiple times a week. She is in college and has recently broken up with her fiancee who helped with her childcare. She also waits to ask me until an hour or so before school lets out. This has really started to bother me on multiple levels. She has never offered to pay me or even watch my children in return. I don’t mind helping out but it doesn’t seem fair that she asks me so often. I also don’t like being put on the spot at the last minute. So I started not answering the phone when she calls or making up excuses about why I can’t watch her daughter. However, I feel bad about it. She is in a tough spot right now. I’ve tried to explain to her that I don’t mind helping but I need advance notice but that doesn’t seem to do anything. I’m starting to feel rather resentful. So what should I do? I quit my job for a less stressful life not so I can be the on-call, unpaid babysitter for other people. Do you ever find yourself in a similar situation since you do not have a normal 9am to 5pm job?
- Carla

The mother is taking advantage of the situation, no doubt about it. The solution is for you to simply put your foot down and say that you’re not available to babysit at her convenience.

One thing worth noting, though, is the impact this is all having on the young friend of your daughter’s. She’s clearly got to be aware that her mother is going through a hard time right now and may be looking for some steadiness in her life, something you might be providing for her.

If I were you, I’d help out some, but I would not do it at the drop of a hat. That’s the role of a paid babysitter, which you’re not.

Q3: Buying furniture
My husband and I recently moved into a 3-bedroom house, which we are renting. We have very little furniture – a mattress, a hutch, a couple bookshelves – because we recently finished an extended travel sabbatical, and we gave away all our old furniture before we left. We are in our mid-30′s, have no debt, and no kids (though we hope to start a family in the next year or two). One well-behaved dog. Our 401Ks and IRAs are funded, and our emergency fund is stocked. We plan to eventually buy a home, probably in the next five years, but haven’t chosen exactly where we want to settle down yet (the 20%+ deposit is already in the bank) and we live in an area where the housing costs are very high. We are allergic to debt, and prefer to spend our money on experiences over material things…which leads to our dilemma: spending money on furniture.

Our challenge right now is figuring out our strategy for furnishing the place. Do we buy a few quality pieces that we plan to keep for our future home (sofa, dining table, dresser, end tables) and furnish the rest with inexpensive and/or “disposable” furniture? Or do we furnish the whole place as inexpensively as possible, saving our cash for when we do buy a home? Since you live in a house that is not your long-term dream home and have children, I’m interested to hear your thoughts on acquiring furniture.
- Anne

Our method for this was to furnish our entire home as cheaply as possible, then start upgrading pieces as they wore out or opportunity struck us with higher quality pieces.

For example, our original dining room table was an ancient and well-worn hand-me-down from my great grandmother. One of the legs was a bit wobbly and when it reached a very bad state, we replaced it with a much more long-term dining room table.

I can tell a very similar story about our couches, our chairs, and so forth. Of our first batch, many came from Goodwill or were hand-me-downs. Over time, we replaced them with much better versions, but not all at once.

Q4: Going back to school
I am a 25 (soon to be 26) year old who graduated from my undergrad about 2 years ago. I originally went with the intent to get a degree in education and along the way became involved with a residence life organization (a group of students who work with college students who live in the residence halls on campus) and decided to look for graduate assistantships that would pay for graduate schooling while I worked with residence life and college students. I dropped my education major and graduated with Spanish and English majors.

I received a graduate assistantship in another state (I am originally from the Midwest) and decided to go work out East and enjoyed my time working with the college students. However because of the heavy workload, homesickness and an unwavering feeling that I should be working with different students I decided to leave after one year. Following that decision, I decided to move back to my home-state and take a year off and figure things out.

During that year I decided that I wanted to go back to school to get that education degree but more specifically for Special Education. There have been numerous instances that have pointed me in the direction of working with students that have disabilities. This upcoming year I will be attending graduate school for Special Education. I have started to pay off (very slowly) student loans that I acquired while I was taking my undergraduate degree. I guess I am wondering (since I know that Special Education won’t make money) what the best way about getting funding is. Or if you think this is a wise decision financially? I guess any direction would be greatly appreciated.
- Emily

You can’t make your career choice based on finance alone unless you want your career to be mired in unhappiness. A career that you solely get into for the money will either lead you to a life you don’t like or to a wasted degree.

If you’ve figured out what you want to do, then I would go for that degree. Go for it with relish, get every valuable bit of education and experience you can, and put yourself in the best position you can to get the job you want.

As for funding it, your best route would be to start seeking out scholarships and aid specifically for that area. There tends to be aid available for people who want to take on educational and career paths such as these. Start with the education department at your institution and also check with the financial aid office.

Q5: The burden of care
If everyone takes steps to prevent health care facilities from “taking all their money” then who is supposed to pay for all of that very expensive care? Are you and I supposed to help bear the burden of someone’s care (should he need it) while his children benefit from his [...] windfall? I have a parent who is in Assisted Living which costs almost $4000 per month. Because my parents were frugal there was money in the bank as well as a home that will be sold to pay for my Mother’s care for as long as possible. This is her money—not mine – not an inheritance for the Grandchildren. If she did not have these resources she would be (and will be if she outlives her money) receiving Medicaid and living in a Nursing Home although she does not need to be in a Nursing Home – she just needs some help with daily living. My family was not wealthy—they scrimped and saved all their lives and I am sure paid their fair share of taxes to help take care of those people who somehow made sure their children would inherit their money..

Have you considered this aspect of people trying to “hide” or gift that money so that healthcare facilities don’t “get it”? Who IS supposed to pay those (underpaid) medical professionals who care for us when we are old and infirm – especially if we do not or cannot move our parents into our own homes and care for them ourselves?

I could not live with myself if I knew I had all of my Mother’s money while she was forced to live in a Nursing Home when she could no longer live alone but did not need 24 hour nursing care. And Medicaid will NOT pay for Assisted Living – only Nursing Homes.
- Rhonda

It really doesn’t bother me too much, to be honest. If a person has accumulated significant wealth in their life, then they’ve had to pay taxes during that accumulation, likely at a higher rate than people with less wealth. They’ve often paid a lot of taxes over the course of their life.

That money they’ve accumulated is their after-tax money and they should feel free to spend it as they wish. If they choose to spend it by gifting it to family members, then rely on a lower level of senior care as is made available through government programs, that’s their choice. If they want to hang onto that money and have a higher level of care, that’s also their choice.

There’s also the case that you’d be punishing the frugal. If someone can blow every dime they’ve earned throughout their life and then the state takes care of them at the end, but someone who carefully saved throughout their life has to pay for that care out of pocket, the situation is encouraging people to just blow their money.

Q6: Idle computer energy drain
I have become very intent on saving electricity where ever I am able to. Several blogs have told me that saving electricity by unpluging or switching off devices with a constant power draw, such as laptop and phone charger, can save me a few dollars from my power bill every month. All of my devices are on one power strip, but it is a pain to switch it off every time I am not using it (under the desk, hard to get to, etc etc). Am I really saving a significant amount of money by doing this? Or am I crawling under the desk for nothing?
- Craig

It will save you a few dollars every month, but just a few dollars. Is it worth it for you to climb under that desk several times a month to save $2 or $3 or $4? I can’t really answer that for you.

For me, it would be worth it to rewire things so that such a switch is easily available without a lot of effort. What I did with my main computer setup is get a power strip with a “master” plug-in where if the device on the “master” plug-in isn’t drawing electricity, then nothing else on the strip gets any power. I plugged my main computer into the “master” and devices like the monitor and the printer and the USB hub into the other slots.

If the only option is to crawl under the desk repeatedly for $3 a month, it wouldn’t be worth it for me. I would probably look for other solutions to the problem, though.

Q7: Considering a job change
I am in an interesting position right now as a full-time graduate student. I cut back on my hours at my loan servicing job to go to school full-time this fall. (Library Science) I absolutely love my program and being a student again, but I’m struggling because I am very unhappy with my current job. I’ve been at the same job for three years due to the bad economy and the safety net of a job with health insurance. To be perfectly honest, this job also helped me decide to return to school after I realized how unhappy I was working there!

I seem to run into the same problem every few months. I’ll tell myself I need to count my blessings because I have a job with insurance and can go to school full-time. Having this job takes off some of the financial stress as a student, and I’m able to volunteer to gain experience in my graduate field of study. But then I run into a stressful period or become upset with something that happened at work and I find myself dreading the next work day. I’m very frustrated with some aspects of my job that are beyond my control, but it mainly boils down to some business practices emphasizing quantity over quality and the lack of opportunities to advance in my current position. It’s strange because I consistently receive good reviews from my managers but I just hate the job itself. I don’t find very much personal satisfaction with my work, and I don’t like working for a large corporation.

I feel terribly guilty complaining about my job when so many people do not have jobs or health insurance. I also feel that since I repeat this same cycle every few months, I should try to address these feelings and at least think about finding a different job. But I just don’t know if it is smart to try and find something else now that I am a student.

Do you have any advice for me on how I can improve my attitude? Or is it really just a better idea to try and find a different part-time job that will be more tolerable?
- Louise

In your situation, this job is a blessing, but I think you’re looking at it from the wrong perspective. This job is a paycheck. It’s nothing more and nothing less. It is not furthering your career ambitions. It is merely making your path to the degree you want much more comfortable.

Compare it to the other part-time options you have, such as working at Burger King or being a checkout person at your local Target. The compensation would most assuredly be less, you would be without insurance, and you’d probably have many of the same complaints.

Go there, do your work, and conserve your energy and thoughts for your Library Science degree and your career after that. Ignore the politics of the job and other factors. Just do the work, but keep your focus on what your passions are.

Q8: Low interest debt?
I work full time and go to college part time. I have to work in order to pay for school. I am faithful in saving for my tuition every semester, as well as saving for retirement and putting towards an emergency fund. Since I am 27 years old, I know that now is the time to save for retirement in order to take advantage of compounding interest. This is my question: Since my income is not high and I qualify for financial aid, should I just use the financial aid (at a low interest) to pay for school – even though I have the money saved up for it. Furthermore, I would use the saved money to max out my Roth IRA for the year. I think of this because I feel I will be able to pay back my loans when I graduate while taking advantage of about 2 more years of compound interest. On the other hand, I am nervous about having a student debt. What do you think?
- Mike

I would avoid going into debt, even with relatively low rates. Having that debt after you graduate will restrict your options and your career mobility by raising your monthly required bills. This is not something you want to have freshly out of college.

My single biggest financial regret in my life is taking out more student loans than I needed. Student loans became an albatross around my neck for the last decade.

If I were you, I wouldn’t sweat the retirement savings at this point. If you get out of college with a degree and without debts, you’ll be far ahead of the financial game anyway.

Q9: Secret Santa difficulty
At my office, we have a “Secret Santa” exchange each year. Rather than drawing names, everyone puts a $20 gift into a box, then everyone draws a gift out of the box.

This seems like a waste of money to me and I don’t want to participate in it this year. How exactly can I get out of this tactfully?
- Megan

It depends greatly on the culture of your office environment. At many offices, such a gift exchange is just a way to have a social encounter with coworkers, often a lengthy one. The gifts are secondary – the reason for doing it is coworker relationships. If this is a job you value, that kind of relationship building is well worth the $20.

This is also a great opportunity for “regifting.” If you have an item around your home that’s unused that you could easily put into the exchange, do so.

Of course, there are other offices where this is just something people do very casually, without much social interaction or a big deal made of it. If that’s the case, just simply bow out with the person running it. Talk to them privately and just say that Christmas means something different to you.

Q10: Road trip music
Like you and Sarah, my wife and I go on lengthy road trips when we visit family. Along the way, we listen to music. However, my wife and I have very different tastes in music. I like Muse, she likes Adele. I like Tool, she likes Norah Jones.

To put it frankly, I’m not a big fan of “her” music, nor she mine. How do you guys handle music selection on your road trips?

I know this isn’t a typical “reader mailbag” question, but it’s something that we’ve bickered about off and on over the years.
- Andrew

Sarah and I do have different tastes in music, and this causes occasional difficulties on road trips. We have two solutions.

First, we often listen to podcasts. While we don’t like the same music, we do have other interests in common, such as current events. I’ll just get a bunch of podcasts on current events and other shared interests before we go and we listen to those.

Another thing we do is seek out artists that we both like. The way we do that is that we both occasionally build eclectic lists of stuff we each like, then we listen to these together and the other person listens for things that they like. Through this, we’ve built at least one good-sized list of stuff we both like.

Got any questions? Email them to me or leave them in the comments and 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 hundreds of questions per week, so I may not necessarily be able to answer yours.

Every Sunday, The Simple Dollar reviews a personal finance or other book of interest. Also available is a complete list of the hundreds of book reviews that have appeared on The Simple Dollar over the years.

As many long-time readers of The Simple Dollar know, I’m quite focused on time management practices. Without good time management skills, I would have never been able to get The Simple Dollar off the ground.

One particular facet of time management was always a challenge for me, though. I would always find that I was more productive on some days than others and at some times of the day as opposed to others. I also began to realize that there were other factors tied heavily to my productivity: the amount of sleep I got the last few nights, whether I forgot to take medications, and so on.

Eventually, I began to realize that energy management was in a lot of ways as important as time management, and that’s exactly the philosophy described in this book, The Power of Full Engagement by Jim Loehr and Tony Schwartz.

Fully Engaged: Energy, Not Time, Is Our Most Precious Resource
The basic premise of the book is that people are most productive when they go through periods of high stress followed by periods of renewal. This is in contrast to the typical idea of time management in which everything is approached like a marathon with a consistent level of stress throughout. The problem with that route is that it doesn’t account for your natural fluctuations in energy. It eventually leads to “burnout” or significant disengagement (you’re just collecting a paycheck).

The Disengaged Life of Roger B.
Roger B. is a person who spends so much of his time responding to external stimuli (the incessant demands of his job, a busy family, community responsibilities) that he’s essentially burnt out on everything and isn’t giving good performance in any area of his life. This is mostly because he never takes time for himself to genuinely relax and figure out what he wants out of life. I’ll admit that pieces of the story sounded incredibly familiar to me.

The Pulse of High Performance: Balancing Stress and Recovery
The key idea in this book is that best way to really perform well in any area of your life is to stress that area hard, then follow that period with a respite that’s free from stress. That doesn’t mean being on call or just having low stress. It means time to recover and rethink. It means a genuine period of rest and reflection and regrowth without a continuation of the stress. A great sports champion doesn’t play nonstop. Why should a great writer or a great employee?

Physical Energy: Fueling the Fire
The authors start off by looking at physical energy, heavily looking at physical fitness as a way to build up physical energy. They recommend that people train by working very hard for periods, followed by periods of almost no work at all. Stress your body nearly to the point of breaking, let it rest and recover, then repeat. This will make your body stronger.

Emotional Energy: Transforming Threat into Challenge
A similar theme – stress, rejuvenation, repeat – pops up again here when looking at emotional energy. Rather than facing a steady ongoing level of emotional stress, you should look at that consistent threat as a challenge and tackle it head on. Yes, this will cause a great deal of stress at once, but resolving that issue will reduce your stress over the long term.

Mental Energy: Appropriate Focus and Realistic Optimism
You can’t just focus mentally on one thing all of the time. You also can’t focus entirely on what others insist that you focus on. You have to spend at least some of your time doing what you want to do, unwinding from the tightness that you’ve built up. Without that unwinding, you’re unable to keep the things you need to focus on in your life in perspective and you’re unable to determine what’s realistic regarding them.

Spiritual Energy: He Who Has a Way to Live
Here, the authors argue that much of the ongoing stress in our lives comes from living in a way that isn’t in accordance to the values we have, whatever they may be. Often, living in accordance to those values means occasional peaks of stress (when doing something that’s hard) followed by a sense of peace and ease of living because those values guide you. You aren’t doing things that are wrong to you, making life easier to handle.

Defining Purpose: The Rules of Engagement
So, how do you really get started on this? The authors say that the foundation of all of this is purpose. Why are you here? What do you want to do with your life? What’s the destination? On top of that are your values, which guide you to that purpose. You move toward that purpose by simply taking on challenges in your life head-on, then taking genuine breaks where you turn off that cell phone.

Face the Truth: How Are You Managing Your Energy Now?
It’s often hard to face the real challenges in our life. We tend to take shortcuts that work well in the short term, but fail us in the long term. We keep up a wall at work. We take a pessimistic, snarky attitude about things. The list goes on and on. However, if we take that short-term heat head on and face the truth of our situation, we can move onto a path that actually makes life easier.

Taking Action: The Power of Positive Rituals
How do you keep going on this path? The authors suggest positive rituals. All of us have a morning ritual where we go through certain actions automatically each day. If you want to move toward the big goals in your life, you need to add to your daily rituals. Make going for a walk each day “normal.” Make working on your novel a bit each day “normal.”

Is The Power of Full Engagement Worth Reading?
I felt that The Power of Full Engagement offered up a powerful perspective on managing one’s time and energy. The idea of bearing down on particular things then alternating them with a rest period is a powerful one. The book also does a great job of walking through the ramifications of that perspective in different dimensions of life.

If you’re finding it difficult to achieve the things you want to achieve in life, The Power of Full Engagement is well worth a read. I found lots of food for thought in those pages, which is the most I can really ask for from a book.

Check out additional reviews and notes of The Power of Full Engagement on Amazon.com.