I’m 34 years old; live and work in Washingon, DC for a non-profit organization I’ve been with for 10 years. My salary is quite good, and the benefits are great. Those benefits include a current 13.5% contribution to a 403b (they start at 7.5, then add a point for every two years of service, add a couple of points when you cross each decade threshold, etc) without needing an employee match. So, confession: I don’t contribute to it on my own at all. In the early years, I was wasteful, and now I’ve been focusing my money on getting out of debt first and foremost, and rebuilding my emergency fund (which has gotten tapped to pay for mother’s funeral, emergency veterinarian bills, etc in the last year).

Am I making a mistake not contributing some of my own cash as well? I feel like 13.5% of my salary puts me in good stead over the long-term, and that there will be time enough to contribute more in a couple of years when I am out of debt. My parents both died long before retirement age, too, and I am not planning on having kids who can inherit the retirement money if I have the same fate…).
- Karen

First of all, your benefits are stellar. There’s simply no other word for an organization that puts 13.5% into your 403(b) for you without you having to contribute to it. That’s a benefit most of us would kill for.

At this point, you need to step back and look at the big picture. Are you on pace for the type of retirement you want? I’d take a look at a good retirement calculator.

Two key questions worth thinking about: when do you intend to “retire” from your current career, and at that point, how much of your salary will you need? If you like to work, your intended retirement age will probably be higher than it would be if you can’t wait to retire. If you want to try a second career in your retirement years, your percentage will be lower than if you want to spend your retirement traveling.

Many will argue that you can’t know this. My belief is that the truth is somewhere in the middle – people usually know if they’re of the type who’s happier working and being productive and who’s happier with pure leisure time, but the specifics of your life can change.

Run some appropriate numbers through that calculator and aim a little on the high side. Of course, with 13.5% already being saved, you’re probably fine no matter what you do.

My question, which is prompted by your fall cleaning post, is whether people have been able to find a market for their stuff in this economy, or, to put it a little more optimistically and pragmatically, what strategies have people used to sell their stuff? My neighbor and I have a yard sale in late spring every year, but this year, for the first time ever, we hardly sold anything, making the whole event seem like a waste of time. Along the same lines, I am wondering whether people have found it harder to sell stuff on EBAY, or whether they have had to change their strategies for such sales.
- Barb

My experience in buying and selling on eBay and Amazon auctions, as well as a semi-frequent thrift store visitor, is that the secondhand and discount marketplaces are thriving right now and that it’s a perfectly good time to sell used goods. Most of the economic downturn is coming at the expense of more upscale retailers.

People tend to focus more on bargain-hunting when the economy is down, but rarely do they make true changes to their behavior. They might choose to shop for the thing they want on eBay or Craigslist or at a thrift store, but they’re still going to buy an item if they want it. A retail economic downturn usually means only a 10-15% drop in sales, which means 85-90% of the items they were selling before are still selling.

In short, if anything, now’s a better time than usual to dive into selling used stuff, because there are plenty of buyers out there.

My boyfriend and I are traveling to Prague in the Czech Republic over Thanksgiving weekend and are trying to figure out the best way to exchange money. Is it best to a) change cash in the US to travelers’ checks, b) change US cash in Prague to Czech crowns, or c) take out cash in the form of Czech crowns from local ATMs while there? I also have about 40 Euro left from my last trip to Europe that hasn’t been changed back to US dollars.
- Valerie

Your best bet is to look at your various conversion options before you leave and choose the one that gives you the most crowns for your dollar now. Your best option depends heavily on the policies of the bank you use compared to other options.

Depending on your credit and personal responsibility, it might make the most sense to simply make most of your purchases on a credit card. Visa and MasterCard are widely accepted in Czechoslovakia and you are simply billed for the amount. Be sure to tell your credit card company that you’re traveling before you leave. Assuming that you pay the bill in full when you return, this is a safer option than traveler’s cheques.

One guaranteed piece of advice: avoid currency exchanges at the airport. Their rates are atrocious. I would also probably advise doing the currency exchange there because your options are more limited than they are here in the States.

You’ve talked before about how you don’t like consumerism. How does that affect how you buy Christmas presents for your children?
- Ed

I’m more of the philosophy that you get children a small number of quality presents instead of piles of unnecessary stuff. I also am a big fan of gifting experiences to people.

So, for example, I would have no problem wrapping up a picture of Disney World or of Yellowstone and giving that as a gift along with a promise of a family vacation there. That would be one of, say, three gifts they would receive.

I have no problem with giving gifts or receiving them. However, I’m not a big fan of giving gifts or receiving gifts that are unwanted and just result in more “stuff” for people to manage that they don’t really value.

So, for all of my friends and family reading this, if I ever give you a gift that you don’t want, absolutely feel free to take it back or re-gift it. Please don’t keep unnecessary stuff in your home.

I’m a public school teacher, and as you can imagine, this was a bad year for our union to be re-negotiating the contract. Bottom line is, I’ll be bringing home less money per week next year than I am this year, and I’ll be getting fewer benefits. Though many teachers are well-paid for their efforts, young teachers like me typically start out very low on the pay scale. Next year will be tough.

Could you give me the lowdown on HSAs? I understand the basics. What would be the risks in going with an HSA plan? What would be the benefits? Who would you see as the optimal candidate for HSA, and who would be a person that should stay with a PPO?
- CT

In a nutshell, HSAs are just savings accounts that your employer deposits money in that you can withdraw solely for health-related expenses. This is usually done through a reimbursement system or via a debit card that accesses the account which can only be used at health-related businesses.

In general, HSAs are a solid option for younger workers who are in good health. The older you get – and the more known conditions you have or know you will develop – the better off you are sticking with the PPO.

Given that you’re young and healthy, it’s likely that the HSA is a reasonable option for you. However, it does carry a risk. You’re basically betting against a very expensive medical emergency in the next year or two. While that’s potentially a good bet for you, it becomes a much worse bet for people with pre-existing conditions and people who are older.

When you just close your eyes and let yourself dream, what do you dream about? If everything goes perfectly for you, where will you be in ten years?
- Adrian

I dream of being a best-selling fiction writer. I dream of having a house out in the country with a large office for writing, a small barn in the back, and some woodlands there. I dream of happy, healthy, and curious children.

More than anything, though, I dream of not being afraid of what the future holds. Even with all of the positive changes in my life over the past few years, I’m still afraid of what might come. I haven’t reached the level of financial security I’d like to reach.

My husband and I put aside money into a few mutual funds to save for a house shortly after we were married (about 6ish years ago). The money is in 3 Vanguard index funds: an S&P 500, a long-term bond fund, and a European fund. We are getting closer to buying a house (probably 3-4 years away now). How do I decide when to take the money out and put it in something more safe. Honestly, with the rocky stock market, I don’t think we’ve made any money at all on our investment. It’d be nice to get some more stock market gains seeing how low money market accounts are now, but I don’t want the money to be too volatile, as we would really like to put down a large downpayment on a house once my husband finally gets a real job (i.e. finishes his postdoctoral training and gets onto the academic market).
- Amanda

The real question to ask yourself when deciding whether to move money into something more conservative is to ask yourself whether you can tolerate the worst possible outcome.

For some situations, like retirement, the worst possible outcome – losing 20-30% of the investment over the next few years – is intolerable. For others – perhaps yours – it’s not nearly as vital.

If losing some of that money you have now would really hamper your plans for the future, move it into something more conservative. If that house you’re talking about isn’t an absolute requirement within four years and you’d be fine if it didn’t happen right then, leave it there.

My biggest problem during my workday seems to be uneven energy. I seem to run out of steam at about eleven and so I go eat lunch with some people. After that, I feel almost exhausted for a big part of the afternoon.

I know the solution to this is eating breakfast, but I can’t get into a routine of eating breakfast. I don’t like most breakfast food. What is your breakfast routine like?
- Payton

I usually eat breakfast with my kids each morning. We usually eat something different every day. One day, it might be oatmeal; another day, it might be scrambled eggs. We might have a bagel or toast for breakfast along with some fruit.

Don’t worry about tying yourself into a “traditional” breakfast food. Eat whatever sounds good to you that’s reasonably healthy and provides some energy. If it’s fruit, great. If it’s a salad, great. If it’s a beef and bean burrito, great. Just find a food that works for you in the morning.

I need to have surgery on my left jaw joint. I’ve had various appliances and procedures over the years, all of which have helped (or not) to some degree, but now things have degraded to the point of constant pain and not being able to eat more than pudding (and even that hurts, believe it or not). However, I just found out (literally on Friday, three days ago) that my employer’s health insurance has a specific all-encompassing exclusion for jaw-related treatments of any kind (I have paid for the smaller procedures and appliances out of pocket in the past, so I didn’t realize there was such a total exclusion that would zap me now), and this surgery will be $11,200 minimum. My oral surgeon already sent off an impassioned plea to the insurance company, which was met with a total denial because of the exclusion. I’ve been told there’s no point in appealing, again, because of that exclusion. The dental plan also will not touch it. I can get along awhile longer without the surgery, but the pain and inability to eat much will only get worse, so at some point I pretty much have to have the surgery. I refuse to go the narcotics route.

Short of quitting my job, divorcing my husband, giving away all my assets and applying for medicare/caid, is there any other option I’m not seeing? Or any other way to handle the finances that might make it less painful in the wallet?
- Cindy

You’re likely far more informed about your options in this situation than I am. However, three things pop into my mind.

First, have you sought out multiple opinions on the subject? If you have not sought a second opinion on your jaw, you might be missing out on a treatment option that drastically reduces your costs and gives you the results you want. Your oral surgeon could be one of the best in the world, but he still might be missing some detail.

Second, have you simply tried negotiating? Tell your oral surgeon that it would be difficult to pay for the procedure. Offer to barter what skills or time you have in exchange for some part of the payment. See what’s possible.

Finally, have you looked at any form of third-party dental insurance? There may be forms of insurance that will cover your procedure. It might not be a bad idea given your spouse has also had oral issues.

Whatever happens, good luck!

Peyton Manning or Tom Brady?
- Evan

Drew Brees.

Got any questions? Ask them in the comments and I’ll use them in a future mailbag.

What is your take on the cost and necessity of supplemental insurance (disability, cancer, et al) from companies such as AFLAC?

I purchased cancer insurance through AFLAC when I first started at my job because cancer is very prevalent in my family’s medical history, but today I realized that I’m spending $358.80/year on it and wondered if it’s actually worth it. That’s $358.80/year I could be putting towards my debt and/or emergency fund.
- Joshua

In situations like these, I think the real question to ask yourself is what the insurance is actually buying you. Insurance buys you two things.

First, it buys you financial protection against a certain situation – in this case, cancer. The odds of such situations are known to the insurance company and calculated into an actuarial table. That basically means that they believe, on the whole, if thousands upon thousands of people exactly like you paid $358 per year for the insurance, the company would expect to make a profit. You can use that information (and the approximate value of your payout) to make a reasonable guess as to the odds they have calculated for your likelihood of the condition. That’s what you’re protecting against.

Second, and perhaps more importantly, it buys you peace of mind. This has more power than you realize. People with certain psychological profiles are very open to worrying – perhaps excessively – about potential bad scenarios, and knowing that a scenario is protected against can be an enormous peace of mind and stress reducer to those folks.

For me personally, part of the equation revolves around one’s financial state. If you’re very secure and have a lifestyle well below your means, insurance becomes substantially less important.

What I’m trying to say is I can’t give you an answer to your question. That answer comes from you – what kind of person you are, what the real odds are of cancer, and so on.

Foods prices fluctuate so rapidly these days. What are your suggestions for keeping a pricebook for when store prices change so much?
- McKella

I’ve largely given up, to tell the truth.

What I do is about once a year or so, I’ll spend an afternoon in the grocery stores. I just mark down the regular prices on 25 or so of the staples we buy most frequently. Whichever store has the cheapest total for those staples is the one I shop at. The only exception to that is if I notice an enormous sale in a flyer or something to that effect.

For us, that means we do almost all of our food shopping at Fareway, with occasional stops for specialty items at other stores. Jumping from store to store based on price book entries that are outdated in a month just isn’t worth it to me.

Trent’s comments were less than PC but they don’t bother me. Very few people are really PC all the time and at least a large minority are not PC at all any of the time! We just don’t talk about those people any more because it’s not PC to do so!
- Shevy

You know what, I’ll say it.

People are different. People who grew up in different parts of the world see the world in a completely different way. They have different cultures, different behavioral norms, different thoughts, and different ideas. They’re treated differently due to their physical appearance (as much as you might want to wish it away, it’s still true).

There are good traits and bad traits in everyone. There are prevalent traits – both good and bad – in almost every possible slice of the demographic pie.

And that’s awesome. The world benefits from this kind of diversity. I want to get to know everyone I meet because we all see the world so differently. It’s beautiful.

But it’s different when I consider where I want to live – the place where I put my head down on a pillow. I want an environment where I’m not afraid to leave my door unlocked for a half an hour while I go to the hardware store. I want an environment where people will simply leave me alone to do my own things and think my own thoughts. I want an environment where I’m not concerned about random acts of violence beyond an occasional playground fight. I want an environment where I can breathe clean, fresh air. I want to live in an area where politeness and courtesy towards others is a cultural norm. I want to live in a place where neighbors bake each other loaves of bread and don’t mind if they erect a compost bin. I want an environment that has strong winters and hot summers, as I love weather variety. I want to live in a state that has a high standard of education and funds its schools well. This is what I want – it may or may not reflect what you want and, in fact, it probably does not.

Whether you like it or not, that pretty much prescribes that I live in parts of the world that are dominated by certain demographics and underrepresented by other demographics. In the United States, the only place where I’ve found this environment is the rural upper Midwest – a part of the nation that’s pretty accurately described by “A Prairie Home Companion.” Some other regions have come close – the Olympic Peninsula in Washington state is nice, as are some rural areas in New England, but nothing captures it quite like Iowa, Wisconsin, and Minnesota.

Guess what? The rural upper Midwest tends to have a lot of people of Scandinavian descent. Immigrants from Norway, Sweden, Finland, and Denmark chose this part of the country to settle in because it reminded them of their home country. I’m not of Scandinavian descent at all – I’m part German, part English, part French, and part American Indian – but the places where I most want to live tend to have a large Scandinavian demographic. I recognize that and I’m not afraid to say so. The area near Decorah, Iowa is where I would most want to live – for the reasons described above – and Decorah prides itself on having an event called “Nordic Fest.”

I’ve alluded to this in a variety of ways over the years and been called racist for it. If that is racism, then I’m racist.

If you want someone to be perfectly PC all the time, go to another blog. I speak my mind and my heart here and I don’t waste time mincing words and worrying about whether some group of people will be mildly offended by some comment. Political correctness hurts diversity because it suppresses raw, fresh thoughts and encourages people to filter what they say and think, spitting out milquetoast that destroys the diversity that political correctness is supposed to preserve in the first place.

If you had the option to get a refund on your social security taxes, in exchange for not recieveing SS benifits when you retire, would you take that deal?
- John

Absolutely. I’m already assuming I won’t get a dime from Social Security when I retire, so if I could get a refund of the money I’ve paid in, I’d happily take it.

In fact, I think that’s a good policy for anyone planning for retirement, especially when they’re young. Ignore Social Security. If you do end up getting it, view it as a pure bonus.

Why do I feel that way? Given the skyrocketing budget deficit since 1980 and the huge flood of people Social Security will get in the next twenty years or so, there will come a point when the math doesn’t add up. When that happens, there will have to be major changes. I see that point happening well before I’m old enough to even sniff benefits.

My Wife and I bought a home recently and have determined that we do qualify for the $8K tax rebate on our 2009 taxes. This will likely mean a significant tax refund this year, we’re thinking in the neighborhood of $10K as we always overpay to get a refund (I know, blastphemy to some), and are wondering if you think it is best to put it on the mortgage (5%) or pay off our credit cards completely (11 to 19%)? This seems a no-brainer to me, but it has started a healthy debate at my house and I was curious as to what you had to say on the subject.
- Paul

Credit cards, without a doubt. It comes down to the interest rates above all else, and the interest rates in this case aren’t even comparable.

I can’t think of a case in which someone would think it was better to put the money into the mortgage. Is the logic that one could then borrow from it – via a HELOC – much more cheaply? Or maybe it’s a lock-and-key philosophy – they believe if you pay off cards, you’ll just charge ‘em up again.

Whatever the reason, you’ll be much better off if you just pay off some cards and, if you’re having control issues, cut them up.

Do you have any books you’d recommend on motivation? Particularly on motivating others?
- Kellie

I think perhaps you’re looking too specifically for a solution.

From what I’ve seen, people tend to fall into one of two camps when it comes to personal motivation. Either they have a major well of self-motivation that they can draw from, or they’re motivated by the presence of a great leader or someone else in a position of authority who can tell them what to do.

There’s not a whole lot you can do to help the self-motivated except give them the tools they need and some encouragement. The real value in motivation comes from the other group, and the best way to do that … is to be the best leader you can be. Almost all jobs where you help others revolve around these two roles – giving the self-motivated space and tools, and giving everyone else leadership, direction, and inspiration.

So, I’d look for books on leadership. The one book that’s been recommended to me over and over again on leadership is On Becoming a Leader by Warren Bennis. This is a book I’ve strongly considered reviewing on The Simple Dollar and may yet do so. Why? The skills described in that book are universally helpful in improving your career and your position in society.

What movies and television shows do you allow your children to watch?
- Ellen

Unless there’s a major news event, we pretty much never watch live TV. Instead, we have a DVR and use it to record programs so that we have a large selection of quality stuff on demand instead of having to channel surf.

Most of the stuff we record comes from PBS – Sesame Street, Sid the Science Kid, Caillou, and a few others. I really wish Mister Rogers’ Neighborhood was still showing – that would be an auto-add. So, when we decide to watch television, we choose one of those.

Our DVD collection is mostly Pixar and Miyazaki, with a few of the older Disney films mixed in.

Our one “splurge” outside of this realm is for our older son, who is a huge fan of Spider-Man. We DVR The Spectacular Spider-Man – which is actually quite good, as it focuses a lot on Peter Parker’s internal struggles with right and wrong – and let him watch an episode as a treat every once in a while.

Along those same lines…

What kinds of educational games do you play with your kids?
- Eldon

We play a lot of Memory – that’s the most played game with the children around here.

My daughter just turned two and has a difficult time comprehending games with any level of complexity. With her, we focus on games that are mostly about mastering the idea of a bit of patience and taking turns, with maybe just a touch of cooperation. The big hits with her are Go Away, Monster and hide and seek with highly restricted hiding rules if she’s seeking.

Our son, who is almost four, plays a lot of games and even participates in the games that adults play, at least a little. His favorites seem to be The Kids of Carcassonne, Blokus, and Ingenious.

Do you ever feel like you’re running out of ideas?
- SueB

Not really, and I don’t think I will unless I stop changing as a person and my family stops changing around me.

Most of my ideas come from the things I do in my own life, and those things change over time. I’m becoming better and better in the kitchen. My kids are getting older. My parents are getting older. I’m getting older. I read new things. I push myself into better habits. People come and go in the context of my life. I join different groups. All of these are fodder for ideas.

Beyond that, readers are constantly sending me ideas and suggestions for posts, many of which are angles that I’ve never considered.

Plus, I’m often anxious to tackle topics I’ve already covered in a new way to help out a different group of people – retirees, twentysomethings, parents, teenagers, college students, mid-career professionals, stay at home moms, and so on.

Add that all together and I have mountains of ideas. The trick is often filtering them and figuring out which is the wheat and which is the chaff.

Do you feel guilty when you give erroneous advice?
- Shane

I strive to write accurate stuff, but I don’t feel strongly guilty when I make a mistake. I get called out enough on the tiniest things by commenters on here that it serves as a constant reminder that I’m far, far from perfect – or even good.

If I got bogged down in that, I would pretty much just quit writing – and that wouldn’t do anyone any good.

So, no, I don’t really feel guilty about it. I just try to learn something from my mistakes and move on.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

How about combining your frugality and kitchen skills by giving us some recipes and tips on cooking Beans and Rice and Rice and Beans?
- Marcia

A long time ago, I wrote an ode to the bean, which may be my favorite item to use in cooking. It’s inexpensive and it’s a protein-rich backbone to countless different kinds of meals, from tacos and chili to curries and soups.

What I usually tell people to do is very simple. Just take whatever staple ingredient leftovers you have – vegetables, meats, and so on. Add some rice or some beans to it. Season appropriately. There, you have a killer meal.

You almost can’t mess it up.

For giggles, I’ll reprint five of my favorite bean-oriented recipes here.

Beans and Eggs
Easy as pie. Just crack four eggs, add half a teaspoon of milk and some pepper, and beat them rapidly until they’re consistent in texture. Pour the egg mixture into a skillet and add half a cup of cooked black beans (or a bean mix, if you prefer). Scramble the eggs by repeatedly moving the eggs around in the skillet as it cooks until it’s nice and fluffy and full of beans. Put some cheese and salsa on top and you have one of my favorite breakfasts in the world – plus it’s an ovo-vegetarian dish.

Balsamic Vinaigrette Bean Salad
Take two pounds of cooked beans, any variety you’d like, and add in a diced medium red onion. To this, add two tablespoons of balsamic vinegar, four finely chopped garlic cloves, a quarter of a cup of extra virgin olive oil, and mix everything together. Add some ground black pepper to taste. This makes a very big batch of the salad, which is a great thing to take to a potluck dinner – for home use, you should probably halve the entire recipe (one pound of beans, a small diced onion, one tablespoon of vinegar, two garlic cloves, and an eighth of a cup of olive oil).

Beef and Bean Burritos
Cook a pound of ground beef. As the meat is cooking, add half a cup of chopped onion and a minced garlic clove. Stir the meat often to break it up, then when it’s well cooked, drain it, and add to it two teaspoons of chili powder, one teaspoon of oregano, half a teaspoon of cumin, half a teaspoon of salt, and half a teaspoon of brown pepper. Mix it all together and you have the beef part of the recipe. Just fill a large tortilla with this meat, some lettuce, and whatever beans you like – I prefer black beans or pinto beans or even refried beans.

Sixteen Bean Soup
Just follow the cooking directions above with your favorite multi-bean mix, except add half a pound of leftover meat to the soup as it’s cooking. I like to add cubed ham myself, but you can add other meats. Also, add a small minced onion to the soup, too, just as it begins to boil, and also add salt and pepper to taste.

Bean, Ham, and Tomato Casserole
Basically, take the soup you made with the sixteen bean soup recipe and drain off all but a cup of the liquid. Mix into the soup two diced tomatoes, put a bit more pepper on top, and (optionally) put a thin layer of finely ground Cheddar cheese on top (the cheese is highly optional). Bake it at 350 F (160 C) for about ten minutes and it turns out surprisingly well and often very distinct in flavor from the sixteen bean soup.

I recently got a flyer for ING’s Orange Mortgage. They offer incredibly low interest rates. But the structure looks surprisingly like a ARM. What am I missing here?
- Pankaj

It is an adjustable rate mortgage – you’re not missing anything.

An ARM worth its salt starts off with an unbelievably good rate – often 2% below what a comparable fixed rate would be. That gets your attention, of course.

The catch is that in so many years, the rate adjusts upwards, and it often has a ceiling higher than a comparable fixed rate mortgage.

Many people got ARMs because they were seduced by that low rate and they believed their future situation would easily be able to handle the adjustment. Quite often, they were wrong.

Avoid adjustable rate loans. Never believe your future self will be able to handle it.

I find it ironic that a guy who writes a blog that (probably) reaches millions thinks having kids is the best way to advance their cause.
- Kevin

If no one had children, we would all be candles in the wind. In one hundred years, there would be no human race. We would pass nothing on to the future, any of us.

Thus, anyone that chooses not to take on the burden of raising a child is themselves a candle in the wind. They’re relying on others to continue the flame by making the candles. Any flame that they can pass on is passed on to a candle made by someone else, a candle that’s already formed and given flame by the parents of that child (most of the time, of course). Sure, they might make the flame stronger, but they didn’t start the fire. (Yes, I’m using Billy Joel and Elton John metaphors to illustrate the point).

My feeling towards anyone who calls a parent a “breeder” is that they’re completely comfortable with the complete extinguishment of the human race. And that, frankly, makes me personally uncomfortable. If they were not comfortable with this, they would not denigrate those who take on the often thankless work of raising that next generation of people.

For all the good I’ve done in this blog, it does not compare to the impact I have by raising a child to adulthood. I have the unique position to mold that candle so that the flame burns bright, an opportunity I simply don’t have in other avenues in life. No matter how great of a writer I am, it simply pales in comparison to the continued impact and influence I have on the mental, emotional, spiritual, and psychological growth of the two little children in my home. I gave them their genes and now, perhaps more importantly, I’m responsible for the nurture side of the coin.

If I do it right, I can turn out a child that has the potential to cure cancer or breed a better crop that can feed starving children or create art that can truly uplift the human race or, perhaps best of all, find authentic joy in the world and find ways to share it with others. If I do it wrong, I turn out a sociopath.

I’m not saying that others do not have influence. But no matter how enormous that influence, it doesn’t compare to the thousands of hours parents spend with their children, passing on language, beliefs, customs, personality traits, perspectives on the world, personal skills, and countless other little things.

Everyone thinks of Mr. Holland lighting a child’s flame, but forgotten in that shuffle are the parents that drove kids to countless band contests, urged them to practice at night, provided feedback on their play, bought new reeds and dropped them in the instrument case without being asked, showed up for all of the recitals, bought sheet music and audio CDs to help fuel the passion, and all without a dime of compensation. Mr. Holland showed up for work and waved a baton – yes, it was important and it caused a child to change their direction a bit, but that flame rarely takes off without quite a lot of prep work from a good parent.

And, remember, Mr. Holland was a parent, too. One can do both.

What benefit is a child going to get out of having a tutor?
- Johanna

It depends on the child. Some children thrive on individual one-on-one teaching, where they’re much less afraid to ask the “stupid” questions that are plaguing them. I know several kids like this – they didn’t understand the topic in the classroom because they were afraid, for various reasons, to ask, so it was up to a tutor (in this case, me) to help them out.

For other children, it may be that they just have little interest in learning and a tutor is a waste of time and resources.

Often, for a parent, it’s hard to tell which one is the case, especially if they have little confidence in their ability to teach classroom-type lessons. So they’ll hire a tutor or a tutoring service and let them figure it out.

For me, I’d prefer to give my own child my best crack at tutoring so I could at least understand where he or she is coming from.

Would you share with us your recipe for that wonderful sounding au gratin?
- Mike

Take four russet potatoes and slice them into 1/4 inch slices. Slice one onion into rings. Then, preheat the oven to 400 degrees Fahrenheit and lightly butter a one and a half to two quart casserole dish.

Put half of the potato slices into the casserole, then the sliced onions, then the rest of the potatoes. Put some salt and pepper on top.

After that, melt three tablespoons of butter over medium heat. Add three tablespoons of all purpose flour and stir until it’s a very thick paste, about one minute. Then, stir in two cups of milk. Cook it for about two minutes until it just begins to thicken, stirring regularly. Then, add one and a half cups of grated cheese to the hot milk mixture quickly, stirring it in until you have about four cups of a thick, delicious liquid cheese mixture.

Pour that cheese mixture over the potatoes, breathe in the wonderful aroma deeply, then cover it with aluminum foil and pop it in the oven for one and a half hours. Yum!

What do you think about bankruptcy? While I realize there are sometimes extraordinary circumstances, it seems like many people who declare bankruptcy could handle their debt like you did: by scaling back their lifestyles, living within their means, and committing to debt reduction. Would you ever recommend that someone declare bankruptcy instead of trying to repay their debt?
- Sara

While I understand society’s need for some sort of resolution to a person who is in far too much debt, I feel like society’s penalty for this is actually too lenient today.

Do I advocate a return to debtor’s prisons? No. However, if you’ve mismanaged your finances to the point that you need a court to straighten everything out – and in the process, you escape some of your debt – there needs to be a steeper penalty than just a court-enforced payment plan and a bad credit history.

I’m not sure what that balance is, but I do feel that bankruptcy, even with the recent tougher changes, is still too easy.

You’ve said you’ve used iTunes for years to listen to music. What’s your most listened-to song? Album?
- Kate

My most listened to song since somewhere in mid 2004 is Hallelujah by Jeff Buckley – a cover of the classic Leonard Cohen song for all of you older folks like my friend Heidi, who was slackjawed recently when I identified Hallelujah as a Jeff Buckley song.

I had a harder time actually figuring out which album was the most listened to, but from the best I can determine, that album is Bachelor #2 by Aimee Mann.

If I were guessing without looking, I would have guessed the album right, but I would have guessed the #3 song for most listened – Rangers by A Fine Frenzy.

When you and Ramit had a big “debate” a while back about frugality, was that whole thing a set up or do you guys actually have a personal issue?
- Fred Mac

My father spends $5 every week on lottery tickets. I tell him all the time that it’s a waste of money, but he shrugs it off. What do you think? How should I get him to stop this stupid behavior?
- Carlos

Do you feel that other bloggers are rivals of yours? Do you compete with them?
- Amanda

Not at all. My only rival in blogging – seriously – is myself. My own laziness and willingness to go off the tracks following my own whims and muses is my biggest obstacle.

Almost every blogger out there is not a rival, but a peer. Those people know better than anyone else how difficult – and how rewarding – it can be to blog for a living. They share ideas and thoughts. They link to each other. They support each other. They help each other.

If we were rivals, we would stab each other in the back, not encourage our readers to read those other sites.

The only exception to this are bloggers who never seem to link out or ever mention others. However, I don’t view them as rivals – they’re just loners.

To put it simply, I simply don’t have rivals. I have peers and friends.

Except for J.D., of course. He’s going down.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

Can you tell me a little more about how banks like ING work? If they don’t have a physical branch how do I get my money? Do I need to keep my current bank and just transfer the money around? I generally have several different saving account that I use for saving for specific purchases or vacations. Once I meet my savings goal I simply switch to whatever I’d like to save for next. My current problem is this: my bank has recently switched from a $100 minimum for penalty to $250. This means I now need to save $250 over my goal or close my account each time I reach a goal to avoid a service fee. I feel like I never actually have all of my money. I’m under the impression that online banks such as ING have much smaller fees. Any advice?
- Dana

ING Direct – and other such online banks – basically provide all of the services of a typical bank without a brick-and-mortar location. Typically, at least some of that savings is passed back to the user in the form of better service in other areas and high interest rates.

So how do you bank with them? Most of the interaction with such banks is done online. They all have a very full featured online bill pay service, for starters. Many online banks issue paper checks (not all – ING’s Electric Orange doesn’t) and if they do not, they allow you to fill out a check online and have it sent to a business for free.

When you’re out and about, most such banks have an enormous ATM network that allows you to get at your money without a fee at many, many ATMs.

I found that, for me, I was happy enough with ING’s service that I switched to using it as my primary bank, even without a teller window available to me. We did eventually decide to open a free checking account at a local bank for emergency reasons and so we would have access to a paper checkbook, which made it easier to do things like order a magazine subscription from the neighbor’s kid for a school sale.

would you consider making another blog or on occasion posting a few short stories? I enjoy reading short stories a lot and I’m sure many of your readers would be interested in reading a few of them.
- Alexandra

I’ve been debating whether or not to post some of these stories online or not – I’m actually fairly torn on it. If I did, I would put them on my personal blog.

Why am I torn? A big part of me would like to succeed as a fiction writer on my own merits, without the success of The Simple Dollar influencing it. I feel as though I might be able to “get away” with substandard fiction if publishers believe I can bring a built-in audience to the table.

On the other hand, I know that sharing what I write here on The Simple Dollar has led to a lot of great feedback – both negative and positive – and it’d be great to open up my fiction writing.

I still haven’t made up my mind, to tell the truth.

Can’t Laurenly also build her credit score by having an apartment lease, utilities, internet, etc. in her name? Does paying for those things not factor into a person’s credit score as much as a credit card?
- Chelsea

Sometimes they will, sometimes they won’t.

Different utilities and rental companies have different practices on how often and how much information they provide to reporting agencies. Many of them – perhaps most of them – only report delinquent accounts and don’t report positive payment. Others do full file reporting, which means they report everything, good or bad.

You can ask your utilities which method they use and they may or may not tell you. Either way, though, I wouldn’t expect a utility payment to be the source of financial recovery.

I know the local library is one of your favorite resources — it’s one of mine, too! However, I live in Philadelphia, where, if the economic situation doesn’t get better *fast*, the libraries and recreation centers will all be closed as of the beginning of October, which means we’ll lose all the great free resources the libraries ofer, as well as the free or cheap resources offered by the rec centers.

Short of personally balancing the state and city budgets (I’m no economist), what can the people in Philadelphia (and any other city or town in this situation) do in the absence of these resources until they re-open (assuming they do!)?
- Laura

Utilize used book stores. Trade the books they have with their neighbors. Use services like PaperBackSwap.

People who want to read can usually find a low cost way of doing just that. A library is a tremendous service, but lack of a library is only a small obstacle in the face of a focused and resourceful reader.

For other community services, just get together with your neighbors that miss those services and co-op them. Start your own basketball league and enroll people in the neighborhood to coach and referee. You don’t need a bureaucracy to make this happen – it’s not like they’re ripping up the basketball courts.

I vaguely remember you answering this question elsewhere, if so, please remind me. If not, will you please tell me the pros and cons and differences between copper, stainless steel, and non-stick cookware? I am at the point where my first purchased pots (purchased in one of those large sets that you abhore) are starting to crack on the handles. Over the past year I have become relatively proficient in the kitchen and want to upgrade some of my cookware as it breaks or needs replacing. I’d like to replace it with something high quality, but is the mark up on copper really worth it?
- Gwen

Most lower-cost nonstick cookware is covered with a nonstick coating – Teflon is a common one. This coating usually lasts for a few years, but begins to peel – and when it begins to peel, you shouldn’t use the pan any more, as Teflon isn’t something you want in your food.

Alternately, high-cost nonstick items are covered in a baked enamel or porcelain finish. These are usually quite expensive, but they won’t peel and can last for a very, very long time if cared for.

Now, about copper versus stainless steel. Copper has much better heat conduction and heats more evenly, which means that things will cook a bit faster with it and the stuff cooked inside will heat evenly. However, stainless steel is cheaper and looks pretty – it’s all shiny! Many pots and pans can be found that are made of copper with a stainless steel lining, which kind of gives the best of both worlds. Some cooking mavens will grumble about tin-iined pans, but they’re hard to clean and they occasionally have to be re-tinned, which is a real pain.

The best thing you could get, in my opinion, is copper with a stainless steel lining – but these can be breathtakingly expensive. From there, you can kind of go down the scale. I’m not sure what you’re looking to spend, but that’s my thumbnail guide.

Also, if you’re used to cooking with nonstick, cooking on stainless steel is very different – you have to heat it first with nothing in it, then add the oil and other ingredients.

What percentage of your readers are from outside U.S? When you write a blog, have you ever stopped to consider whether certain US centric references that you make may not be familiar for readers outside US?
- Prasanth

My readership is roughly 85% within the United States.

I typically don’t worry too much about focusing on issues that are strictly within the United States. I believe I talk about universal concerns often enough that when I do dig into U.S.-specific issues, it’s appropriate for my audience.

To put it simply, I really don’t worry about it too much. I just focus on being me.

I have a firm grasp on my finances and would like to start helping other people get their finances in order. Do you have any suggestions on how to get a personal finance consulting gig going?
- Austin

If you actually want to get into a career of financial planning, be very, very careful. Such industries are incredibly highly regulated and you should have proper certifications and such before embarking in it.

Sometimes people think, “Well, he can do this website, so why can’t I throw out my shingle and consult?” Well, on every single page of The Simple Dollar, I make it clear that this site is for entertainment purposes only and any information or suggestions taken should be followed up with one’s own research. On top of that, this is a free website – I’m not charging for services as a consultant would be.

If the idea of being a planner interests you, look into proper education for it. Start off by digging deep into what it means to be a certified financial planner.

Is it worthwhile to invest in art?
- Shanya

If you’re investing in art because you believe it will return aesthetic appeal and enjoyment to you over a long period of time, by all means, invest.

If you’re investing in art for a financial return, don’t waste your time unless you’re treating it as tantamount to gambling. The art world is fickle – and an art purchase for investment assumes that someone will want to buy the art in the future, which is far, far from guaranteed.

Yes, by all means, if you have art that appeals to you and you can easily afford it, buy it. It will add true enrichment to your life.

But if you’re looking to turn a buck, stay away from the art world unless you’re working for Sotheby’s.

You mentioned attending SXSW recently. I also know you’re really into playing board games with your family and friends. Have you ever gone to GenCon? It’s not that far from Iowa.
- Ron

I confess – I am strongly considering a trip to GenCon in 2010. My wife is planning a short trip next spring or summer to visit her sisters, leaving me with the kids – and also with a ticket to have my own fun solo trip. GenCon is likely that destination.

I have several friends in the area that are considering going, so I will likely pool up with them at least for the trip.

If I do decide to go, I’ll let people know on The Simple Dollar so we can meet up if readers wish to.

How do you discover the personal finance books and other books you write about?
- Gil

I usually carefully follow the new releases and sales rankings on Amazon to see what’s new in the genres I follow.

If a major release is coming down the line, I’ll try to request it at my library. if that doesn’t work, I’ll attempt to request a review copy, but I don’t particularly like doing that as I feel slightly obligated to give a positive review.

I also listen carefully to reader recommendations. Sometimes – more than once, actually – I’ve suspected that an author of a book is posing as a reader and trying to pitch me on reviewing their book. If I get that vibe, I’ll usually blacklist it. I don’t like those games.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

I especially like the fact that your website has minimal ads. However, I’ve noticed for the past few days that Crate and Barrel has advertisements on your home page. I live in the Atlanta area so I don’t know if the ads are specific to regional differences/popularity, etc. I was surprised to see the Crate and Barrel ad on your website. I think while the quality of what they sell is much better than average, the prices are astronomical. I have a good job, money in the bank, but I could not afford even, what I consider their knick knacks, unless they are on clearance. Also, I would imagine that many of your other readers might feel the same way. Anyway, this is just my perspective. I’m wondering if you’ve heard from anyone else on this?
- Tasneem

The good is the enemy of the perfect.

If I accepted only ads that absolutely, unequivocally met my definition of a perfectly ethical, great customer value organization, I wouldn’t have any ads on the site and The Simple Dollar would cease to function.

That’s not a good solution.

Instead, I just try to focus on a few key things. Is the company reputable? Are they producing a product of reasonable quality that’s at least worthy of consideration for use or purchase? If it passes these litmus tests, I’ll happily place the ad, even if it’s not something I would always purchase for myself.

Crate and Barrel have good items. Many of them are pretty highly priced. You might be able to find equivalent items elsewhere. But if you buy an item there, I don’t think you’d get ripped off – you’d be getting a good item. To me, that’s enough – they’re in the conversation when considering a particular type of purchase and they’re not scamming you.

Sure, I’d be a bigger fan if their prices were lower. But if I designed my “perfect” company from a consumer perspective – high quality items, environmentally sound, very low prices – the company couldn’t afford to stay in business. They wouldn’t turn a profit.

In the end, the perfect is the enemy of the good, and Crate and Barrel (and similar shops) are good enough, even if they don’t represent the best possible bargain out there.

Going into my senior year in college, I had minor surgery. I assumed that my mom and dad (divorced) would handle the medical bills the way they always had. A year later, in grad school, I started getting collections calls. I called my parents and found out that they had been fighting over the bills, which were in my name, and nothing had been paid. If I had known, I would have taken out more money in student loans to pay the hospital. I paid settlements to the two agencies that contacted me. I am now out of grad school, ran a free credit report from annualcreditreport, and see that I have a third account in collections that I never knew about. I’m pretty sure it’s my debt and not an error (my medical insurance was an 80/20 plan and I pieced together that our share was about $5000).

My question now is: do I contact them and try to work out a settlement for this last $1200 or do I wait for the debt to disappear from my report in 2 years? I have some ability to repay but I hate the thought of parting with money that I worked so hard to save and the hospital (which did an excellent job!) doesn’t get any of it.
- Kelli

The ethical thing to do is to always repay our debts. If you borrowed money from someone, it’s the right thing to do to pay it back.

Things get hazier in the real world, though, and it sounds like you’re in a mess. My suggestion here is to contact the holder of the debt and negotiate. Ask them what they would take to have the debt marked as paid on your credit report.

The real world is sometimes a sticky place. This sounds like it could be very close to a “he said, she said” kind of battle. In those cases, everyone involved is better off if someone just steps up and solves it – the mature person in the mix. It sounds like here, Kelli, that’s you.

Along those same lines…

I’m curious if you’re familiar with do-it-yourself credit repair, particularly for low dollar delinquencies (less than $500). I’ve read that with collection agencies you can write “pay to delete” letters where you agree to pay the entire amount in exchange for them removing it from your credit reports. Have you or any readers had success in removing negative items from your credit report?
- Christine

Let’s be clear: paying someone to remove accurate info from your credit report is illegal. It constitutes fraud.

Now, it’s always a good idea, if you owe money to a collection agency, to negotiate with them. What kind of payment will they accept in exchange for marking the debt as paid?

This is completely ethical and legal – it’s a negotiation between two parties over a debt. When you come to such an agreement and your report is updated, it won’t undo a long period of delinquent payment, but it will begin to immediately heal your credit history and credit score. And, as time passes and the debt fades into your past, your credit score and history will greatly improve over time.

Either way, you need to address this. An open wound like this on your credit report is doing you no favors at all.

I don’t understand the Idiocracy theory. If you have children, you have to devote a lot of resources (time and money) to raising them – resources that you could otherwise use to influence other people to take up your cause. On the other hand, if your cause is such that the only way you can persuade someone to take it up is to brainwash them with it from birth, then what kind of cause is that?
- Johanna

Look at it through demographics, Johanna. These statistics from the Russell Sage Foundation indicate that the more financial success a family has, the less likely they are to have children. Instead, they devote their time to developing skills, pushing forward causes, and growing their knowledge.

Sage’s statistics show that the poorest quintile of America – the group that has, on the whole, the worst set of behaviors for financial and professional success (I’m not saying they can’t succeed, I’m merely saying that the results of their efforts is the worst) – has, on average, 10% more children than the richest quintile.

So, let’s do the math on this. Let’s say you have five couples, one in each quintile. The couple in the lowest quintile produces 2.0 children, while the couple in the highest quintile produces 1.8 children. Thus, the number of people that would define the lowest quintile today will grow in the next generation, while the highest quintile will shrink. Some of the people with the traits of the lowest quintile will now find themselves in the next highest quintile simply because of sheer numbers. Thus, all higher quintiles – in other words, all of society – see a slight reduction in traits that gear towards success.

Over many generations, you see a large reduction in the traits of people that made up the highest quintile and an increase in the traits of people that made up the lowest quintile, whether those traits come from nature or from nurture. If this gap in child bearing continues, the behavioral and cultural norms of the lowest income people will become the cultural and behavioral norms of all of society.

Is that a good thing, a bad thing, or an indifferent thing? It’s something that could be endlessly debated. However, the effect itself is clearly happening – whether or not you can trace that back to cultural and social changes is another question altogether.

My belief is that, from the pure perspective of diversity, it’s a bad thing and that people who are successful in life can do their part to help the world by having children of their own and raising them with the care and compassion they show in other aspects of their lives, the aspects that brought them success.

Has Sarah ever commented on any of your articles just to keep you on your toes?
- Mol

Sarah (my wife) usually “comments” to me face to face about my articles. Usually, her comments revolve around some of the choices I make to protect privacy – I’ll leave out details about people, change their first names, or somehow alter them in an inconsequential way to protect their privacy.

Sometimes, she’ll get really aggravated with commenters, who read one article and immediately leave a flaming comment about a decision we puzzled over for months. I usually remind her that (a) these people are likely trolls and (b) if they’re not, they don’t have the full view or the time invested in studying our situation. A single post cannot possibly reveal all facets of a complex choice.

Every once in a while, she’ll harangue me for an inaccuracy somewhere, usually related to my juxtaposing elements of a remembered situation. “That never happened like that!” she’ll tell me, and then she’ll inform me how she remembers it. Likely, the actual story is somewhere in the middle – or maybe I’m right, or maybe she’s right. To me, it’s inconsequential – the important part of it is always the positive outcome.

I recently graduated college and have 2 student loans to pay off:
Loan 1: about $4,000 left on it with a 6.8% rate
Loan 2, Part 1: about $3,000 left with a 6.8% rate
Loan 2, Part 2: about $7,000 with a 4% rate
Loan 2, Part 3: about $6,000 with a 5.3% rate
The kicker on loan 2: I was ‘automatically selected’ to pay off both part 2 and 3 before I can even start paying off part 1 (with the crazy high rate).

I have asked around and done a bit of research on my own. Really the only thing that I keep coming back to is Ramsey’s idea of paying off the smallest loan first, while still making minimum payments on the other loan (so I don’t default). I have already built up an emergency fund and am trying to decide how to tackle these loans that would be the most profitable in the long run.
- AReynolds

Loan #1 should go first regardless of how you calculate it.

The way I calculate segmented loans like loan #2 is by figuring out the average interest rate. Just multiply the interest rate of each segment by the amount of that segment, add the totals of each segment together, then divide by the cash total of the loan. In this case, the average rate is 6.0125%. Over time, it’ll inch upwards, as the balance of the first segment will go up faster than the second and third, but the rate will never equal the rate of the first one.

I’d just think of loan #2 as a single loan with an interest rate of 6.0125%. That means you’re choosing between a loan with $4.000 on it at 6.8% or a loan with $16,000 on it at 6.0125%. Almost every method under the sun for debt repayment will tell you to go with the $4,000 loan first.

How much does it cost a company to maintain the record of your debt? Given that they have to pay someone to call you, have to pay for postage to contact you with documents, and any other costs they have to soak to keep your debt on file, at what point would it become less than worthwhile to keep your debt on the books?

To use an extreme case, suppose I had an outstanding balance of $.01 in debt, and maintained it at that level, it would be more cost-effective for the company to write that off than collect, wouldn’t it?
- prufock

Companies that have sensible bookkeeping procedures usually do forgive tiny amounts due. Bills for $0.01 are largely a thing of the past as companies have realized that there is a cost to bill a customer and that forgiving the remaining amount is the best route if the balance is lower than the cost of billing.

What’s that cost of billing? It largely determines on the internals of a company. I’ve received bills for $4 in the last few years, but I can’t recall anything lower.

From my back-of-the-envelope chicken scratches, I would guess that for most companies, billing amounts under a dollar or two are probably better off left unbilled. Instead, they often just sit there and are added to larger bills if a customer has a new charge in the future.

At the same time, though, it’s usually a good move for a company to issue a refund or a payment for any amount, even if it’s just $0.01. The cheapest way to do that is usually to just treat it like any other payment and issue a check. While it might be cheaper for them to just hold it and apply it as a credit to your next bill, it’s often not allowed – and they’re far better off following the rules to the letter.

If you were forced into a short-term debt situation right now, would you rather borrow money from a friend or a family member or go into credit card debt?
- Andy

I’d rather get into credit card debt if those were my only choices.

I very rarely see a situation that involves a family loan that doesn’t end up with hard feelings or resentment on one side of the coin or another. If this is just a short term debt small enough to be put on a credit card, I’d rather pay a hundred dollars in finance charges than jeopardize a valuable family relationship.

To me, the value in my life isn’t measured in dollars and cents. It’s measured in people. The risk I would add to such a relationship is worth the extra money a credit card debt would cost me.

What is a typical work day like for you?
- DeLa

I wake up around 6 AM and usually check my email. My office is right next door to the kids’ bedroom, so I hear them when they begin to awaken, usually around 6:30.

After that, it’s time for getting dressed, brushing hair, eating breakfast, a bit of horseplay, getting shoes on, getting any winter clothes on, and getting out the door to daycare. I’m usually more interested in just spending good time with the kids, so this isn’t rushed in any way unless I have something URGENT for work. Most days, my workday proper doesn’t start until 8:45 AM.

I usually spend the morning in three separate hourlong focus sessions, where I turn off the phone and focus on an article. I’ll usually try to finish a good draft in that timeframe. Between the sessions, I’ll take a break or do things like approve comments.

After that comes lunch and often another hourlong focus session. Then I’ll spend time editing the posts and setting them up for public display. I then usually do a big email session. After that, I’ll usually work on some other large project – a book manuscript, a post for my personal site, or something along those lines.

That gets me to about 3:30 in the afternoon, at which point I wind things down for the day. I’ll usually keep working on whatever the biggest “fire” is until my wife and kids arrive home around five.

About two days a week or so, I’ll spend the afternoon out and about. Sometimes, I’ll do something like grocery shopping with my notepad open to jot down ideas. Other times, I’ll go out to lunch with someone. Sometimes, I’ll spend an afternoon at the library.

To continue that train of thought…

If you work at home alone all day, how do you combat loneliness?
- Emerson

I don’t feel loneliness if I can consistently get myself into a creative zone – and most days, I can. It’s the days when I can’t that are the trickiest.

On those days, I usually go do something social. I’ll go eat lunch with someone I know. I’ll go to a coffee shop and work. I’ll try to pencil in an interview with someone. I’ve even sat in on a class at a local university.

There are always people doing something out and about in the community and it’s not hard to meet up with them. I’ve found that, for me, that’s enough.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

How do you minimize distractions while you’re working? I also work from home and find that many people are not respectful of this. Even if I choose not to answer the phone, sometimes the ringing proves to be enough to cause a break in concentration, which results in lost time. Is it rude to leave an outgoing message on our answering machine, to the effect of “…we can’t answer the phone right now as we are unavailable or working….”? Even then I don’t think it would get the message across.
- Kristine

I usually just turn the ringers off on my telephones and allow messages to go straight to voicemail or an answering machine. I also shut down my email and log off of any messaging services I’m on.

My feeling on this is simple. The real meat of my work is best done in focused chunks. When I have a two hour period of time where I can just sit down and block out the world, I’m ridiculously productive in my writing.

On the other hand, if I allow myself to be interrupted, my writing slows to an absolute crawl and, in the end, there’s little benefit from the things I was able to immediately handle.

There’s almost nothing on this earth that’s worth interrupting those focused sessions. Without them, I wouldn’t be able to do what I do.

So when you are bad at budgeting, and the money is going willy nilly do you think it is wise to sit down with an accountant to help come up with a plan? I find that people like Dave Ramsey just want you to make a budget and use cash only but if you could do that you would not be in the problem you are already are in! I am meeting with an accountant to help me set up a plan because obviously I can’t do it right. What are your thoughts on this? The accountant also said every time he spends money he thinks how many hours will I need to work to get this, he told me he is a tight wad!
- Tamara

If you’re having difficulty with the structure and numbers of a budget, an accountant can help, but that’s usually not the problem.

A budget is a piece of paper that does nothing more than represent a promise to yourself to get your spending under control. For the most part, we can’t make choices about how much we spend in many required areas, like our rent or our sewer bill. Our choices come in areas like food, entertainment, our automobile, and the like.

The key to controlling spending in those areas is mindfulness and impulse control, not having a piece of paper.

A budget is useful – particularly at first – because it lets you see what you’re really spending in those various areas. It says, “Hey, you’re spending a ridiculous amount on entertainment and it’s hurting you. Cut back.”

In the end, though, you have to make the behavior changes. A budget can’t do it for you.

So, yes, if you’re having difficulty with the structure and the numbers, have an accountant help you. But don’t expect the presence of a budget on paper to magically change your situation.

$350,000, divided out by 18 years, is only $53/day or so.

Counting up food, clothes, field trips, housing, etc. that you pay for your children, would $53 a day sound like an unreasonable number?
- A.J.

A.J.’s comment refers to some estimates that the average cost of raising a child born today into adulthood is $350,000 by some calculations.

First of all, it’s worth noting that such a number is an average. You’re including kids with full-time nannies. You’re including kids that go to private school. You’re including kids whose parents write checks to their Ivy League institutions. You’re including the kid whose parents bought him or her a brand new Lexus for their sixteenth birthday.

In short, most of us will actually spend less than that total raising our children. What is that less number? It depends a lot on the choices you make.

Are you going to buy them a car when they’re sixteen? Are you going to pay for college? Are you going to hire tutors? Are you going to get them into a better school? Are you going to buy them a top-of-the-line instrument for band? Are you going to dress them in new trendy clothes or go shopping first at thrift stores? Are you feeding them organics from day one? Are you going to travel extensively with them as they grow up? Are you going to move into a larger house to accommodate them?

All of these choices will make a radical shift in your total expenditures for your child, either up or down. Parents that make all of the low-cost choices will spend significantly less than that $350,000 total – perhaps half, or even less. Other parents who make different choices will spend more.

It really depends on your parenting style and what you value. For me, I’m more willing to invest on what’s in the inside – educational opportunities, food – than what’s on the outside – clothes, a new car.

I am becoming increasingly aware of the inhumane treatment to livestock in the food industry. Do you have any recommendations for websites or books to learn more on where to buy organic food and what resteraunts offer it?
- Mol

I tend to think that the best solution, if you’re worried about big agri-producers, is not to buy organic, but to buy local. Buying local means you can actually visit the farms where the items are produced and see for yourself how they’re treated.

In our case, for example, we buy milk and other dairy products from Picket Fence Creamery in Woodward. We can drive by the farm any time we like and they have very regular open houses and tours. I don’t care if it has an organic label on it or not, that’s a level of trust you just can’t get from buying an anonymous product in the store.

One great place to start with this approach is http://www.localharvest.org/, which has tons of information on eating from local sources.

Obviously, you can’t get all of your food this way, especially if you live in a colder climate, but it’s a big step in the right direction.

Due to reasons too complicated to explain, we have a mortgage where the only ones really keeping track of the balance are ourselves. (In other words, when we make an extra payment, it doesn’t necessarily get recorded unless we keep track of it.)

We have been adding roughly $165 a month to the payment with the goal of paying the loan off early. In the future that amount may go up. But we paid on the loan for a year + before adding additional money. I haven’t found a mortgage calculator that works for us. It is very important to keep track of this (it would be for anyone, but even more so for us). Have you any suggestions for something workable to track these payments?
- Kathryn

It sounds extremely shaky to me that you’re making payments to the bank and they’re not registering. If my lender had this kind of policy, I would make every effort to refinance, because the whole thing sounds really questionable.

In terms of personal financial records, the best thing a person can do is learn how to use a spreadsheet. A spreadsheet is so free-form that you can basically track your information in whatever way is most convenient for you. Spend the time to know how to use one.

Beyond that, your best step is probably to find a way through the complicated situation to ensure that your payments are being recorded correctly. There’s little reason for a company to have such sloppy records.

Trent, do you ever enjoy a good cigar?
- Mike

No, I do not. I have had several relatives have a miserable end to their lives due to emphysema (let alone lung cancer) and I’m beginning to watch a few more begin to head down that road. It’s a very painful thing to watch and experience.

This experience has put me firmly in the “not going to smoke” camp. I’m not an anti-smoking zealot by any means, but I do avoid businesses and private clubs that allow smoking and I’m extremely hesitant to visit the home of a smoker.

Many people respond with comments along the lines of “an occasional cigar is no big deal.” Maybe that’s true, but watching my grandmother spend the last few years of her life struggling for every single breath puts me firmly on the side of prudence in this case.

Trent, you mention that you keep your computer on because it automatically collects data at certain times. I was wondering if you are trolling for news articles or something similar to keep up to date on specific topics. I’m interested in doing that myself and was hoping you could suggest the easiest way to “troll” for news or blogger posts using keywords or something. Not sure if this is what you do, but if you have any pointers, it would be much appreciated.
- Victoria Vargas

I collect articles in an offline RSS reader that automatically checks hourly for updates. I save them locally so that, in the event that a blog disappears from the face of the earth, I still have a personal archive of the writings. It also enables me to read such writings when the internet is unavailable, which happens every few months or so here for a day or so.

Beyond that, I also run Folding@Home, which utilizes unused processing power of our home’s computers to analyze proteins, the results of which can be used in biomedical research to cure diseases. I have these programs set to automatically return results as soon as they’re finished and retrieve new ones, which means that Folding@Home sometimes runs in the middle of the night or on weekend afternoons.

Beyond that, my local computer also stores automatic backups of The Simple Dollar.

Between all of these automated things, I’m better off just leaving the computer running. It performs several important tasks, even when I’m not there to manage it.

I’ve been following you on Goodreads and you read a lot! Are you going to make a “best of 2009″ list for books so people might have some interesting Christmas gift ideas?
- Kelly

I will probably have a “best of 2009″ article or two on my irregularly-updated personal blog (right now, with my book crunch, I don’t have time for such updates, sadly). But I know that a lot of my readers are avid book readers who also often gift books to friends and relatives, so for you all, here’s my current “top ten books of 2009″ list. I’m including only books published in the last 24 months that I read for the first time in 2009.

1. Let the Great World Spin by Colum McCann
2. Shop Class as Soulcraft by Matthew Crawford
3. Supermarket: A Novel by Satoshi Azuchi (new in English)
4. This Is Where I Leave You by Jonathan Tropper
5. Anathem by Neal Stephenson
6. Satchel by Larry Tye
7. Crazy for the Storm by Norman Ollestad
8. The Magicians by Lev Grossman
9. Sunnyside by Glenn David Gold
… and, honestly, I don’t have a tenth that fits into this group quite yet.

What do you do with the personal finance books you review but don’t keep?
- Millie

Many of the books I review come straight from the library, and that’s where I return them. By now, I must be one of the best customers of the Ames Public Library in Ames, Iowa.

Aside from that, though, I do pick up a few books for my own use. When I have one of those, I either give it away to a reader randomly (I just pick a commenter that tickles my fancy) or I ship it away via PaperBackSwap for something I’ll find more worthwhile.

On a rare occasion, I’ll keep it because it seems like a good reference or has potential for inspiration in the future.

If you had sufficient money, would you choose to send your children to a private school?
- Charles

No. Instead, I’d choose to live in an area that put a high value on public education, a town where the citizens were willing to pay local taxes to have an incredibly strong local school district. There, I’d send them to the public school.

To me, private school is a good solution for affluent parents who are focused on education but required to live in an area with really poor public education. Since parents often don’t have the choice to simply raise taxes and improve the district with a wave of their hand, private school is a logical solution for them.

What about homeschooling? For one, I don’t believe in my own skills as an educator enough to follow this path. I suppose I would consider an appropriate tutor if money were no object and I was strongly opposed to the public school and I couldn’t move for some reason, but that seems like a pretty narrow situation.

I also often feel as though children are homeschooled to protect those children from certain kinds of knowledge or strongly reinforce particular ideas. However, the purpose of an education is to gain exposure to all kinds of knowledge and build up the tools to interpret and make sense of that knowledge. I want my children to face challenging decisions and ideas, and part of that means being exposed to children and families with different ideas and perspectives and values.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

I recently graduated college and have 2 student loans to pay off:
Loan 1: about $4,000 left on it with a 6.8% rate
Loan 2, Part 1: about $3,000 left with a 6.8% rate
Loan 2, Part 2: about $7,000 with a 4% rate
Loan 2, Part 3: about $6,000 with a 5.3% rate
The kicker on loan 2: I was ‘automatically selected’ to pay off both part 2 and 3 before I can even start paying off part 1 (with the crazy high rate).

Any and all advice will be welcomed. Please and thank you in advance!!
- AReynolds42

The first thing you need to do is figure out the true interest rate on that second loan. Effectively, you need to treat loan #2 as one loan – ignore the separate “parts.”

It’s easy – multiply $3,000 by 6.8%, $7,000 by 4%, and $6,000 by 5.3%, then divide all of it by $16,000. You get 5.0125%. Then, compare that interest rate to the other loans and start paying off either the one with the smallest total (the first loan) or the one with the lowest interest rate (again, the first loan), depending on whether you’re using the Dave Ramsey plan or the mathematically superior plan.

The answer’s easy for you – pay off the first loan first and just wait on the second one.

What is your process of reviewing books? Do you read the whole book and then do the review? Do you have any advice for writing good book reviews?
- Jules

I usually read the book chapter-by-chapter or section-by-section and jot down my impressions afterwards. Sometimes, I focus in on the big point of the section – at other times, I end up jotting down the individual point that sticks with me the best.

Once the book is done, I write down a few final notes on it and ask myself whether it was a worthwhile read.

From those scribblings, a book review comes together pretty easily. The real time investment is in the reading. I tend to put two hours a day aside for just that purpose – reading for the purpose of learning more about personal finance, careers, and so forth and writing reviews of those books.

Uh…you think emergency funds should have no limits? So, if I was a college kid with a $50,000 emergency fund in a savings account, you wouldn’t suggest I do something with that money?

One should never stop replenishing an emergency fund, yes, but that’s because emergencies keep using it up.
- Michael

Michael, it might be useful to put away your “jumping to conclusions” mat that you like to pull out all the time.

Yes, I think an emergency fund should have no limit. No, it doesn’t necessarily need to all sit in a savings account. Put some of it into CDs or bonds or short term treasuries.

An emergency fund shouldn’t just be used for negative emergencies. Life often throws us opportunities (or positive emergencies), and our emergency fund should be there to easily help us with those, too. That means the typical “six month emergency fund” – intended to just help with negative emergencies – isn’t enough. You need more. And given the number of opportunities we have in life, the more the better. If you keep your ears and eyes open, life is full of great opportunities.

In the past five years, three of my grandparents have passed away, having had the usual run of health issues, and having been helped tremendously (at near-sainthood levels) by their respective children – my parents, aunt and uncle. My sister is on the verge of getting married, and we’ve been debating the merits of having children. I love children, and hope to have several of my own. My sister doesn’t much like children, and doesn’t consider herself good “mom” material. But we both agree there are lots of times in life when having family support is necessary, and old age/failing health is the biggest. We always expected that the grown children would take care of the parents. But what if there are no children? Seeing the number of families where the kids grow up and are completely estranged, unwilling to help take care of aging parents, there’s no guarantee they’ll take up the task either.

My sister says raising kids and paying for college is expensive, and that amount of money invested wisely could pay for a great deal of home health care when the time comes. Does that work? We have a family friend in her 90’s, never married, who has had a home health care aide (let’s call her Jane) for years, who does all the cooking, cleaning, personal care and PT. How do you estimate how much to save for that? I suppose it’s like planning for retirement, but sadder.
- TheOtherKathi

If you have children and raise them in a loving and supportive environment, they’re often there for you in your dotage. I’ve seen it time and time again in my own family and in my wife’s family as well.

If you don’t have children at all, you simply don’t have that support. You don’t have children popping in to check on you or calling you every day. All you have is you (and perhaps your spouse).

That’s not a reason to have a child. If you’re not capable of being a good parent, your children won’t be capable of being good children. Don’t have children unless you want to have children.

Another caveat: it’s a bad idea to plan on your children helping you. Instead, you should focus on not being a burden to them in your final years – they’ll often still help you, but it’s impossible to predict how much they’ll help you.

Do you dream in color or black and white? Do you remember your dreams?
- Ashley

I dream in frighteningly vivid color. Sometimes, I have dreams that remind me of Yellow Submarine, actually – I don’t know how else to describe them. Many of my dreams are more reality-based, though.

I tend to remember one dream a night or so and I usually write them down in as much detail as possible in my journal. For example, last night I had a dream that my wife and two kids passed away and I wound up remarrying a very short woman – I never did see the woman’s face. She had also lost her husband in an accident and we found each other in a support group. She had a teenage son (that I do remember) who practically demanded that we get married.

I usually write these dreams down because they become the basis for short stories later on. I read through these recollected dreams and every once in a while, one will become the source of a piece of fiction.

Me and my partner are planning to go to live in Southeast Asia for up to a year (or longer – it’s very open-ended). We both have roots there, and think it would be one of those life-enriching experiences that we’d never forget and would thank ourselves for later on in our lives. We’re planning to use about 20k in savings to pay for basic things, and then try to start a little business (English tutoring, guest house, or online service). However, we’re both concerned that when (if?) we get back to the US, we’ll have to resort to office/other drudgery again. Also, our parents are getting to that age where they need more of our financial and emotional support. Being in a traditional family, they’d like to see us buy a home to which they’d most likely move to as well. Do you think it makes sense to travel now or to hold it off until we save more?
- Ty

Travel now.

Here’s why. The older you get, the more likely you’re going to be entangled in many different demands in your life. Your parents will be in worse health. You may wind up with children whether you intend to or not. You’ll become a part of a community and more attached to the people around you.

And travel will seem less realistic than it does now. It’ll be harder to take such a leap.

The best time to do such a thing is when your entanglements are few, and they’ll never be fewer than they are now.

If you’re dreading returning to “drudgery” when you return, you should consider a different career. What do you consider to not be “drudgery”? Think about that and try to find work in that direction.

Do you ever write fiction?
- John

I try to write a short story a week. I’d love to be able to write more than that, but fiction writing is harder to find success with today than nonfiction and memoir writing (which is what The Simple Dollar is, for example).

I’d love to be able to primarily write fiction at my own pace, but that’s a future that seems a long way off. My plate is happily full at the moment, so I mostly work on fiction to keep myself from getting completely rusty.

I haven’t written anything that I feel is publishable yet, but I may be too hard on myself.

May I know what you consider as the best personal finance book for people in their 30s that you have read so far?
- Joy

It depends on what you’re looking for.

If you want a book that focuses on the nuts and bolts of investing and money management, I’d probably vote for Get a Financial Life by Beth Kobliner.

If you’re re-evaluating your whole relationship with money, nothing beats Your Money or Your Life.

If you’re at a career crossroads, look at something like Career Renegade by Jonathan Fields.

Those all speak well to thirtysomethings, I think.

How much money does a person have to have before you consider them rich?
- Kelly

There’s no set dollar amount.

For me, a person is rich if they can wake up each morning and do whatever they want to do. It might be some kind of work or it might not, but the person has the freedom to choose between work and play and define entirely for themselves what work is and what play is.

That, to me, is what it means to be rich. It doesn’t mean a huge number of investments or a fleet of expensive cars. It just means freedom.

Did you enjoy Professor Layton and the Diabolical Box? You tweeted about it a few times.
- Kathy

It’s just as good as the first Professor Layton game, if not better.

For those unaware, Professor Layton and the Diabolical Box is the second in a series of games for the Nintendo DS. The games are simple adventure games (with amazing graphics and voice work) that involve solving a huge number of puzzles – 150 directly in the game and a few very engrossing puzzle-based side quests.

Both games are well worth playing. They only have between five and ten hours of gameplay in each one, but it’s some of the most enjoyable gameplay around. It’s great to pick up for fifteen minutes, solve a few puzzles, dig a bit deeper into the story, and then put it down.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

Do you really believe it’s better for the earth to have more children?
- Kelly

I’m a big believer in what I call the “Idiocracy” theory, so dubbed because of the very eloquent and humorous explanation of the idea at the start of the film Idiocracy.

To put it simply, if you believe strongly in a cause to the point of taking action to push your cause forward, the best thing you can possibly do is have children, raise them to think and be independent, and get them involved in the cause, too.

Many people who are driven to success in life or push themselves toward a cause eschew the idea of having children – they don’t have time, or they’ve convinced themselves it’s a moral wrong. Instead, people who are not driven and not committed to a cause tend to have more children – they do have time and they haven’t convinced themselves it’s a moral wrong.

Thus, the next generation has a higher proportion of people who aren’t driven towards causes, towards self-improvement, or towards improving the world.

If smart and driven people want to make the world a better place, they should consider having children, who will often also be smart and driven. The more smart and driven people there are in the world, the better off the world will be.

If you’re smart and driven and have chosen to not have children, you’re much like a candle in the wind that’s not lighting any other ones.

The only way I can stop using credit cards is to not have them at all. I have balances on my cards though. I just want to close the account & pay down the balance. However, I read that will hurt my score. What is going to hurt more – high balances on maxed out cards or closing the account and paying it off? This really is my only option. I would love to hear your opinion!! Thanks!
- Allie

Your best bet is to leave the accounts open for now, destroy the cards, and pay off the debt as quickly as you can without missing a payment.

In terms of your credit score, one big factor is the percentage of your credit limit that you’re utilizing. The way to do that is to leave your total credit limit alone – not canceling anything for now – and simply keep yourself from using it while paying down the debt. Over time, your percent of utilization will go down and your credit rating will go up.

You don’t have to cancel the account – just destroy the cards themselves (and erase the numbers from any online accounts)!

I was wondering if you have looked into “lifetime webhosting” – how do ensure that your content lives on (i.e. your blog keeps being hosted) without your active renewal, for example, 75 years from now?
- chessiq

For one, I don’t believe the web as we know it will exist in seventy five years. And for another, The Simple Dollar is being archived in several ways – archive.org, for starters.

My intent is to maintain The Simple Dollar as is for a long time, but inevitably, the period of the World Wide Web will wane and be supplanted by other forms of media. When that happens, I may move it to another format if it’s still relevant.

I’m considering some other options for maintaining the content, including a print anthology of the best timeless articles from The Simple Dollar.

Do you ever feel that you have many things pulling at you at once, frugality being just one of them? When purchasing food for dinner, I like to eat some protein (meat), as I go to the gym a lot. I like to eat healthy, so that meat should probably chicken or fish. And, I’m not a big fan of fish, so I find myself eating grilled chicken 5+ nights a week. (I’ll vary rice/pasta and veggies on the side). Without limiting the quantity of chicken, I can’t really get the price down, although it’s usually around $2 a meal. I’d like to be more frugal, but I don’t want to sacrifice my health to save $1/lb on meat, or make my effort in the gym worthless, by eating a protein-free dinner. I don’t too much mind the monotony (although I am open to suggestions), but was more curious if you ever feel the same way?
- Dave

Eating the right foods is an investment in your health. I have no objections whatsoever to spending more on food to get higher quality food.

Think of it this way: most foods that enable you to get a very cheap meal aren’t healthy for you. Over the long term, they’ll cost you in the form of lost energy, health care costs, and other effects.

$2 per meal is completely reasonable in my eyes if you’re eating healthy, high quality foods and eating such foods is one of your key values in life (as it clearly is for you).

One note, though: consider eating more beans. Beans have quite a bit of protein, can be prepared tons of different ways, and are incredibly cheap. I’m a big fan of beans.

When the Security and Exchange Commission fines a business or individual for an infraction or violation of the rules, usually the fine is pretty hefty – sometimes in the millions of dollars. What does the commission do with the fines they receive?
- Steven

SEC fines are rolled back into the SEC’s annual budget, but it’s only a small part of their budget. The rest is funded directly with taxpayer money.

If the SEC grew a backbone and started cracking down hard on some of the grey area securities tactics that many companies use, they could bring in a boatload of money and make the market more open to individuals.

However, they have no real incentive to do that, especially since many people at the SEC are heavily connected in the securities industry. So much for regulation.

My son-in-law has all but given up on his favorite sport, golfing, because of the cost. What is the best place to look for golfing coupons?
- Barbie

My best source for golfing coupons has always been the Entertaiment Book, which is often sold as a fundraiser for community organizations. Most of them offer quite a few pretty nice discounts at area golf courses, as well as discounts and free buckets of balls at local driving ranges.

Since I rarely golf any more, that pretty much takes care of my needs. The only thing the Des Moines-area Entertainment Book doesn’t cover for me is a once-a-year (at most) golfing outing in my hometown with my in-laws.

I haven’t found any other really reliable solutions. Perhaps the readers have some ideas.

We had a company wide re-structuring and everyone got to know their new job title. would it be an acceptable code of conduct to ask people what their new job title is? (Just to know where we stand in the company).
- RU

I think that’s completely appropriate. In fact, I think if such a thing happens in a company, they should require name tags with everyone’s new job description on it and have everyone wear them for a month or so just so everyone can figure things out and get on the same page.

Perhaps you can suggest this. It would be useful for everyone in the company as they become used to the new corporate structure.

One big thing: you need to be completely willing to answer the question if you’re going to ask it. If you ask someone and then don’t respond to their query (or to the query of someone else), it will NOT reflect well on you.

I am a college student, just starting my final year. I was lucky enough to be able to pay for college with scholarships and the help of my parents, so I have absolutely no student debt. I’ve had a checking account for several years, but I have never opened any kind of credit card account as the idea of that much financial room has always intimidated me.

I was wondering what I could be doing to responsibly build my credit/ credit score so that it will be at the optimum point when I look into making significant purchases (house, car) in the future. I am worried about going down the wrong path if I’m not even sure where to start.
- laurenly

Your best bet – the simplest way to start – is to get a credit card. Use that credit card for ONLY one kind of purchase, one you make regularly. For example, if you commute, get a BP card and use it only for buying gas at the BP. If you’re in college, get an Amazon Visa and use it only for buying textbooks. Then, pay off the full balance each month and don’t use the card for anything else.

Doing this will help your credit score immensely. The trick is to not decide that using a credit card is “easy” and start using the card for other purchases – that’s where people get into trouble.

Get a card, use it for one type of purchase, and pay it off in full each month. Not only will it help your credit, but you’ll likely get a bit of a reward out of the card, too.

How can you make phone calls with Skype on your iPod Touch? I’ve heard you can’t use it on there because it doesn’t have an internal mic. Do you only use the messaging feature on your iPod touch?
- ema002

When I first got my iPod Touch, I didn’t realize it was possible to use a mic for it. Then I damaged my ear buds (I cut the cord, actually) and had to go get a replacement pair.

That’s when I discovered the Apple earphones with remote and mic. These plug into the headphone jack on an iPod Touch and function as a microphone on any apps that require it. I can sit there with my headphones on and use my iPod Touch as a Skype client.

I can also use the Voice Recorder and add voice notes to Evernote as well using these things. They’re great.

If you could live anywhere in the world, where would it be?
- Larry

First of all, I’m going to exclude any places I’ve never actually visited. It’s completely unfair to fetishize some place I’ve never been to and claim I want to live there. Instead, those are places I’d love to visit some day. On that list: rural France, Turkey, and Norway.

But what about living? I’ve visited two places that have really sung to me in a certain way, making me wish I lived there.

One was northeastern Iowa/southeastern Minnesota/southwestern Wisconsin, along the southern edge of where the glaciers reached during the last ice age. It’s very hilly there, with lots of old forests. The people are mostly Norwegian and Swedish, which means lots of calm and friendly temperaments. The weather rotates wonderfully through the seasons, having very nice and distinct summers, winters, falls, and springs. It’s just wonderful.

The other place is Washington state, out near the coast. Here, the temperature and weather is pretty stable throughout the year and the people seem to be very libertarian – in other words, they let you do your own thing without much snooping or prying. Mostly, though, it was the weather and vegetation – the large forests, the great access to Olympia National Forest, and so on.

The only large city I’ve visited that I would consider living in is San Diego. Again, the people are a big factor – it often felt like the sleepiest large city I’ve ever been in, which is a good thing, and the weather was beautiful during almost every season.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

I know that predicting the market is impossible, but different people are saying drastically different things about where they predict the stock market to go in the next year or so. What do you think will happen?
- Vern

First of all, what I’m about to say is solely my own opinion, founded on reading a lot of economics books over the years and reading publications like the Wall Street Journal and The Economist. This is my own opinion and not an expert one.

That being said, I think the economy is turning around, but I don’t think we’re going to return to the economic freight train of 2003 to 2007 any time soon. Instead, we’ll recover slowly. Unemployment will remain high for quite a while compared to 2003-2007, but low compared to other periods in history.

The biggest danger, as always, is finding a healthy balance. I don’t think spending money like it’s water is a good thing right now – but it’s never a good thing. Similarly, I don’t believe that buying bullets and guns and hiding in your basement is a great answer, either – but that’s never a great answer.

Balance, my friends, balance.

Trent, since part of you income is from ads on the site, it would seem that people that read the Simple Dollar via RSS or email would cause you to loose income, is that not the case?
- Bob

There are small ads on the RSS and email feeds, but they earn me less than 1% of my income.

Even given that, my belief is that sending out my writings via emails and RSS is well worth it. Why? It keeps readers interested. Many of those readers click through to the site to read the comments. Some of them open up only one email a month – but that one email might get them to visit the site.

To put it simply, having a reader is better than not having a reader, even if some readers earn me more revenue than other readers (even here, we’re talking about fractions of a cent per reader).

What do you consider a more valuable investment in your child’s future: a tutor now or a college education later?
- Jim

A tutor now, undoubtedly. The best thing I can give my child isn’t covering their tuition bill. It’s doing everything I can to ensure that they can actually learn and grow on their own and then ensure that I’m not a burden to them later on.

If a child has the skills to learn and the desire to push forward into self-learning, I’m not too worried about their college career, actually. A child that can push forward on their own will find a way to make it happen.

My responsibility as a parent is to teach them how to do this and instill that desire in them. Thus, my key period as a parent is right now, teaching them how to do this (and getting help if I need it), rather than writing a tuition check later on.

Do 401(k)’s really charge fees? I understood that funds charge fees, but I never realized that the vehicles themselves do. Could you clarify, Trent?
- The Frugal New Yorker

Most 401(k) plans charge rather high fees on the funds you can invest in within the 401(k). 401(k) program fees are usually covered by your employer.

The reason I tend to be wary of just using your company’s 401(k) is that often, a company will sign up for whatever 401(k) plan is cheapest for them. Since the company is out to make money, they’ll get you on the funds themselves by charging high fees there.

Not all companies do this, of course. You should always check the funds offered by your company’s 401(k) and see whether or not they charge high fees. Anything over 1% or so would start to set off warning bells in my head.

I have a question regarding the book Get A Financial Life, which you recently reviewed.

Should I take that 2% and open a Roth, or should I just leave it be? It seems like an insubstantial amount of money to go through the trouble of opening a separate account, but if the benefits are worth it I would have no problem doing it.
- Trey

Whether the effort is worthwhile really depends on how old you are. The younger you are, the more worthwhile it is to make the move.

Why? If you’re younger, you have more years between now and retirement – and that means more years for investment growth. Thus, the decisions you make early on have bigger tax implications at retirement than the decisions you make later in your career.

If you’re sixty, I wouldn’t worry about it too much. If you’re twenty five, I’d definitely get that Roth IRA opened up (I use Vanguard for mine) and start pumping money into it.

Why do you link to such awful articles in your roundup? Some of that stuff is completely in opposition to what you talk about on The Simple Dollar!
- Lily

I don’t link to stuff simply because I agree with it. If I did that, the roundup would be a chorus of echoes – quite boring.

Instead, I link to stuff because it forces me to think and re-evaluate my beliefs and ideas about personal finance, careers, personal growth, and so on.

Sure, I often link to articles I agree with. But almost as often, I link to articles I disagree with. My only criteria for linking is that it makes me think. If I find the ideas crossing my mind later in the day after reading the article, it’s likely I’m going to link to it.

Trent, to what extent does “knowing your audience” affect your blog posts? I mean, you’ve got a pretty niche market- most people I know would consider it some kind of punishment to read through a financial blog “for fun.” So do you pretend to write to the “average adult American” or do you recognize that your audience is typically more financially responsible than the average American, or at the very least, intending to be more financially responsible than the average American currently is.
- Tim

I don’t “pretend” to write for anyone.

I write for several audiences. I write some that are obviously for the longer-term readers, the ones who are pretty skilled in frugality and have their financial lives in pretty good shape.

I write for people who are in the midst of their turnaround and often have a religious fervor about debt repayment.

I also write for people who are suddenly realizing their precarious financial situation and are desperately Googling for help.

I don’t write for people who have no interest in reading The Simple Dollar. On the occasions when I write “devil’s advocate” posts, I’m mostly trying to reach the people who are in that last group, the ones who are rethinking their assumptions about their life and how they spend money.

I’ve got my money in order. I’ve got my cooking skills in order. The one thing in my life that is never in order is cleaning/organization. It’s something I constantly struggle with, the way others probably struggle with money. You seem to have it together in nearly every way … I’m curious what you to do conquer household cleaning and organization, if you care to share in the future.
- LDH

For one, I’m a big believer in “dirty floors and happy children.” Keeping a perfectly clean house comes in way behind spending time with my children. Sometimes, that means the house is a mess, with some dishes in the sink and some toys left out in the living room and a kitchen floor that needs to be swept while I’m out in the yard playing with the kids, but that’s a compromise I’m completely happy with.

I don’t really view it as a struggle. I make sure to keep ahead of the things that are really important, like clean laundry and such, but I honestly don’t sweat the details that much. I make an effort to keep the rooms where guests visit pretty clean so that I’m always happy to have guests over.

I think it comes down to a values thing. Step back, look at your life, and ask yourself how important a spotless house is in the big scheme of things. For me, it’s simply not that high on the importance list.

What type of life would you lead when you finally do retire many years down the road?
- Studenomist

I want to write novels and short stories at my own convenience, when the muse strikes me. The rest of the time, I want to be living on a patch of land out in the country with a big garden and a barn, with perhaps a bit of small-scale livestock (a couple cows, a goat, lots of chickens). I’d like to spend at least some of my time working for some charitable causes, and I’d like to be able to spend several weeks a year living in another country – not hitting the tourist spots, but living in an apartment out in an area far away from the tourists.

That’s the life I’d like to lead. It’s pretty much what I’ve always dreamed of.

It still seems really far away, but it doesn’t seem as far away as it once did. I’m taking steps toward that dream every single day.

I’ve been reading your blog entries for several years now. And this is the first time that I’ve had a question that I’m not sure I can answer on my own. I just graduated from grad school in May, and I’ll need to start repaying my student loans in a few months. The Dept of Eduction is offering a 0.25% rate reduction for enrolling in Checkmate II, their automatic payment program (i.e., they withdraw the monthly payments directly from your checking or savings account). Although the brochure indicates that it’s totally “safe” and “secure”, I’m a bit wary. With a credit card, I know that I can dispute any unauthorized charges. But if they empty my checking account inadvertently, I’m guessing that it’ll be very difficult to convince the bank to reverse the charge. Can you think of any other advantages or disadvantages to setting up automatic payment? Is the 0.25% rate discount worth the risk?
- Jennifer H.

I used this very program for several years with no problem.

It’s in the federal government’s best interest to be as accurate with this as they possibly can. Once an automatic payment has been set up – whether it’s with the federal government or any large business – the cost of them messing up such a payment simply isn’t worth it. It’s a lot more worthwhile for them to build careful, redundant systems that basically eliminate such erroneous billing.

Basically, I trust automatic payments, as long as they’re executed by a business or organization larger than a mom-and-pop shop. Those businesses and organizations execute lots of payments a month, and it’s simply not worth the risk for them to not do it as carefully as possible. It has lower risk, in my opinion, than me manually writing checks or manually doing online bill pay.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

I have a question about savings and student loans. I am in graduate school and working on an emergency savings fund while paying off a student loan (deferred but accruing interest). Presently I am putting only a minimal amount towards the loan ($50/mo) and the bulk to my emergency savings ($950/mo). My plan is to get to the $6000 mark in the emergency fund, then apply the full $1000/mo to the student loan until its gone, then to start investing in an IRA. The catch is that due to funding I will take a pay hit in September 2010 and will only have ~$200/mo. to save.

Is my plan sound? Should I try to put money towards all three at once or is in sequential order best?
- Christina

I think doing things sequentially like you’re doing is sound. It’s better to work towards one goal than to split your efforts among a bunch of goals – you’ll have to wait a LOT longer to get to success if you split your efforts.

Having said that, though, I would actually go ahead and start that IRA now. Since you’re a student, a Roth IRA is probably the best option for you. I’d contribute $100 a week towards that, then put the other $600 a month toward the emergency fund and not even worry about the student loan. Once the e-fund is funded, take that $600 monthly and channel it toward the loan.

My only question is the reason for the $6,000 emergency fund. I assume it’s calculated based on how you spend money. Is it intended to provide a certain number of months of living expenses? My guess is that it’s for two or three months, depending on how you live.

Have you read the South Beach Diet book? It’s a good read even if you are not ‘dieting’. With your interest in food and nutrition (and reading) I’d highly recommend it.
- Mol

I’ve read a lot of diet books, many of them having conflicting advice.

In the end, the only pieces of human nutrition advice that seem to be consistent is that you should simply eat more vegetables than meat and to eat in moderation. Once you get much beyond that, the advice is heavily contradictory and confusing at times.

Lately, my interest in books about food tends more toward the art of preparing it (like Ratio) or where it comes from (like The Omnivore’s Dilemma). I don’t tend to bother much with books that provide a “plan” for losing weight, especially one supported by a lot of frozen foods sold in supermarkets.

How did you teach yourself how to cook? Do you watch Food Network?
- Adam

I don’t watch Food Network much at all, to tell the truth.

Most of my education in the kitchen was from books and a few YouTube videos for specific techniques. I’d read about it, then go give it a shot.

I’m not ashamed to admit that many kitchen skills are still quite challenging for me. I tend to over-butter things. I am slower than molasses chopping most vegetables – and it’s not because of the knife. I sometimes overcook meats.

Here’s the thing, though. It’s all fun for me. I love spending time in the kitchen. Best of all, I sometimes stun people with the things I make, like my potatoes and onions au gratin from scratch that takes about forty minutes of prep time and almost two hours to bake.

That’s my motivation – and that’s enough to get me in the kitchen, try things, occasionally fail, and sometimes succeed.

My husband and I have been noticing for awhile now that we’re outgrowing our friends. We are married and own our home, and are thinking about having kids in the next few years. Most of our friends still live with their parents, and are more focused on buying expensive toys (new vehicles, electronics, etc.) than they are about focusing on their future.

Is there a way we can politely bow out of these relationships, without causing many hurt feelings? Also, are there any relatively safe online communities that we could use to find people in our area that share our same interests? I know we can make new friends easily, but we don’t know where to start looking for them…
- Jessica

Just gradually slow down the interactions over time. Instead of doing something with them every week, scale it back to every two weeks or every month. That will leave you with the free time you need to build up new friends and new interests.

As for looking for people in your area, start with your interests. Visit businesses that sell products connected to your interests and see if they facilitate any groups. Get involved in any community groups and organizations connected to your interests.

Some of your friends will just drift away. Other ones – the better ones, actually – will want to know what’s going on. Be honest. Tell them you feel like there’s a gulf between what’s happening in your life and what’s happening in their life.

You’ll be surprised how flexible truly good friends can be. My best friend became my best friend when I was single. He stuck around while I seriously dated Sarah, married her, and had two young kids – he’s still single and he still stops in all the time. My kids think he’s the cat’s banana.

As for the rest? If they drift away, it’s not that big of a deal. Some friends exit stage left to make room for the new ones entering stage right.

I know you watch baseball. What other sports do you actively follow? Who are your favorite teams or players?
- Edward

I follow baseball faithfully. The only other sport I follow with anything approaching that kind of consistency is golf.

I also follow – on a somewhat more subdued basis – college and pro basketball, tennis, and soccer.

I follow football and NASCAR enough that I can talk about it in conversation with people, because I know many fans of both sports.

By following, though, I should say that I don’t slavishly watch them on television. I’ll usually watch the Sunday afternoon of a golf major and I’ll often watch the baseball playoffs. I’ll occasionally watch an NBA game or an NCAA tournament game or an English Premier League match or a semifinal or final match at a tennis major. I’ll listen to either sport whenever I find it on the radio. I also carefully read game and tournament highlights for both sports.

In the end, though, if you gave me a choice between watching a sport or playing it in the yard with my son, I’ll head outside any day. Most of my sports watching happens on days where the weather doesn’t mesh well with going outside.

You recently wrote about how your net worth is negative if you don’t count your home as an asset. When do you think your net worth will be positive again?
- Sandra

I was intrigued by Sandra’s question, so I ran some models in a spreadsheet. According to my math, I’ll be able to cross back over to a positive net worth sometime in 2011. Yes, that’s with the full crunch of my mortgage over my head and not counting my home as an asset.

My path for getting there is mostly based around whacking away at my remaining debt – my student loan and then our mortgage. I have plenty in savings to sustain us through almost any emergency.

Why is this important? In a strict way, it’s not. It’s mostly a way for me to look at the realities of my life – if I were to liquidate everything that’s easily liquidatable, where would I be?

I’ll certainly feel a lot better when that number’s in the positive, I’ll tell you that!

I am wondering if the real answer for why we never get in contact with you is that you in reality do not have time for all of us readers?

So is it not time to scale back, get more involved in the comments and with each reader instead of turning into one of those sites just pumps out information?
- Tordr

All of that stuff you list is for direct contact with readers. I interact with readers directly on Facebook, Twitter, and FriendFeed – and email, for that matter. I do reader mailbags specifically to respond to reader questions. I write articles in response to specific reader questions. And I comment, too, on occasion.

In the end, when I think about how to spend my time, I try to imagine the person I want to reach with my writing. For me, it’s that person who’s near their financial bottom. They’re scared. They’re typing search terms into Google, hoping that someone can provide them with the cool words they need to help them get a grasp on the problems around them. Maybe they hate their job. Maybe they’re scared about their debt. Maybe they just feel stuck in a serious rut revolving around consumerism. Maybe they’re trying to follow a new career path.

Whatever it is, it’s a big change, one that’s scary to face alone.

My hope is that those people find a page on The Simple Dollar. Much of what I write is with that person in mind, above all else.

We use paper plates for lunch, snacks, etc. I’ve always assumed that the cost of washing our regular plates (plus the time to do it) was probably equal to the cost of the paper plates. Also I assumed the same for paper vs. cloth napkins.

Do you have any thoughts on this?
- Ann

How exactly are you defining “cost”?

If you’re looking strictly at your own dollars and cents, you need to figure in the time you add to the equation due to the extra trash you generate, along with any extra costs you might incur due to putting more trash out by the curb. There’s also the cost of having to go to the store to re-buy those paper plates – some fraction of your grocery store trips are done to buy these plates, something you don’t have to do with normal plates.

Another factor – if you use the cheapest plates, they’re not sturdy and often cause messes (in my experience), which take time to clean up and often waste food. More expensive plates are – well, more expensive.

Beyond that, there’s the environmental factor. Paper plates take a long journey to get to your store shelf, starting with the trees in the forest that are cut to make the plates, the processing done to those trees to make the plates, and the shipping of those plates via ship and truck. With normal plates, you’re not contributing to that cost – and it certainly is a cost in a global sense.

For me, these factors tip the scale towards reusable plates.

Hey Trent, I’m also interested in canning salsa this year. How about sharing your recipe and techniques with us in the future?
- Kim

PickYourOwn (a site I quite like, even if the design is circa 1995) has a great guide for making and canning salsa.

To put it simply, canning salsa (and other tomato-based foods) is really easy because of the acidity of the tomatoes. You don’t need to pressure cook them – a boiling water bath will do the trick. Basically, just make what you want to can, boil the jars and lids for a bit to sterilize them, fill the jars, put lids on them, put the jars in boiling water for a while, and you’re done. Let them cool, check the lids, and put them up for storage.

These actually make great Christmas gifts. Homemade salsa almost always blows away stuff made in a factory.

I’m certainly no expert on libertarianism, but I’ve always had the impression that most libertarians are against taxes. Is this true for you? While it seems clear that you’re all for reallocating taxes to fund education more heavily, I was surprised that you didn’t seem more anti-tax in general.
- Georgia S.

There’s a big difference between being a libertarian and a Libertarian.

A “big-L” Libertarian is a member of the Libertarian Party and subscribes to their beliefs, many of which I view as being self-contradictory.

A “little-l” libertarian refers to a broad swath of people who believe strongly in individual liberty and smaller government. These people are basically outcasts in both major political parties.

A “big-L” Libertarian is basically just one extreme flavor of the broader group that is “little-l” libertarians. I would probably put myself in the latter group, but I’m far from the former group. I believe taxes are needed and I believe that many services are better handled by the government than privately, such as a standing army and roadways – pretty far from “big-L” Libertarians. I’m probably closest to the Republicans in terms of how public dollars should be used, but some of their uses still make me shudder.

I also believe that individual liberties should extend to the point that as long as it doesn’t violate someone else’s individual liberties, it shouldn’t matter at all in terms of the law. That’s close to “big-L” Libertarians, but very far from the Republicans and actually closer to the Democrats.

So, usually, I just vote for whatever candidate seems to match my views the best. Sometimes it’s a Republican, other times it’s a Democrat. Sometimes it’s a third party candidate.

I hope that clears things up a bit.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

I have a very good friend, who is also very frugal. She has recieved this habit from her parents, who have told her to study hard, work hard, get a good, steady job and save your money. This is working out really well for her so far, and in our peer group, she actually has the highest savings ( most of the group still living from paycheck to paycheck).

How do I get her to see that she should look after herself more and that it is okay to start enjoying your money guilt free?
- Donna

At first, my impression of the friend was that she was in fact living “too tight” and was in danger of becoming a miser who misses out on life-fulfilling experiences in an effort to conserve every dime.

Then I read the part about loaning a family member $30,000 with little expectation of getting it back – I’m sure she was aware of this – and my opinion changed quite a lot.

It sounds to me like your friend has her values figured out – and it’s just that those values are fairly different than yours. Your friend’s values center around her family and she’d rather do without little things in life to help out her family – and possibly her close friends, too.

I know a couple people who do this – they scrimp and save, then occasionally help the people they care the most about in a big way, swooping in to do things like make down payments on houses or buy new cars. They also often do things like write $50,000 checks to charities when those charities most need it. At the same time, they won’t go out for coffee because it’s too expensive.

Is that miserliness? I’m torn. On one level, I think that these people are missing out on some of the joys in life. On the other hand, I think that perhaps they’ve just figured out what really makes them happy – helping their family and closest friends and the causes they care about.

It’s not a tradeoff I would make, but it’s a tradeoff I understand.

At last NBC began streaming Days of our Lives full episodes online, so theoretically, there’s no reason for me to subscribe to cable anymore, since this is the last of my “must have shows” to become available this way. I am considering giving up cable, in favor of a combination of internet and TV with rabbit ears. I live in an apartment, so indoor antennae is my only option, and since my TV is digital, would I even need a converter box? I am very low tech, but the reading I have done indicates no, however higher tech friends say I would. Also, I am thinking a VGA cord to attach my PC and TV would give me TV size streamed programming, any other considerations?
- Mary

Days of Our Lives? I actually watched that one summer almost two decades ago when I was convalescing. All I remember is that Satan was actually a character on it, which I found hilarious.

Anyway, if you have full access to the programs you want to watch, I see no reason to not abandon cable/satellite television. You can get emergency weather from a weather radio, local news from the internet, and there are lots of sources for the programming you want to watch.

Frankly, I’ve been watching almost no television over the last several months. I’ve watched some programs, but almost all of them have either been on sites like Hulu or on DVD.

On Twitter, you mentioned seeing District 9. Did you enjoy it?
- Ev

Very much so.

The best science fiction is basically just a morality tale on modern life where one element is altered in a fantastic way in order to make you consider the situation in a new light.

District 9 is essentially about immigration and looks at an individual’s change in perspective if they go from being the established citizen to being the immigrant.

In the end, I thoroughly enjoyed the movie and the questions it raised floated in my head for a good week. That, to me, is a sign of a very good movie.

i have a work offered HSA (health savings account) and high deductible health insurance. They take the money (i decide how much) out of my paycheck and put it into an account that i can then use to pay my deductible and other health related expenses. this is all pre tax money, its a great deal for me,a nd i can keep it as a sort of ‘health nest egg’ of sorts. what I guess I was wondering is, how should this affect my emergency fund, given that I have a fund which is of equivalent size for health emergencies alone?
- akb

I would consider that account to be a useful tool, but given the many restrictions on how the money can be used, I would not consider it part of my emergency fund.

To put it simply, many, many serious emergencies in life happen in situations where a health savings account won’t be able to help. It can’t help with a serious engine problem on your car. It can’t help with a job loss. It can’t help with a big unexpected personal expense. It can’t help with a forgotten tax bill.

It also can’t help with any big opportunities that come your way, either.

Thus, I would not count a health savings plan towards one’s emergency fund. That being said, I’m not sure putting a “cap” on an emergency fund is a good idea. I’ve been moving more and more towards looking at my cash savings as an emergency fund and an opportunity fund, so I don’t hesitate to continue to add to it over time.

If you don’t mind me asking, how do you promote the site, just seo or do you market as well? all tips gratefully received.
- Lee

I don’t promote The Simple Dollar directly at all. My audience has been built by word of mouth. I didn’t have any “connections” in the blogosphere to tap, either – no one has helped me with traffic because they’re an “old buddy.”

I also don’t worry that much about SEO. My only real concern in that area is just to write meaty articles. If I write meaty, thought-provoking, and useful articles, they’ll naturally attract links and search engines.

In the end, it comes back to good content.

Why do you think Skype is better than Magic Jack? Doesn’t Skype require you to have your computer on all the time?
- Kelly

I’ve used Skype and Magic Jack and personally found Skype to be the superior service. I’ve had fewer problems with it (using it for more than a year versus a few problem-plagued weeks with Magic Jack). I can use it on pretty much any computer, for starters, and I can use it for videoconferencing, too.

As for having a computer on all the time, I tend to do this anyway. My desktop machine does several different automated tasks (collecting data at certain times, mostly), so I just leave it on and have Skype run on startup. Thus, Skype is almost always running.

Skype’s not a great telephone solution for everyone, but it works pretty well around here.

I’ve been accepted to a MBA program and got a two year deferral so I can work for a couple years. My school’s website says that they don’t consider retirement assets up to $100k in their aid decisions. I’m looking about $50-55k per year in MBA expenses.

I have about $30k in other savings and expect to put $2.5k per year (state tax deductible) in a 529 plan.
- AK

Since you’re investing for a short term goal, you should invest in something very stable, like bonds or even cash.

Markets that don’t have a guaranteed return (stocks, metals, commodities, currency, etc.) aren’t stable short or medium-term investments – over a three year period, there’s enough fluctuations in those markets that you have a very high likelihood of simply losing money. Most such markets do gain money consistently – and quite nicely – but that’s over a long period, much more than just three years.

Just go conservative. It might seem like a small return, but it is a return, after all.

We purchased our home 6 years ago with 100% financing split between our 1st mortgage and a HELOC. We are able to make both payments. The 1st is at a 6.375% APR and the floating HELOC rate is 2.75%. We have an emergency fund equal to 105% of the HELOC balance. My question is this, should we: 1) take advantage of low rates to consolidate the 1st and HELOC, or 2) just pay the HELOC off and use that as our emergency fund?
- Michelle

I’d lean towards the first one, provided you don’t have to get PMI or other such insurance. Contact your local credit union and see how you can consolidate.

On the surface, that might not seem like a great idea because of the very low HELOC interest rate, but that rate is floating, which means that from here it’s got almost nowhere to go but up. I’m also assuming that the HELOC has a much smaller balance than the primary mortgage.

I would not tap your emergency fund to pay off debt, especially debt with this low of an interest rate. It’s a great goal to get rid of it, but Murphy’s Law pretty much guarantees that if you were to wipe out that emergency fund in this way, you’d need that emergency fund the next day.

I was just wondering how you first got into blogging, and what you used when you first started out.

Reading your blog and seeing your passion for writing about frugality and life has made me rather inspired to perhaps start blogging myself.
- Kayla D.

Whenever I start blogs – just to see if I can write consistently on a topic – I start on Blogspot. That was true for The Simple Dollar – I played around with some ideas on Blogspot in October 2006 before launching the main site.

I’ve also started a lot of blogs on Blogspot that never really went anywhere. They just didn’t click.

Once I realized that The Simple Dollar might be something that I could do for a long time, I got my own domain name and my own hosting plan, then migrated to Wordpress. However, doing that is overkill if you’re not really committed to what you’re doing.

Your list of books you read last month was really impressive! Do you really read that much? What about the books you review here? Where do you find the time?
- Jason

Yes, I read that much. I read a book for personal enjoyment every three days (on average). I also read about a book a week for The Simple Dollar beyond that.

Most of my leisure time, frankly, is spent reading. My wife does the same thing – in the evenings, 90% of the time, we’re either both reading or we’re playing a board game against each other.

I also make a point to read in front of my children for at least a little while each day. This serves a lot of purposes. For one, it shows them that reading books is part of a normal adult life – I do it as a role model. For another, it gives them time to play independently and make up their own games, which I consider vital for child development.

I also usually take at least an hour out of my work day each day to simply read. Perhaps once or twice a week, I’ll read a book for personal enjoyment – the rest of the time, it’s reading for The Simple Dollar.

Add that up and it’s clear how I manage to read so much.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

The cost of education is increasing at an alarming rate. At some point it will come down to a cost benefit thing. Is it worth it to pay $150K for a 4 year degree say in creative writing where you struggle to find a job?

At what cost will college be worthless if tuition is increasing at its current rate? Yes you can say that education shouldnt have a price, but what if it cost you $250K just to get a 4 year degree? That’s a 30 year mortgage for a lot of people.
- Jake

I’m going to throw out my own theory here. I think we’ve reached the peak of the power of the bachelors’ degree as a ticket to a career.

What’s happening is that at many schools, the cost – both in time and terms of dollars – are eating up enough of a person’s lifetime earnings that a properly motivated individual can find other avenues for earning a good living without going through that process.

Entrepreneurship doesn’t require a degree of any kind, and the internet has opened the door to entrepreneurship in countless interesting ways. The door is open wider to self-employment and entrepreneurship than ever before.

When everyone can show off their work online, we move closer and closer to a true meritocracy. Degrees were once ways to show that a person had a set of experiences, but today, one can find evidence of experiences and talents online by viewing a person’s Facebook profile, personal website, online portfolio, and shared thoughts.

I’m not devaluing a college degree – the experience of getting it, if properly utilized, is life-changing and life-affirming. But viewing your degree as simply a ticket to riches is on the verge of becoming a thing of the past.

My suggestion to people thinking of entering school: what are you sharing with the world? Are you creating value for others? The earlier you start doing that, the better off you’ll be.

I hate everyone at my job and I want to quit. Why should I bother maintaining any sort of relationship with any of these bloodsuckers after I leave?
- eldrick

Sounds like somebody’s got a case of the Mondays!

You might view the people around you as soulless cretins better suited for True Blood than real life, but those people are still involved in your current career path – and may even hold valuable connections in other career paths.

You might not like some people in your office and will be fine severing ties with them – that’s fine. But if you have a positive relationship with anyone in your office, you’ll always do well to cultivate that relationship.

No matter what, though, don’t burn your bridges in some childish fashion when you leave. All that does is create a negative impression of you – it doesn’t “show them” a thing.

Trent, what’s the problem with shilling for things you DO believe in? You’re in a fantastic position to provide for your family by blogging — blogging, of all things! I wouldn’t trust you any less for getting paid for peddling products and services you actually do find useful. I think the trust has already been established; we know you can’t be bought. Other readers, you with me?
- Leah

I do write about things that I do believe in. I talk about PaperBackSwap and ING Direct and Vanguard and Evernote and SmartyPig and books and games I enjoy all the time.

The catch is that I restrict my positive comments and reviews to things I actually use in my own life. If I don’t use it myself, I don’t endorse it, period. I don’t even talk about it except on rare occasions where something deserves clear commentary.

It would be incredibly easy for me to expand that a bit and cash in big time. I could start recommending banks that seem to have good service, but that I don’t use because I find more value at other banks. Talking about banks is good, right? And I can certainly make some cash from that with affiliate links. The same goes for some credit cards with good rewards programs. Or supplies for cooking at home. Or investments. The list goes on and on.

I don’t do that. If I write something, it’s about what I’ve found useful for me, not what I’m paid to talk about. Period.

Yes, I’ve been asked to try a lot of things over the years. The only ones I’ve bothered to write about at all were the ones that were compelling enough for me to start using them regularly – like PearBudget and Wesabe. I use both of those things semi-regularly (I use the PearBudget spreadsheet with some homebrew modifications and I follow discussions on Wesabe all the time), so I have no problem mentioning them. However, both of those things were brought to my attention by people who practically begged me to try them. I’ve tried hundreds more and never went back – so I never wrote about them.

If I did anything else, I’d not be honest. That means I leave money on the table all the time. My reward for that is loyal readers, like the 2,000+ who have signed up to be “Friends of the Simple Dollar” and the many thousands of others who share my articles with their friends and mention them on Twitter and Facebook.

It’s more than a fair trade, in my opinion. Full honesty has rewards far beyond a few dollars left on the table.

Frugality is for old people. I want to live now, not later.
- Dimes

What do you mean by “live”? Is “living” buying every consumer product you see? Is “living” throwing cash down the drain on convenience foods and convenience purchases. Is “living” burying yourself in credit card debt and watching more and more of your paycheck vanish into the gaping maw of interest payments? Is “living” working at a job you hate so you can “live it up” on the weekends?

I tried living like that for a while. Before long, I found myself masking a lot of pain – big debt bills in the mail, a career that paid well but didn’t seem to have many prospects and didn’t include work that I was passionate about – with a lot of “living.”

The end result? I almost lost everything I had – my marriage, my job, and my small amount of remaining happiness.

What I discovered is that “living” meant figuring out what I actually wanted to do and then doing it with abandon, then paring down the other aspects of my life that weren’t as important. That’s frugality in a nutshell, and it changed my life. Writing went from being a vague dream I tortured myself with to a way of life. My debt bills went away and I was able to start saving for some big goals. I was able to take some huge professional risks to chase what I wanted to do, not what my spending habits dictated.

If your version of “living” involves designer labels, a pile of gadgets, and drinking and partying and eating to cover up the pain of your job and that growing wall of debt, feel free to have at it. I’ll take my version instead.

I live in a one bedroom apartment in Utah and will be moving to Ohio to live with my sister and her family at the end of September. Due to having been unemployed since March, I can really only afford to take whatever will fit into my 2003 Oldsmobile Alero.

My question is this: what is “worth it” to take with me, and which items would best to sell and buy again once I get a new job and a new place?
- Misty

Take the things that have personal value to you or that you use every single day and sell everything else. Seriously.

A move like this is the perfect opportunity to pare down your possessions to the things that are really valuable to you. No expectations of others. No anything. Just you and what’s important to you.

You’re far better off just taking enough stuff to fill a few bags and a healthy wad of cash than to bring a bunch of stuff you don’t really value and a significantly lighter wallet. You’ll save time, save mental clutter, and have more money by going light when you do this.

What kind of correlations have you made between finance and your previous research job? I’m sure there have been some.
- Mol

Science and finance are both about evaluations of data. The biggest difference is that most of the evaluations done in finance relate heavily to human nature.

In its idealized state, science is about making predictions based on facts. Finance does the same thing. However, hard science generally isn’t impacted by human psychology – the facts are often concrete and stable.

Personal finance is much different. Human behavior can only be predicted to a certain extent. I find that personal finance is actually closer to psychology than it is to hard science.

I don’t understand the “absolutely no debt” philosophy. Do people who advocate this really believe that a person should rent their housing for years and years and years before buying a home?
- Flo

From a pure numbers standpoint, the debt free lifestyle makes a great deal of sense. Virtually every debt you incur requires you to pay back that debt with some interest attached, which is a net loss of resources. Avoiding debt means that you retain all those resources and can invest them, generating more resources.

But do those numbers reflect real life? It’s hard to come up with a concrete answer to that one. I certainly believe that having a nice, stable home is beneficial to my children in ways that are difficult to directly express in dollars and cents.

I think that it’s easy to argue on behalf of no debt in areas you don’t personally value in a deep way. It gets harder when debt intersects with your key values, like your family and the decision to buy a home.

What do you think of the third season of Mad Men so far?
- Ralph

A long-time reader sent me the first season of Mad Men on DVD and got me hooked. It’s an incredible series, one that I’ve thoroughly enjoyed…

… up to this point. The third season hasn’t really clicked with me yet. Perhaps it’s because I haven’t finished watching the second season, but something just seems to not quite click.

Of course, I’ll admit that the first episode or two of the first season didn’t quite click with me either. It took a while for it to really click. Maybe the same thing will happen again.

Ignore the experts for a moment. How big of an emergency fund do YOU think people should have?
- Walt

Honestly? I don’t think there should be a limit. I think people should contribute a healthy amount to an emergency fund with every paycheck.

Why? I think that the definition of an “emergency” is often limited to negative things, when it should also include positive things. My life regularly offers me great opportunities that I could jump on if I had a bankroll – investment in businesses, taking advantage of enormous sales, taking giant career risks with potential rewards.

I’m not saying all of that should be in cash – I believe in a CD ladder approach to maximize your returns. But there should still be a large amount safely in cash for you to grab when an emergency – both good and bad – occurs.

Should Pete Rose be in the Baseball Hall of Fame?
- Larry

I’m a lifelong baseball fan, and the whole Pete Rose question is a nugget that constantly gets kicked around among baseball fans. Several readers – a few of whom I’ve played fantasy baseball against – have asked me this question, so I’ll give it my best shot.

I think Pete Rose not being in the Hall, as things are now, is dishonest.

If he’s excluded for his actions, Ty Cobb, Smokey Joe Wood, Tris Speaker and others should be tossed out of the Hall of Fame because there’s similar strong evidence that those guys also bet on baseball. Yet those fellows remain in.

On the other side of the coin, if Rose is allowed in, then “Shoeless” Joe Jackson should also be eligible for the Hall of Fame.

My personal opinion is that the Baseball Hall of Fame should simply reflect the nature of the game itself and the players that had a significant impact on the game’s history. In that regard, Rose and Jackson should unquestionably be in, as should the guys in the modern era who used performance-enhancing drugs (yes, if I were voting, I’d vote for McGwire and Sosa). After all, many players from the 1970s who used amphetamines to get an edge (like Mike Schmidt, for example) are currently in the Hall, and if that’s the established standard, then that standard should apply to everyone. Given that, I would also understand if they raised the guidelines for membership and cleaned house, getting rid of people that would be effectively “banned” by the character guidelines that are already in place.

In my eyes, the disgrace here is the Hall of Fame and the voters, which is clearly using a double standard for determining who should be in. I’ve loved baseball all my life, but I have no interest in going to Cooperstown if it merely reflects some warped view of the history of baseball rather than the true history of the sport. Put Rose in or kick Cobb out, in my opinion – leaving things as they are is hypocritical.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

The only credit card I’ve ever had is one my father signed me up for when I went away to college. I’m 25 now, and starting to get curious if there are any beneficial credit card programs I’m missing out on because of my very basic card. I rarely use it (I use a my bank debit card for most expenses), but could use it more if there was an incentive.

Any suggestions for rewards programs or should I just keep the card I have around for emergencies and keep using my debit card?
- Joel

What you’re doing right now in terms of credit card usage is very good – rarely using it (which helps your credit rating but doesn’t get you in debt) and instead mostly using your debit card. That’s perfect – keep it up.

Your best bet, if you’d like to get a little more value out of this situation, is to simply get a Mastercard or Visa associated with a chain you regularly use, like BP or Target. Where do you shop for food regularly? Where do you get gasoline?

Quite often, cards at such places reward loyalty. Just use it for your normal purchases and you’ll regularly get rebates or discounts of all kinds associated with that retailer.

Do you have any opinion on the device known as Majicjack? It seems like a reasonable way to save money on my phone bill(I have a land line and a Tracfone) but have read some extremely various opinions and reviews on the device.
- Angelo

From what I’ve seen, MagicJack works well for what it is. It simply uses some of your internet connection (you have to have broadband) to place and receive phone calls. It’s easy to use. The problem is that it’s as reliable as your internet usage is and it also requires your computer to be on to use it.

What I didn’t like is that the MagicJack software delivers advertisements to your computer. It also “analyze[s] the phone numbers you call in order to improve the relevance of the ads.” I’m not a big fan of spyware – it’s a big privacy breach that I’m not interested in.

Having dabbled with many different VoIP solutions, I’m happiest with Skype. I can use it pretty much anywhere – at home on my desktop computer, on my laptop, on other computers, and on my iPod touch – without taking hardware with me (all you need is a webcam). I can call any number in the U.S., Canada, Mexico, and a few other countries for free, and receive any calls for free. I can also do video chat with other Skype users. It’s only $24.99 a year for all this – and just chatting with other Skype users without a phone number is free.

I am a new golfer, and have come to love it for the challenge of perfection, and individual accountability versus team sports. I also enjoy being outside, hanging out with friends, etc.
I usually use coupons, and go during “twilight” hours, and rarely pay more than $20 for 9 holes and a cart. For 2 hours of my time, I find it well worth it. I go maybe once a month, so I’m not one of those that go at least twice a week or anything.
It’s just really fun, and a casual hobby I would rather not give up. So do you still play at all, occasionally, or have you given it up altogether?
- Matt

I play occasionally, but it’s usually when I’m able to meet up with others who enjoy playing on a non-fanatic basis. That usually means lining up schedules.

I actually enjoy playing the most with my wife and my father-in-law, neither one of whom takes it very seriously and makes the entire thing quite fun.

For me, it’s now a rare-occasion social event instead of a giant almost-never-ending time and money suck.

What are your views on leaving an estate for heirs? I know that planning for dependents to be taken care of is a given, as much as is possible. But assuming the heirs are adults who do (or could) earn their own way – what are your ideas? My grandparents were all about leaving a large estate behind for all the kids & grandkids, but I’ve read some authors who say the goal should be to have a 0 balance (after funeral expenses & settling the estate’s accounts), because counting on a large payout can keep people from being fully responsible for their current spending.
- et

If I were planning on leaving an estate, the last thing I would do is tell the people I would give the money to. You’re right – if a person knows they have an inheritance coming, it changes their behavior.

Instead, I’d just say I was planning on giving anything that was left to “various groups” and simply arrange things privately with my lawyer.

I don’t have any problem with leaving money behind for your descendants, but I do think one should keep in mind the psychological impact of such an inheritance, especially if it’s known in advance.

I appreciate your candid honesty of your “Road to Financial Amageddon” series. How did you recover, psychologically, from the knowledge that you were responsible for decisions that would cost you dearly?
- John

Simply put, you can’t change the past. It’s water under the bridge. The only moment you control is the now and so worrying about the past doesn’t help.

I recovered by stepping up to the plate and making changes. I put a lot of effort into undoing my mistakes in the realization that the only way things would get better is by today’s action.

Let go of the past. Don’t be burdened by guilt for the things you’ve done. Instead, be thankful for the fact that you have a chance – right now – to change it.

I am going to buy a used car and my CU offers a really great rate (4.95%) and for up to 72 months. I am trying to balance the loan length with the rate of depreciation, so at any point in time if I need to sell the car and I still owe, that I am not upside down on my investment. What is the best way you think to do this? The reason for this exercise is because I also have some CC debt I am trying to pay off that will have higher interest rate than the car. Should I not need the car I don’t want to have to dip into savings to pay the difference of what I owe vs. what I can sell it for. Your insight (opinion) is appreciated!
- Marcus Murphy

If I were in your situation, I’d buy the cheapest car that will keep me on the road for a while. That way, you’re not going to be upside down for long on the car, you have more money to get rid of that pernicious credit card debt, and you’re closer to debt freedom.

If you’re getting a seventy two month car loan, that means you’re buying something pretty expensive, likely something new. That’s not a good mix with a pile of outstanding credit card debt.

Doing this now means that you can actually afford a good car later (assuming that’s something you value) without the prison of debt holding you in place.

Many of your posts indicate that you cook often and enjoy it. Do you have any knowledge/opinion on health issues concerning the various types of cookware (i.e. Teflon/non-stick vs anodized aluminum vs cast-iron)? I worry about this when I cook for my family and was wondering if you’ve done any research on it.
- Sophie

I used to use Teflon-coated dishes, but I’m starting to move towards cast iron. Cast iron doesn’t stick at all as long as you treat it well when you first start using it – that means coating it in vegetable oil, baking it, then cooking bacon or something similar in it a few times and only washing it with water and a brush.

Teflon is cheaper and doesn’t require the up-front work, but Teflon also peels after some use. That means it gets into your food and it also means that anything you cook in the pan immediately starts sticking once the Teflon peels away.

I think I’ll pass on that. I’m in the process of slowly moving my pots and pans to cast iron.

You always suggest weird board games. Why don’t you just play normal games like Pictionary?
- Shawn

I’ve played a lot of Pictionary in my life – as well as many of the other typical party-style games – and what I’ve found is that I have a lot more fun when I play something like Ticket to Ride or Settlers of Catan or Puerto Rico instead of Pictionary.

First, Pictionary really only seems to flex the right brain – the purely creative side. I enjoy things that make you think strategically and creatively, which is what games like Ticket to Ride do well.

Second, Pictionary – and many other such games – are difficult to play with a small group of two or three people. Many other games suit small groups very well. If there are twelve people looking to play a game, Pictionary works well, but I rarely am in those types of situations.

Finally, games like Ticket to Ride reduce the impact of luck. Sure, there is some luck, but unlike games like Pictionary, luck doesn’t define whether you win or lose. With Pictionary, it’s all about whether or not you’re lucky enough to have a good artist on your team, the die rolls, and the cards you draw. Very little decision-making is involved, and I usually wind up feeling that all I did was shout out guesses and it had little impact on the game as a whole.

Another big reason I mention such games is that they’re unfamiliar. Everyone’s heard of Pictionary, but not many people have tried games like Ticket to Ride or Agricola.

The short story is that my divorced parents are each in financial ruins. When is it the kids’ responsibility to support the parent??
- es

That’s purely a question of family dynamics. I don’t want my children to ever be responsible for me. When my dotage sets in and my health fails, I absolutely do not want to be any sort of burden on my children. The guilt would drive me crazy.

On the other hand, if my parents need help, I want to help them. They don’t expect it, but they’ve done so much for me that I want to help.

Other families have a different dynamic. Perhaps the parent-child relationship has been poisoned along the way by various things. Perhaps there are different values overriding the situation.

If you do not want to help your parents in their dotage, that’s your own call. I don’t believe you should feel obligated to do so if it’s not something you want to do. It’s the end result of a lifetime of interactions.

If you reach a point of true financial independence, would you quit writing The Simple Dollar?
- Jenny

I’m honestly not sure. My big question would be whether or not I still had anything to say that was of value to anyone. If the answer is “no,” I’d just archive the whole site and leave it up for others to read and get value from.

I would still write – I love to write. I just might focus on other areas – fiction, food, sports, gaming, or some other area of passion for me.

One possibility might be that I would just slow down my posting rate here to start other things. I might go to one post a day or three to four posts a week and use all that spare time to launch other endeavors.

The last thing I would do is retire into idleness, I can tell you that. I’m not wired to sit still.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

We currently have a propane-fueled water heater. I live in AZ which has fairly reasonable electricity rates. Since propane is pegged to the price of oil, if we ever have to replace the water heater, would it pay to convert to an electric water heater? If so, do you have any idea how much time it would take to recoup any differential costs for the switch?
- Jeff

It’s absolutely impossible to say without rates. Real numbers are needed for these kinds of calculations.

However, I will say this: replacing a functional piece of equipment in order to save on energy rates is rarely a good idea unless you’re certain that you’ll be able to quickly recoup the cost. Replacing a functional item is a reliability risk – if you know it works, why risk replacing it with a lemon?

It’s also environmentally costly to simply replace equipment with such abandon.

What is your favorite thing about blogging?
- Journey

Probably the respectful and thought-provoking discussions I have with readers.

There’s nothing more interesting than a refreshing new angle on an idea. It makes me think about whether I’m right, whether they’re right, and sometimes whether the question itself is worthwhile.

Part of the reason that purely negative comments frustrate me so much is that they’re usually presenting a good idea, but they bury it in attacks and vitriol that take that good idea and bury it in negativity. This helps no one.

I have recently lost my job and am collecting unemployment. My former employer sent me paperwork about my 401(k). What should I do with that money? I don’t need to take it out but don’t want to leave it with the company if I have other options. Thanks.
- Josh

The traditional advice is to tell people to roll over their 401(k) into an IRA the second they walk out the door. This advice is usually given under the assumption that IRAs are competitive – meaning they have lower fees – while 401(k)s are larded with high fees.

That’s not always the case. Quite often, IRAs nickel and dime you with fees and, at the same time, 401(k) plans are often managed quite well with low fees.

My suggestion is to figure out where you would want to put your IRA – probably in a low-fee place like Vanguard – and figure out all of the fees and costs associated with what you want to invest. Then, compare that with where you’re at now. Are they comparable?

How is it possible that you get paid to blog? Is it from like, page views, advertisements or something? Do you get paid per blog post?
Just curious, I’ve never heard of anyone being paid to do something that sounds as fun as that.
- Steve

I get paid in several ways. The most straightforward one is advertisements on the site. Most advertisers pay me a small amount (a few bucks) per thousand views of their ad. Since The Simple Dollar gets quite a bit of traffic and I show multiple ads, that can add up.

A secondary way I earn income is through links to Amazon. If I review a book or talk about some product and link to Amazon in my description of that item, if someone clicks on that link and then decides to buy the book, I get a small percentage of the cover price of the book, and I also get a small percentage out of anything else they choose to buy while there. Since I already link to Amazon because I think their pages have a lot of information about books and products, this is more or less icing on the cake.

Lately, my income from non-blogging sources has risen as well due to the impact and popularity of The Simple Dollar. I’ve been able to sell some freelance articles and sign two separate book deals, things that only happened because of The Simple Dollar.

The problem with making money blogging is that it’s a long slog. It takes a very long time to build up an audience to the point that you would earn more than a pittance from it.

I am 36 years old and have been spinning my wheels career-wise for the past 7-8 years. Five years ago, I got two useless licenses and last year, I got another one.

If I go to a “trade school”, I can go full-time for as little as 4 months for $4500 or I can get my masters for $40K and up (and everything in between). Obviously, I would be without an income during this time.
What would be a better investment for me at this stage in my life? Keep in mind that I have less than 30-years to “get my money back”. I’m open to just about anything: my personal choice would be to continue working and go to school part time, but I’m curious if anyone knows what the “pay back” for higher education really is. When does it start becoming profitable?
Oh and I currently make about $18K as an “entry level” clerical position.
- Ashley

Again, without specifics, it’s hard to draw very clear answers here.

The best possible thing you can do in your situation is to follow your natural passions and talents. What are you naturally good at? What are you passionate about? Those are the areas where you should be pushing for your future career.

Sometimes that path leads to trade school. Sometimes it leads to college. Sometimes it leads to starting a small business.

Don’t worry about the money. If you follow something you’re passionate about and utilize the talents you have, money will always come.

The best thing you can do right now is simply live as lean as you can, take stock of your already-existing talents and passions, and start following up on them to see where they might lead.

Are you a conservative or a liberal? I can’t tell from your comments!
- James

I’m definitely a libertarian. I believe highly in the value of privacy and I believe that any activity that a person can do without harming someone else shouldn’t be punished by law. As long as you’re not hurting someone else, I don’t care what you do with your time and energy and money, as far as the law is concerned.

On most political issues, I see both sides of the coin. I think that most political issues end up coming back to an individual’s own moral code and I think it’s very hard to make a law that everyone should abide by that’s beholden to one person or one group’s set of moral values.

I’m an ardent believer that the best investment the government can make is in education, because education sets the stage for solving society’s problems over the long run. I would happily forego Social Security and Medicare and Medicaid to give the children in my town a better education. But, again, there you go – that’s my own values speaking, and I have a hard time believing that my own values should trump your values in terms of the law.

I think this is why I’m continually more interested in local politics and care less about national party politics. Individual liberty, quality education, and personal safety are best protected on the local level, where elected officials are directly connected to their constituency every day instead of sheltered in an office in Washington surrounded by aides with their own agendas.

Does that make me a liberal or a conservative? I have no idea. It just makes me me.

I want very much to budget our money well so that we can pay off debt, create an emergency reserve, and prosper. What is making it difficult for me (besides my right-brained tendencies :) is that our income is in part from seasonal work. We have one job paid by a salary year round, and another job paid by hourly wages only during the school year. So during the summer, our income drops to about 1/3 of what it is the rest of the year.

I had worked out a system of saving during the more prosperous months to make it through the dry summer, but was doing all the record-keeping on paper. Do you have any suggestions for how to make this situation work using a program such as Quicken?
- Michelle

You’ve already got the right idea – when both of you are working, you need to save as hard as you can so you can survive the lean months.

I don’t really think the best solution for this is Quicken. I think the best solution is to set up an automatic savings plan at your local bank and make adequate savings automatic. Set up the plan so that you’re putting enough money into your savings account each month that you could actually survive on it, then make it your goal to make ends meet with the excess.

So, let’s say your living costs each month are about $2,000 and you find that you bring in anywhere from $1,000 to $5,000 each month. Set up your automatic savings plan to knock $2,000 each month into savings, then attempt to live out of your checking account. Only tap your savings when you absolutely must.

Should I feel obligated to attend a dinner party held by someone that I don’t like? I invited this couple to a dinner party we held several months ago and they were really loud and borderline rude. They loudly asserted some borderline racist opinions and left everyone feeling uncomfortable. Now they’ve invited me to a dinner party of their own. Should I go?
- Shanda

Absolutely not. You should never feel obligated to attend a purely social event if you’re going to feel uncomfortable.

Having said that, not accepting their invitation without an iron-clad reason will likely damage that social connection. Is that something you’re quite comfortable with doing? It sounds as if it is, but many people often try to have their cake and eat it, too – they’ll avoid spending any time with a loosely-connected friend, but expect that person to be there when needed.

Life doesn’t work that way.

In 2010, Lexington, KY (where I live) will be hosting the World Equestrian Games. The whole city is getting revamped in anticipation of the many people coming here from all over the world. Our newspaper recently ran an article about people renting out their houses during that time. Based on the article, my fiance and I (we will be married by the time the games come around) determined that we could probably get about $1000/day to rent out the house. The article had a smaller home with no yard that was going for that much. The games last for 15 days. During that time, we could go on vacation or stay with my fiance’s parents without any trouble. We’d have to clear out our clothes and some valuables, but for $15,000, it seems well worth it. There might be some issues with damage, but a damage waiver would at least help, and we might need to update our insurance policy for the home. The article even listed 3 companies that offer different levels of help with the process (i.e. hands off and no commission or hands on with commission). Do you think this is a good idea to pursue? Do you have any thoughts on this that might be helpful?
- Katie

If I were in your situation, this is something I would do.

Before I did it, I’d contact a lawyer and see what sort of legal protection I needed. Insurance coverage? Damage waivers? What other issues are worth considering here?

$15,000 is mighty lucrative, but you definitely need to protect yourself. I would strip that house down to the point of being like a hotel before I left, removing everything that could possibly be used for identity purposes and blocking all mail delivery.

At meals, do you feed your children different foods than you eat yourself?
- Leonard

Since the children were old enough to actually eat at the table with us, we haven’t done this. We serve them a plate that’s as identical to ours as possible and let them decide for themselves.

We only make one simple request at dinnertime: they have to eat one bite of everything on their plate. Beyond that is entirely at their discretion, but they are required to sit at the table until everyone is finished. Mostly, this is a good way to maintain conversation and to get them to try multiple bites of an unfamiliar food, since it’s right there and they see us eating it.

If they refuse, then we literally put their plate in the fridge and they are served that plate whenever they’re hungry in the future until they’ve tried everything on it.

This really seems to work well in practice. They’re constantly exposed to new foods and have found that they like unusual things. My son, for example, has utterly fallen in love with black olives, while my daughter is the biggest one year old connoisseur of broccoli in the world.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

Last week, my grandfather gave me an envelope of really old silver and gold certificates. The face value of these certificates is in the thousands of dollars all told.

However, I recognize that these certificates are likely worth more than their face value as collectibles. What exactly should I do with them to maximize their value?
- Thomas

The first thing I’d do is figure out what I have. I’d research silver and gold certificates online and try to get a ballpark of their value.

The next thing I would do is take them to a coin dealer and get them appraised. Obviously, the dealer will make you an offer that’s less than what they expect to be able to get out of them – that’s expected, since dealers are in the business of making a profit in just this situation.

If the offer is close to your own estimate, I’d take it. Why? You have to figure that making up the difference will require a pretty large time investment, and that time has value.

Good luck. My family (my father and grandfather) were/are currency collectors and I enjoy it myself on a secondary level – it would be fun to see such a collection.

Trent, do you at least check the comments left on your facebook statuses? I realize that they are linked with your twitter, but I like the interaction that the facebook comments allows. However, if I know that you don’t read them, I’ll just reply on twitter instead.
- leslie

I read comments and messages on Facebook, Twitter, FriendFeed, and other places, too. I tend to not get as involved in conversations on Facebook simply because I don’t visit as often. I probably go there daily or every other day and read through recent conversations, while I tend to read Twitter and FriendFeed more often.

Why? I usually find Facebook to be too noisy. With the other services, it’s pretty easy for me to filter out stuff I don’t want to read. With Facebook, it’s a lot harder – I tend to have to dig around a lot to see interesting things.

I think Facebook and Twitter have different purposes. Facebook is great for keeping in touch with a smaller circle of people you have long, established relationships with. Twitter is better for communicating with a much larger group of people – and meeting new people. Although I value both, I tend to enjoy the latter more.

paperbackswap.com is not the only option, I have had lots of luck with half.com buying books for as cheap as 77 CENTS and than paying the $3.99 shipping fee. This means for $4.76 I can get a book, delievered to my door without having to worry about mailing or listing a book of my own to sell. Although I have sold books on their website, mainly textbooks, for a resonable price.
- Anna

I included this comment because it was an interesting part of a long discussion on various methods of acquiring books for low prices online.

One option that Anna is overlooking is that it’s easy to buy PaperBackSwap.com credits from other users. In the site’s Book Bazaar, you can often find credits for sale for $2.80 a pop. A single credit equals a book mailed to you for no additional cost.

I know about this because when I first started getting into PaperBackSwap, I bought a big pile of credits in just this way to order a bunch of books I wanted. Once I wound up “swapping,” I no longer needed to buy the credits and now I actually have a pretty healthy surplus (meaning I can largely order what I want without mailing books).

Let’s say that I invest in a 529 for my child and they later choose not to go to college at all. What exactly happens to that money?
- Shane

One option is to transfer the balance of that 529 to a sibling or another immediate relative by changing the beneficiary on the account. That means that someone else can use the college savings.

Another option is simply using it as a mutual fund. If you’re not using the account for educational purposes, it can be used just like a taxable investing account, but with a 10% penalty on any gains. However, in most states, those gains are actually offset by the tax breaks you get by putting money into the account.

A third option is to simply wait. If the person decides to go to school later, that money is ready and waiting. If they become disabled, the money can be withdrawn without penalty. If the person passes away, that money goes into their estate, again without that extra penalty.

In virtually every case, there’s some option that will work well.

Do you still do some canning at home? If so, can you do a photo tutorial post on how you go about it or describe your canning process in more detail?
- candylover

We don’t do much canning at all at home. Instead, we tend to freeze vegetables and use them in the winter after freezing.

Why freeze? For one, it’s much, much simpler. Just put your vegetables in a airtight reusable container, label it well, and pop it in the freezer. If you use it in six months or so, it’ll be fine. For another, if you already have a freezer, keeping it full actually saves money – it causes the freezer to run less often and reduces the speed of spoiling if you lose power.

Having said that, we are considering canning a small amount of salsa this year for gifts. Salsa is relatively easy to can because it’s acidic – you only need to do a hot water bath instead of using pressure.

My husband and I are considering getting a vacuum sealer so we can freeze more of the bulk groceries that we buy. In your experience, is it worthwhile to buy a vacuum sealer and the special bags for them, or is it better to stick with the ziploc bags we’ve been using? I’m wondering what other people have experienced with the vacuum sealed bags and whether they actually prevent freezer burn more than a ziploc freezer bag.
- candylover

Vacuum sealers allow frozen items to last for longer in your freezer than other sealing options – that’s really their only advantage. On the other hand, the cost of sealing is fairly expensive.

I think a vacuum sealer comes in handy if you do things where you freeze a year’s worth of food (or more) all at once. For example, if you tend to grow an enormous abundance of a particular vegetable, a vacuum sealer can help you preserve it for a full year, much better than what you’d get out of a Ziploc. Similarly, if you’re a hunter, a vacuum sealer can help you preserve the meat over the long haul.

So, start by looking at your uses. Are you going to be preserving food for a year or more? Or are you just saving summer foods for the following winter?

I have a question for you. I’m just graduated and I’m going to be starting my first job soon, yay! My question has to do with savings. I know there’s a multitude of things to save for, down payment on a house, vacations, appliances, down payment for a car, emergency fund, and the list goes on! I have one savings account, so I’ll be looking at my total savings. How would you recommend keeping track of the different categories?
- ed

I use ING Direct as my primary bank and it has a handy feature – you can set up as many savings accounts as you like.

So, one option might be to simply open up an account there and set up automatic transfers for all of these savings accounts – with each account assigned to a particular goal.

Another option would be to simply track each “segment” in a spreadsheet and simply assign the monthly interest to whichever savings “segment” most needed replenishing (like your emergency fund or a goal you’re really pushing for).

I noticed on Twitter that you listed all of the podcasts you listen to – and it’s a huge list! How do you keep up with all of those podcasts?
- El

When I’m writing, I listen to podcasts almost all day long. I don’t give them my full attention – instead, they serve as background noise for the most part.

But something neat happens – quite often, an idea will slip its way into my head. I’ll have an idea pop out of seemingly nowhere, so I’ll jot it down and get back to work. Quite often, the podcasts are the source of those ideas.

I’ll also sometimes pause to close my eyes, relax a bit, and just listen to the podcasts throughout the day.

What I usually do is just list all of the unlistened podcasts in one playlist, order them by length (from shortest to longest), and start listening at the start of the day. At the end of the day, I stop at the end of one of the long podcasts. The next day, I start all over again. What this does is that it enables me to listen to all of the shorter daily ones every day – like the Writer’s Almanac – and puts off some of the long-winded weekly ones – like This Week in Tech.

My husband and I are shopping for 2 used cars. (We had only 1 car which is being totaled and the insurance is going to give us the retail value of that car).

Which will be cheaper? As I also read that loan rate also depends on the amount of downpayment.
- Vana

It’s impossible to say which way will be cheaper because it depends entirely on the offers individual dealers and banks give you.

Your best bet is to simply do the footwork and get the best car deals you possibly can. Identify your needs – not your wants – and focus on maximizing your deal on each car. This requires research and legwork – you’ll have to investigate the data and you’ll also have to go to multiple dealers to find the best value.

You should also look at other options. Do you need two cars? What about just in the short term? Could one of you bicycle to work, or carpool, or walk? Going to one car for a while saves on insurance and gives you a window to save until you can afford that second car.

Last week, I spent five days at a professional conference. It was a great experience and I met a lot of people, but now I only have contact information for about five of them. There are a lot of people I’d like to follow up with, but I don’t know how to contact them!

How do you keep track of meeting a lot of people at a conference?
- Larry

In my eyes, a conference’s success can be judged by the number of people you touch base with after the conference.

One thing I do is I try to get a business card from anyone I find interesting. I’ll even ask for it (and, of course, I’ll trade my own for it). If they don’t have one, I’ll pull out my notepad and get their email address and name.

Later, I’ll try to jot down anything interesting I can recall about them. What do we have in common? What’s interesting about them?

Then, after the conference, I move through all of these connections I’ve made. I look up the people, find out more about them, then get in touch with them about our overlapping areas of interest.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

I saw that you’re looking for an assistant. Send me an email, we could seriously chat about it.
- Michael

For a long while, I’ve been thinking of hiring an assistant for The Simple Dollar. Not to write or anything, but to help with the deluge of email and other things I get every day (like comment approval). I’d like to be able to translate a stack of 300 or so emails into 25 or so that need responses and a list of 20 or so other things I should be aware of. These menial tasks eat up probably two or three hours for me each day and, frankly, I’d rather not be doing them.

I tried hiring remote assistants to do this three times, but it just didn’t work out. I found that during the training period, there was so much communication going on that I would have saved substantial time doing it myself without the embarrassing mistakes.

Right now, I’m looking locally for such an assistant, perhaps a stay-at-home mom in my area who could do this for two hours a day while the kids are napping or something. So, please don’t send me your resume.

Considering the amount of free information on the web, I was wondering if you are paying subscriber to any websites (such as consumerreports.org) and if you think those subscriptions return their value.
- Frank

For me, it depends on how often you actually turn to the service for a key use. Do you often turn to Consumer Reports for unbiased rankings of consumer goods? Or, alternately, do you get sufficient answers from digging around the blogosphere, knowing that many people out there are paid corporate shills as well as specific individuals with axes to grind?

For me, CR is useful, so I’m happy to support it with my dollars. Without that support, useful services go away, which is the same logic I used when I chose to become a paid user of Evernote and Flickr, for example. If I use it all the time, the last thing I want to see is that service to go away, and the best way I can do that is to give that service a small amount.

I sincerely wish that there was a simple and functional micropayment system online, because there are several free sites that I rely on and trust that I’d be happy to support with a small donation if it were simple and pervasive.

One of my closest friends is a film buff. She and her husband are about to have their first child and instead of asking for normal baby items for their baby shower, they wanted everyone to bring a copy of their favorite children’s movie so that these could be shared later on in life with the child. This one has me stumped. What would you choose?
- Ciana

Hands down, Spirited Away. Not even a second’s worth of hesitation.

Why? I think it hits that sweet spot of entertainment and empowerment of children better than any movie I’ve ever seen. Chihiro exhibits completely normal childhood fear and reluctance, but she manages to push herself beyond them to accomplish great things through her hard work.

The imaginative nature of the film, the fantastic art, and the realism of the main character (meaning that her emotional responses come off as completely genuine, something that’s rare in any kind of film) makes this one something I already watch with my son and look forward to enjoying with my daughter when she’s a bit older.

So last week, our washer broke. It gets stuck on the fill cycle and won’t move; it just keeps on filling. We have someone coming out to look at it this week to tell us how much it’ll cost to fix.

I’m also looking at this from a green perspective too. Is it best to continue using an out-of-date energy consuming product rather than consume a new product, or is it better to save the energy and water consumption by buying a new product and having to throw out the old one?
- FemmeKnitzi

The first thing I would do is dig through some do-it-yourself websites and make a sincere effort at repairing it yourself. Digging around based on the information you gave, I found this guide, which is something I’d be willing to try in your situation.

If you can’t get it to work on your own, I’d call a repairman and get an estimate. Find out what it would cost to fix the problem. If the cost is too high, just replace the washer.

What’s “too high”? I’d investigate what a new washing machine would cost, including the energy savings. If it essentially saves you money to buy new compared to just fixing the washer, go new; otherwise, stay with what you have.

One big reason for this is environmental: dropping a washer in a landfill and eating up the resources it took to make a new one eats up the gains you get from greater energy efficiency, even over many years.

I’m a recovering methamphetamine addict. I’ve been clean for five months and it’s been the hardest thing I’ve ever done, but every day is easier than the one before it.

I owe so much to him that I don’t think I’ll ever be able to repay him for all he’s done for me. Where do I even start?
- “Mel”

First of all, huge props for turning your life around. Breaking an addiction and getting away from all of the relationships that support that addiction can be extremely hard. You’re on a much better path in life now and the effort it took to get there deserves commendation.

How can you repay your brother? Simply put, you can’t, unless fortunes change.

Instead, what you can do is tell him sincerely how you feel. That in itself can be hard, but sincerity can’t be faked – and sincerity means a lot.

Also, never forget how he’s helped you and be there for him when he inevitably needs help in the future. Something will happen in his life where a helping hand will be invaluable. When it happens, remember how much your brother helped you when you needed it the most and do whatever it takes to help.

Another way you can likely help is to pay it forward. When you see people in trouble, help them out when you can. This seems trite, but it’s probably the best possible way to repay this kind of generosity.

Trent, I am shopping for a gas bbq grill. Do you recommend any? And what is the best time I can find lower prices on the grill?
- Vanaja

Late summer is usually the best time, as gas grills are usually considered summer seasonal items and late summer is the time when stores rotate into fall and winter seasonal items. August and September are the months to shop for one.

As for what one to buy, I’d recommend not getting one with wood trim. Get a stainless steel one, as they require much less maintenance work to stay in good shape.

You’ll get different recommendations from different people when it comes to items like this. I’d focus mostly on what you need. Research grills on your own, figure out what exactly you actually need, and know this before you actually go shopping.

I was laid off in March, and I am currently collecting unemployment. 30% of my unemployment income goes to my rent (I am on a month to month lease and live in a 1 bedroom alone). My boyfriend is losing his roommates and will also need a place to stay (he too was laid off from the same company, at the same time). We would like to take that next step and move in together, which would cut my rent down to 17% of my unemployment income. Here’s the problem: we are having trouble finding someone who will lease to two college educated, albeit unemployed, upstanding tenants. Our unemployment will not run out until March 2010, and together, we make 3.5 times the rent. Do you know of anything that may improve our chances of signing a new lease?
- Brittany

A big deposit helps. The bigger the deposit, the better – cash always talks.

Another option is to get away from the large management houses – who mostly view you as a number – and seek out apartments owned by individuals, like a family renting out a floor of their home, for example. They’re much more likely to actually take your story into account instead of just discarding you.

Alternately, is there a way to use your current apartment over the short term It’d be tight, but if you’re both unemployed, the savings could be worthwhile.

It looks like everybody is coming back for the final season of Lost. The promotional poster for the season features pretty much every cast member that has ever appeared on the show and several actors have confirmed they’re coming back. How’s that going to work?
- Jeff

The poster that Jeff refers to is here, and it does depict pretty much everyone who’s ever been on the show, including lots of killed-off people.

I think the last season is going to start off with Oceanic 815 landing in Los Angeles in 2004 without crashing on the island. That means that no one who died on the island is actually dead. Afterwards, though, they’ll all start having dreams about the island and will eventually find their way there in some way or another. The final one to return will be Jack and the final scene of the final episode will be identical to the first scene of the first episode.

Or maybe I’m just crazy. Lost might be my favorite show of all time.

Presently I find myself doing well in my career, earning comfortably and seriously I kinda of enjoy it as well. On the other hand, I might not know when the ‘enjoyment’ will die on me.

What will you do if you are in my shoes? Stick to the present job? Or to leave the present job and head for the unknown terrain?
- yfloo

Life is all about chasing your dreams and passions. Go for it.

You know what your dream is. All you have to do is start putting the pieces in place to make it happen. Look into what you have to do to be an airline pilot. Start living really lean, building up your emergency fund and any savings you’d need to make it work. Then start taking little steps towards that dream. Take classes in your spare time.

Eventually, you’ll reach a point where you don’t need that income from your job and you can take that leap. But the journey of a thousand miles starts with a single step.

What are you reading lately?
- Neal

Many, many people ask me about what I’m reading – I guess somehow that The Simple Dollar attracts at least some bookish people.

I used to mention them on Twitter, but I decided that I was usually giving short shrift to books by mentioning them there.

So, I joined GoodReads on July 27 of this year. GoodReads is a site that allows a person to keep track of the books they’ve read. I considered going back and filling in earlier books I’ve read, but I simply wasn’t sure of the dates or the titles, so I decided to just record them as of July 27.

If you’d like to see what I’ve read recently – or what I’m currently reading – tune into my bookshelf on GoodReads. I’ve added a link to it on the sidebar in the “More Social” section, so you can check it any time you wish.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

Why do you consider “a bit of interest on the checking” to be so important? If your average checking account balance is $1000, and you get 0.25% interest on it, that’s $2.50 a year. Even if your average balance is $5000, that’s $12.50 a year. Sure, that’s $12.50 that you didn’t have before, but it doesn’t seem like enough to make “interest on checking” an essential requrement for choosing a bank.
- Johanna

I view not having such interest as essentially being an invisible fee charged to you by your bank, for starters. Given that quite a few banks have at least a bit of interest on checking account balances, not having that feature is in essence a fee.

It’s not a make-or-break feature, but would you tolerate it well if your bank suddenly started issuing a $12.50 annual fee for “account services”? Probably not – you’d call and complain.

So why tolerate no interest when you could be getting a little?

Where do you draw the line between saving money in order to have a better life later versus spending money to have a better life now? My dilemma: I’m currently saving $500/month by living with a roommate. This money all goes toward paying off my student debt ($18,000 principal balance, with 6.5% interest). However, I’m at the age (mid-twenties) where I would really prefer to be on my own. I found a studio apartment that would be more than my current rent, meaning I would only save $300/month.
- Becky

You draw the line wherever you want, because it’s your life to live.

If you find that it’s worth $200 a month more to live on your own in a smaller apartment than having a roommate in a larger apartment, then by all means, do so. I cannot tell you what your values are – all I can do is suggest ways to think about money and save money.

You have to come to the value conclusions yourself.

I’m just curious about some aspects/areas of finance and frugality that you DON’T touch on your blog or don’t subscribe to in real life. Other than couponing and the fact that you are willing to pay premiums for good food, I can’t think of any specifics that you’ve mentioned.
- MT

Hmm… I really don’t like haggling. If I think a price is unfair, I just walk away from it and don’t bother. There are a few exceptions to this, like at the very end of a garage sale or a farmers market where the items are likely headed to the dustbin anyway.

I rarely shoot for the bottom dollar on any item I purchase. Instead, I’m more of a researcher – I’ll look carefully at the multitude of options available, figure out where the best bang for the buck resides, then try to get the best deal on that item.

I don’t tolerate dogma or zealotry very well at all. I don’t believe there are “rules” to frugality – instead, I believe in figuring out each situation and finding the best deal for you. If you hold to the absolute truth that you must always buy a used car or that you must always buy generic and feel the need to fling insults at people who don’t subscribe to those rules even though they did their own investigation and simply came to a different conclusion, I have little need for you.

I don’t think excessive reusing is a good frugal strategy. Many people seem to believe that saving everything, from ice cream buckets to newspapers, is a good idea because eventually you’ll find a use for it. Instead, it just seems to overload you with more stuff than you can manage. Having more stuff has a real cost – time spent finding things when you could be enjoying your life.

I’m 18 years old but looking about 7-10 years into the future at the purchase of my first house. Without getting into the whole renting vs. buying debate, I’m internally debating whether or not it would be a good idea to put my savings toward a down payment into my Roth IRA for the time being and, when the time comes, use the contributions earmarked for the down payment plus some earnings (since up to $10,000 would be non-taxable for a first time home buyer).

Thoughts? Ideas? Comments?
- Kevin

Saving for a home is a really good idea. The only problem with this is that you’d be stripping out your Roth IRA and essentially starting over in terms of retirement savings in ten years.

Think of it this way: if you put in $5,000 a year between now and 28 and the stock market returns 7% a year, then stopped putting in another dime, you’ll have more in the account at retirement than if you emptied it out and contributed $5,000 a year for the rest of your adult life.

Depending on where you live, there may be a better option. Montana, for example, has a first time home buyers savings program that stops taxes on any earnings. Other states have similar programs, and there is talk of a federal move to do the same thing.

If I were you, I’d start contributing to a Roth, like you suggest, but if a federal plan for home savings comes through, switch to that immediately. Leave the money in the Roth and don’t touch it unless there’s a real need.

Trent sees college as just a way to make money. The primary purpose of college should be to gain a liberal arts education.
- Michael

I don’t see college as a way to make money – for some people it is, but for many people (who don’t finish, or who earn a low-paying degree) it’s not at all. I do see college as a waste of money for many people straight out of high school who aren’t really equipped to actually appreciate a liberal arts education.

So, if I had a child who had a successful business going out of high school that wanted to put off college for a few years, I’d thoroughly approve it. The years spent learning how life really works while getting that business going will either teach him what it takes to make that business roar or show him the real value one can get out of college.

I didn’t really understand what was useful about college until I was mostly finished with it. I basically looked at it as extended high school – which is completely the wrong approach. Many of my friends and others in my class did the exact same thing – if you got a good grade, that was all that mattered.

Now, I see the value in actually learning things – and learning how to learn. College is jam-packed with opportunities, but many people straight out of high school simply don’t see them – or they don’t value them much at all.

My husband and I recently withdrew equity from our house in order to pay off considerable credit card debt. I felt that this was a reasonable risk because 1) we owe less than one quarter of our home’s value in a mortgage, 2) Our bank offered us a HELOC loan with a fixed rate of 4% for the next ten years, 3) we would be able to pay off the loan within 10 years with a lower payment than we were currently making on the credit card, and 4) the interest rate on the credit cards were much higher than 4%. I was so relieved when we sent in the last credit card payment and paid the full statement balance. What I didn’t expect was that this month the credit card company sent us another bill for a full months interest even though the balance had been paid off in the last statement. The company said that this was for the difference in days between when the statement was issued and the balance was paid. What I don’t understand is that the last payment was made before the due date and no further charges were made, so how can they charge me more interest?
- sleigh

It sounds to me like your credit card company uses two-cycle billing, which pretty much acts exactly how you describe. There’s a great description of it over at All Financial Matters, but what it essentially means is that the credit card company uses an average of your balances over the last two months to calculate the interest you owe this month. Thus, if you pay off your whole balance, you’ll still get another bill.

Discover is known for using this tactic, for one. My wife had a Discover card for a while which she’d pay off every two or three months, yet she’d keep getting another small bill after she thought she had paid it all off.

I don’t understand what you mean when you say you’re leaving lots of moneymaking opportunities for The Simple Dollar behind. What could you do to make money on the site that you’re not doing?
- Angie

I could run more ads. I could sell links during my weekly roundup (I’ve had some surprisingly large offers). I could sell reader mailbag questions (again, I’ve had offers). I could sell whole posts. I could sell individual links in posts. I could do paid reviews for specific products. I could run ads for products I don’t approve of – I’ve had some huge offers here. I could sell my name to various financial products.

I don’t do any of these things. Instead, I just run a small handful of ads, enough to pay the bills and keep food on the table.

Why not cash in? The real issue is that lots of people trust what I write. They recognize I’m not perfect and I do make errors, but they also know I’m not out there lying to them, shilling for things I don’t believe in. Those people will stick around for the long haul. They’ll tell their friends about the good stuff they read here. They’re likely to buy books that I write in the future. If I came to their town, they’re likely to attend a talk I would give. They even support charities I talk about, like Jump for Joel.

That trust is a long-term trust, and it’s not one I will ever sell out. Doing the things I describe above tells those people that trust me that they should no longer do so.

Another big problem: if I started writing stuff like that, I would stop really caring about The Simple Dollar at all. The passion I have for doing this is what fuels the site, and if it were merely a way to scratch out some cash, my attention would pretty quickly go elsewhere.

If I were writing The Simple Dollar to turn a quick buck and didn’t really care about that relationship, you better believe I would cash in. Flashing ads for bogus loans and articles talking about how great a $4,000 debt consolidation program is would be all over the place.

I noticed that you’re reading Infinite Jest along with the Infinite Summer “book club.” How is that going?
- Will

Pretty well. Infinite Jest is a novel that I read in college and started rereading twice since, never finishing it either time. I’ve always thought it’d be enjoyable to read it in something of a “book club” format, so I decided to jump on board the opportunity.

Infinite Jest is a really, really good, but really, really complicated novel. It’s over 1,000 pages and you need to read it with two bookmarks (seriously) because the “footnotes” at the back actually make up a fair amount of the story. The amount of stuff going on at times often seems overwhelming.

Having said that, it’s probably the best picture of modern life and addiction that I’ve ever read. It’s funny, it’s entertaining, it’s thought provoking – what more can you really want?

My mother loaned me $5,000 a few years ago to help me buy a car, put a deposit in on an apartment, and get a few basic furnishings. At Christmas, I wrote her a $1,000 check in an effort to begin paying her back. She got upset, refused it, tore up the check, and told me to keep the money. I now feel guilty, because I think my mother needs the money. Any thoughts?
- Ruben

My suggestion would be to repay your mother by helping her in other ways. Take her out to lunch regularly. If she says things are tight, offer to cover a bill for her. Help out around the house once in a while so she doesn’t have to spend money on a housecleaner or a gardener.

There are lots of ways you can repay that $5,000 – and more – without writing big checks. I wouldn’t be surprised if that’s what she wants – and even if she doesn’t, she’ll surely appreciate the time together and the little efforts you make.

Your mother helped you out when you really needed it. Now it’s your turn to repay the favor, but it’s not as simple as just writing a check.

I was pretty much a [screw]up for most of the last decade, but in the last year I’ve really started turning things around. I have a job, my own apartment, and a good girlfriend that I don’t deserve. The problem is that no one in my family trusts me with any sort of responsibility. What can I do to show them that I’ve changed?
- Dan

Actions speak far, far louder than words.

The next time a family event happens, show up early to help. When there’s a crisis, step up and be there for people who need it. Volunteer to help with things that need done, like driving a parent to a doctor’s appointment. Give thoughtful gifts for gift-giving occasions, not just what you found at the gas station on the way.

Over time, if you keep doing these things, they’ll begin to see that you’re actually changing your ways. Telling them you’ve changed doesn’t really matter – they’ve probably been burnt before by trusting words.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

I love gum. I know buying it in bulk is cheaper than at a liquor store, but does anyone else have ideas beyond that?
- Michael C.

First of all, don’t bother trying to make it at home. The best recipe is comparable to Fruit Stripe gum – it tastes awful and has bad texture after about thirty seconds.

Your best plan is to buy in bulk. At my local Sam’s Club, there’s tons of gum for sale in bulk (by the box) that’s cheaper per pack than what I seem to find in grocery stores (where the low-end packs seem to be around $0.80).

There’s also Candy Warehouse, which directly sells bulk candy, but the prices, though lower than at the local liquor store, are a bit higher than what I’ve noted at Sam’s.

So, what I’d do is this: if you have a warehouse club membership or a friend who does, shop for gum there. Otherwise, Candy Warehouse is a good option.

How would you decide how much to invest and how much to spend if you had a good (?) chance of dying pretty soon, but also a reasonable chance of surviving? The fanatic saving for retirement seems like a bad idea if you’re putting all your money into a future you probably won’t live to see. But if you do manage to, you don’t want to then starve to death on a street corner.
- Laundry and Dishes

Depends entirely on whether you have dependents or not and also on the exact nature of your illness, at least from my perspective.

If you don’t – and you’ll be able to actually function well if you survive – then I’d spend away. If you do survive, you’ll be able to build your savings back up with further work.

If your illness might make you incapacitated for a long time, you’ll probably want to leave your savings alone. Similarly, if you have dependents, limit your spending, as your savings will help them in the aftermath of your passing.

Do you know of groups that have meetings for people interested in reducing debt or improving personal finance habits?
- Salvatore

I sure do. There are a wide variety of groups on debt reduction and saving money in most cities of decent size. However, there doesn’t seem to be an overriding organization that collects all of these groups. Many of these are self-started.

So, how do you find them? I’d suggest three ways.

First, hit meetup.com. Meetup has tons of local groups that are meeting on tons of different topics. Dig around a bit – there are groups on debt, on investing, and many other areas.

Second, check your local library. Many larger libraries have interest groups on all sorts of topics, plus many other community groups will post flyers there. Check out the bulletin boards as well as the library’s schedules.

Finally, check the largest church in your community. Many large churches have groups and classes on all sorts of topics and they’re usually open to anyone who cares to attend.

What made you decide to start a blog on this topic?
- Lily

Well, as I’ve mentioned, I’ve been writing since I was pretty young. I tried various online writing exercises in college, then I tried a parenting blog in late 2005 and early 2006 that was just taking off, but some of the readers were extremely … creepy.

I decided to give blogging another shot in October 2006 – and the timing perfectly coincided with my own experiences with figuring out my money and the experiences of the people around me showed me that a lot of people were going through similar money struggles. So I started The Simple Dollar.

Quite seriously, it’s all about following my interests and passions as well as looking at what other people might value. I could sure write a navel-gazing site, but who would want to read it and how would it really connect with anyone and provide value in their life?

I am in my early 30s, own my own apartment, am employed, have good credit and a family that is financially well-resourced and stable. I am dating a man, also in his 30s, who is a financial mess. He works his butt off following his passion, but does not generate a ton of income (he has trouble paying rent and is often behind on bills). He has credit card debt from his 20’s (he admits he was stupid about it at the time), and his family always on the brink of financial disaster. On the plus side, he is a hard worker and does not spend frivolously. He also respects and supports me, makes me laugh and challenges me, and may be the love of my life. I love that he follows his passion and I support him in that.

What questions should I be asking myself (and him) as our relationship continues? I want to go with my heart here, but my head is worried I could be walking into a life of debt and money anxiety.
- Brooke

You need to be talking about your money together as soon as possible and quite regularly, too. This is clearly an issue of concern for you and also a concern about your future lives together.

Clearly, he comes from a background that didn’t think about money at all, and you came from one that did. It might make sense for you to manage your shared finances – and you each have a certain amount to spend freely each week/month.

Whatever the best solution is, you need to talk about it, very clearly, and you need to come up with a clear solution that protects your futures together. I’d suggest that you read Smart Couples Finish Rich.

ELCA’s articles on doctrine are so vague and unsure. They can’t articulate or explain anything very well. Is that because they think any religion’s as good as their own?
- Michael

This comment comes from an earlier Reader Mailbag where I mentioned I was an ELCA Lutheran.

The ELCA puts more emphasis on one’s personal faith than on a greater church. In general, with the ELCA, the individual is more important than following dogma. Thus, the church documents can be pretty vague in places – it’s left to individuals and individual congregations to make up their own mind.

From that respect, ELCA churches are much less about following some explicit set of beliefs than it is about a group of people who support each other in their own personal journeys.

I think that’s a much healthier perspective than one that forces a strict set of beliefs upon people.

My husband and I have no credit card debt. Our only debt is our mortgage which is at an interest rate of 6.625% (we can’t refinance at this time). In my mind it makes sense to dump all extra money into paying down the principal on our mortgage because that’s like getting a 6.625% return on our money. Right? We have chosen to do this rather than open any investment accounts which may or may not get a 5-6% return on our investment. What are your thoughts on this strategy?
- Emily

If you’re saving for retirement at the same time, it makes sense. You’re right, for most purposes, your payments are an investment that returns 6.625% after taxes (although you might be losing a bit on any tax deductions you get from mortgage interest).

If you’re doing this in lieu of retirement savings, that’s a mistake. Retirement savings, socked away now into a tax-advantaged account like a 401(k) or a Roth IRA, have much longer to build via compound interest. Plus, if you’re investing over the truly long term – more than ten years – well-diversified stocks will return at least the amount you mention (some may shout about how the value of some stock index is barely changed from ten years ago, but they’re ignoring dividends).

If you’ve covered your retirement, getting rid of your mortgage as fast as possible seems like a good plan to me.

Do you have any suggestions for free downloadable enjoyable games?
- Mol

Most of the free games worth playing aren’t really downloadable – they’re usually played in a web browser. Also, it really depends on what kind of games you like.

My favorite free game – and it has been for a long time – is Desktop Tower Defense, which has sucked down more hours than I care to admit.

Several of my friends are Peggle addicts. The full game costs $20, but you download a free trial that has lots of levels in it.

Here are several more classic games that are free – and these games ate up quite a bit of my childhood years.

What did you replace your passion for playing golf with? I know it’s an expensive habit, but I’m having a hard time giving it up!
- Karl

I found other avenues of competition, mostly games of various kinds, and I started hiking more.

The games really helped feed my competitive urges and provided similar careful thinking about my next move that golf provided. I started playing games like Settlers of Catan and Puerto Rico with my wife and with other friends.

The hiking helped feed my enjoyment of the outdoors. In fact, I came to find that I enjoyed the woods far more than the golf course – more alive, more beautiful, and filled with more interesting sounds than some drunk yahoo yelling and the noise of a lawnmower.

Why does it seem to always take two days for my comments to show up?
- Cindy

I generally approve all comments once a day, usually in the mornings. Sometimes, if there’s a conversation that’s interesting, I approve them a few times throughout the day.

Regular commenters are often auto-approved – that’s why sometimes you’ll see comments go up even though yours is still awaiting moderation.

On the weekends, I’ll often skip a day or approve on a more haphazard schedule, as weekends are usually filled with all kinds of family activities.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

Being fat is voluntary. People make a choice to eat unhealthy and not excercise. Therefore, it should never be covered by the Americans with Disabilities Act.
- Lindsay

This was such an egregious comment that I felt the need to clearly respond to it.

Being fat is sometimes voluntary, but in many cases it is not. Many illnesses bring on unwanted and unwarranted weight gain – my uncle’s liver problems caused him to gain huge amounts of weight with basically no change in diet or activity, going from a formerly rail-thin person to someone who was very overweight. Many medications bring on unwanted weight gain – many thyroid medications, resulting from conditions present at birth, result in excessive weight that’s far beyond the choice of the person.

The problem with being overweight is that sometimes it is the result of personal choice and sometimes it is not – yet it is often assumed that it is due to poor choice, a trap that Lindsay falls directly into.

Yes, it’s true that an overweight person might result in a greater cost for a business that might hire that person – they’re statistically more likely to have heart disease, etc. However, one could make the same argument for a female – they’re statistically more likely to have children than men, thus they’re more likely to need maternal leave and incur replacement costs. Yet the former argument is accepted, while the latter argument is sexist?

Forms of discrimination that are clearly based on factors that are beyond a person’s choice – sex, skin coloration, ethnicity – are clearly frowned upon in modern society. Just because we went through revolutions throwing off racism and sexism doesn’t mean that there aren’t still big forms of discrimination out there.

The way I see it, a person is a person, and as Martin Luther King said, a person should be judged by the content of their character. Being overweight might mean that they have some personal issues – or it might just mean that they were born with a thyroid condition. Either way, what matters is how they treat others and what they produce with their time.

I live in Chile and i’m planning on getting a macbook laptop in my next trip to the states.
i was wandering, considering the vast world of choices available in the computer world, if it was really worth it.
- Ricardo Carrasco

I think it really comes down to how vital a computer is for the work you do.

If you’re just checking email or web surfing for convenience, there’s no reason not to just get a netbook and call it good enough. If you’re going to be doing Photoshop and intend to use it as your primary workstation, then a Macbook makes more sense.

For the work I do, which is slowly expanding into lots of videoconferencing, podcasting, video editing, image editing, and so on, I’m saving for a Macbook Pro for my next portable computer purchase. My desktop Mac is simply the best computer I’ve ever used – to have that portable would be invaluable.

You wrote an article some days ago: “Using Consumer Reports to Assemble Your Grocery List” which talks about Consumer Reports, but you have previously deleted your earlier content pointing to them. Your reason for doing so was “Consumer Reports has asked me to eliminate the content of my summaries and any other references to the content of Consumer Reports. I have complied.”

Now if they (Consumer Reports) do not want to be mentioned then why have you mentioned them again?
- Tordr

Over time, Consumer Reports is figuring out how the internet works.

When I first started blogging, they were pretty agreeable to most writing about their publication. In 2008, possibly because of online backlash about their child safety seat articles, they suddenly went through a very draconian phase, where they complained loudly about all “unofficial” mention of their work.

Since then, they’ve taken a more open turn, encouraging people to write and discuss CR information – a policy that’s much more reasonable.

For organizations rooted in old media, the transition to a world where people will quote and talk about your information freely is a hard one. CR is figuring it all out, one step at a time.

I’m a little puzzled about the Twitter goal. I can understand that increased blog subscriptions probably means increased traffic/profit (and I’m not knocking that). I don’t understand what benefit you derive from 25,000 Twitter followers, unless it’s mainly that it increases recognition of your work.
- bethh

The Twitter goal – frankly, all my goals – come back to one thing: reaching as many people as I can with ideas about managing their money a little better and perhaps putting their life on a new path.

The numbers themselves are mostly goals, to give me something clear and tangible to strive for. In both cases, it keeps me focused on writing and sharing good, worthwhile, valuable stuff that people can actually use and relate to. I use readership numbers because if I’m picking up new readers, I’m doing something right.

High targets – like 25,000 Twitter followers in a year and 100,000 site subscribers in a year – make me really think about what I can do to strongly appeal to people: make personal finance accessible, make it interesting, and make it applicable to real change in people’s lives.

Any income that I earn follows from that. The content leads everything else.

I am planning on starting a loan for my last year of college. I have been paying college with my own money through my Amex Blue Cash (to get cash back) but I pay it off monthly. My limit is just enough to pay for monthly tuition plus $100 for myself, but sometimes, this isn’t enough. I tried raising my limit but Amex denied me. Does it make sense to apply for a new CC before applying for a student loan? Will it hurt my credit score (because of the hard pull) or will it help it (because my overall limit will increase)? What is the smarter thing to do?
- Carlo

The hard pull’s effect is pretty small and pretty temporary. If you’re approved for a new card, the increase in your credit limit should be much more of a boon to your credit score than the short-term negative effect of the hard pull.

I’m not sure why Amex denied you, though. Unless you’re not disclosing some other aspect of your situation, you would seem like a good target for raising a credit limit. The fact that you were denied seems to indicate that your credit – for some unspecified reason – is worse than you’ve said.

If that’s the case, applying for a new card can be a risk. If you get denied for it, you get the negative ding of a hard pull without the benefit of an increase in credit limit.

Your best bet, then, would be to put the card aside for a while and just pay your monthly tuition directly. That way, you’ll be utilizing 0% of your credit limit, which should help your score.

Where would you recommend for buying larger sized shoes? My husband wears a 15 EE, and he could probably go a size up… It’s the largest we can find in a store. He needs waterproof boots that breath. I got him a pair at Sportsman’s Warehouse, and his feet are white and peeling from sweat after a day on the lake (he’s on the rescue squad and sometimes he’s out there for 12+ hours multiple days).
- Deborah

I wear a size 16/17 (depending on manufacturer). For my own shoe needs, I watch eBay carefully – that’s how I picked up a really good pair of running shoes for just a few dollars that fit me.

For dress shoes, I’ve had real problems. I found a mediocre pair through a “big and tall” website, but they’re massively uncomfortable and don’t look all that good, either. I’m stuck when it comes to this category – I may end up going to a shoemaker.

When I was younger (junior high) and my feet first grew to this size, my family used a catalog from Eastbay to buy my shoes. I’m pretty sure they still sell a lot of models going up to size 18.

I am currently a PhD English student, so while a lot of my assigned reading is in hard copy books, most of my reading is actually in PDF files culled from library databases. I should state now that I don’t have a lot of money, I am paying my tuition fees and living expenses while *not* working since I’m in school, and the campus has a pay-to-print policy. Because academic reading requires annotating, I print the PDFs, annotate them by hand, and type my notes to prepare for papers. Is there a way to put digital annotations on PDFs? I have already tried in Adobe, but unless the document author authorized the comment feature, I can’t figure out a way to do it. My other option is the Kindle, which supposedly can save annotations and export into a word document, but costs $450… can you help sort this out?
- Shevaun

Well, if you’re using a Mac, it’s easy – Preview allows you to annotate PDFs to your heart’s content. I use this feature myself sometimes.

If that doesn’t work (because of restrictions on the PDF), you could select all the text, copy it out to Microsoft Word, then add the notes yourself.

If that doesn’t work, you can try installing Ghostscript, which can often extract the text from PDFs – from there, you can get them into Microsoft Word.

However, if the pages are images (as is the case sometimes, particularly on older papers), you’re pretty much stuck printing them off.

My neighbor has a riding lawnmower, while I have an old beat-up pushmower. During the winter, though, I have an awesome snowblower and he has a scoop shovel. I’m thinking about suggesting some sort of sharing arrangement, where I can mow using his mower (saving time) and he can blow his snow with my snowblower (saving him time), but I don’t know how to propose it. Any suggestions?
- Charlie

Invite your neighbors over for a barbecue and simply make your proposal over a big hamburger. It’s that simple.

Really, there’s no need to overthink it or be nervous about it at all. If it works out, great. If it doesn’t – you still have your own mower and you still have your snowblower – no harm done.

Just suggest it simply – “Hey, I’ve got an idea. I’ve noticed you’ve got that sweet riding lawnmower … and I’ve also seen you scooping snow in the winter. How about we make a little arrangement that helps us both? In the winter, you can borrow my snowblower to clear your sidewalk and driveway. In the summer, you’ll lend me your riding mower to mow my yard. I’ll keep the rider filled up with gas. What do you think?”

Another tip: don’t be insulted by a “no.” Your neighbor might be scooping snow by choice (as it is good exercise) and might not want a lot of extra miles on their rider – a completely understandable position. If you get a “no,” don’t sweat it – just say you thought you’d throw the idea out there and move on with life.

What do you listen to during the day when you write? Or do you write in silence?
- Frances

I listen to a handful of podcasts, usually first thing in the morning. Most of the podcasts I listen to are pretty short daily ones (a format I considered for The Simple Dollar podcast). For instance, this morning I’ve listened to PTI, Marketplace, Marketplace Morning Report, The B.S. Report, The Writer’s Almanac, and Fresh Air. I have a pile of weekly ones as well that I listen to throughout the week.

Honestly, I don’t pay full attention to most of them. They float in one ear and out the other, but they provide good background noise.

The interesting part is this: about four or five times a day, a point will stick into my head and worm its way up to my conscious thought, usually about a minute after the point is made on the podcast. I’ll back up the podcast, listen again, and usually wind up jotting down a note for later.

Once I get tired of podcasts, I listen to music. I usually fill my afternoons with solid music from one artist – Old Crow Medicine Show, Dave Matthews Band, Regina Spektor, Neko Case, and so on. I’ll say, “Today… is a U2 day” and just shuffle songs from that artist.

How come you never talk about investing in rental properties?
- Shiloh

Frankly, it usually seems like more of a hassle than it’s worth.

One of my best friends owned a rental property for two years. He hired a management company that he thought would take care of everything and just expected checks to roll in.

What he found, though, is that the property was a constant hassle. The renters figured out who actually owned the property and constantly complained directly to him. He’d then refer the complaint back to the management company.

Then, there were constant additional expenses – something needed repaired, something needed replaced.

In the end, he was only making a tiny trickle of income from the property and he was investing a ton of time in it. So he sold the property, only breaking slightly above even on it.

I’ve talked to several other readers who have rental properties and most of them share the same notes. The exceptions are people who own quite a few properties, deal with them themselves – effectively, they’re landlords and that’s their life. Those people love it, since all they have to do is deal with these little details.

Since it’s not something that seems like an exciting route to explore – and it’s an area I certainly won’t be writing about from my own experience – I’m letting this sleeping dog lie.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

I’m getting married in September to a woman who just started a Master’s degree program. We have a fair amount in savings and have set some of it aside for the next 2 years of her college expenses. You’ve discussed 529 plans before, and that got me thinking about a possibility. Could I start maxxing a 529 plan and live out of that savings, then use the 529 to pay for her last year of college? I don’t like living out of savings, but that money has already been taxed. Say her last year of school costs $5,000; I’d be saving about $500 in federal taxes by utilizing a 529 plan. But can you put that much in a 529 in a year? Can you turn around and use the money that soon? We live in Missouri, if the state’s plan types are different.
- Michael the Dumb Tech Geek

There’s no limit to the amount you can contribute to a 529 for you or your spouse (provided you’re filing your taxes jointly). An aside: the only limit is that such contributions are seen as gifts in the eyes of the federal government and thus if anyone else contributes, their contribution must stay under the gift tax exclusion ($12,000 this year, $13,000 this year) or be a one-time gift that isn’t repeated over the next five years (allowing up to a $60,000 contribution). Anything over that would be taxable.

However, if you’re saving over that short of a term, putting your money into any sort of risky investment is extremely risky. You sure can contribute to a 529 as you suggest, but you should choose a really conservative option. In that situation, it basically becomes a bank account where you don’t have to pay taxes on the interest earned if you spend it all on schooling.

No matter what you do at this point, you’re not going to earn any major gains either way unless you’re extremely lucky or take on a large amount of risk.

I believe you owe it to your readers to point out that 529s are a big gamble because if your children get a full scholarship or decide not to go to college you could end up paying income tax on the 529 earnings PLUS sometimes a 10% penalty. Whereas the funds you choose to invest in the Roth IRA are guaranteed to retain all the benefits, tax breaks, and flexibility of the Roth no matter what happens with your child.
- Sophie

The only way that occurs is if you have a child that earns more than full tuition, room, and board scholarships for their undergraduate work, doesn’t attend graduate school, and is an only child. Read the details here. If any of those details are untrue, then the 529 works quite well.

On the other hand, when you use a Roth IRA for education expenses, you have to pay income tax on any gains used for education – using a Roth IRA for educational expenses only avoids the 10% penalty. On the other hand, for education expenses, a 529 is tax free.

So, a Roth IRA is preferable for education expenses if you have a child that earns more than full tuition, room, and board scholarships for their undergraduate work, doesn’t attend graduate school, and is an only child, because in that case, the child would have to pay income tax and a 10% penalty to get the money out of the account. Otherwise, the 529 is preferable, because you don’t have to pay income tax at all for education expenses.

I think, for my kids, I’ll stick with the 529.

*Everyone* told me that I would eventually grow apart from my high school friends when I was graduating high school.

I know it’s unusual, but it’s NOT a given that you will lose your high school friends. Maybe likely, but not guaranteed.
- Heather

Here’s a better way of stating it. There are two types of friends people have in life: friends based on the overlap of interests and experiences and friends based on true caring for each other.

Most friends people find in a high school environment are of the former type – you’re friends because you know the same people, go to the same school, attend the same classes, and so on. When those touchstones go away, so do most friendships.

Now, in some cases, those touchstones get replaced by other ones. You stay in the same town, live near each other, work in similar jobs, and stay in similar social circles. If that happens, you’re keeping those touchstone-based friends, it’s just that the touchstones have changed.

My oldest brother is a great example of this. After he graduated, he more or less stayed in the same area where he grew up, and at least some of the group of friends he had in high school did the same. Those guys remain friends to this day. If he moved away, would they remain friends? I’d bet against it – he might stay in touch with one or two of them, but he’d find a new social circle based on common interests wherever he moved.

It’s healthy to have both types of friends – some transient, some permanent. Disappointment comes in when one group is confused with the other.

In Your Money or Your Life long term treasury bonds are suggested as the ideal retirement investment. Their logic supporting that seems to make sense- the returns are predictable (which is important when you’re living off of them) and the principal investment is perfectly safe. Why do you find the stock market to be the better option? Is it just because of the higher rate of returns? Do you worry that the market will fall while you’re “living off the interest” and cut your income?
- Ariel

Your Money or Your Life offers great investment advice for when you’ve actually reached the point when you’re living off the interest – you want the money to be safe.

However, when you’re trying to reach that point, there’s no reason to restrict yourself to ultra-safe investment opportunities. If you’re still employed, you can afford some risk, particularly if the point of living off the interest is a long way off.

So, let’s say you need $25,000 in expenses a year to survive and you figure that your bond investments will return 3%. That means you need to own about $850,000 in bonds – and ideally more than that, so you have some protection against inflation. That’s a daunting number – it’ll take you many years to save it.

During those years, you may (depending on your risk tolerance) find it worthwhile to invest in higher risk, higher reward things. If they pay off, you’ll move that date a little closer. If they don’t, you just delay it a little longer. Over longer periods of time (ten years or more), the stock market tends to return around 7% a year – including dividends and increases in stock value. So, if you have that much time, it’s worthwhile to put some of your money into stocks.

Then, when you get closer, start investing your newer savings wholly into bonds and slowly start moving that stock investment into bonds as well. This way, if you’re getting close, a sudden market downturn won’t hurt you.

When you’ve finally made it, everything is safe and secure in bonds.

here’s a tip that really helped me and my family – RENTING BOOKS. We found the Netflix of books, Bookswim, and it’s been amazing to save money for required school reading in addition to my personal reading. we rent instead of buy – genius!
- Jennie

I hear you can also rent books at your local library! For free!

Okay, enough snark. Jennie does have a great point. Bookswim is basically Netflix for books, meaning you can keep them as long as you want and mail them back and forth for free, only paying the subscription. It’s a reasonable alternative to the library, especially if you’re a slow reader and find yourself always accruing late fees at the library.

However, there are some problems. If I find a book personally useful, I tend to write a lot in the margins – and that’s a big no-no with Bookswim and with the library. I tend to use PaperBackSwap for my book habits. No monthly fee at all. Roughly $2 to send out a book you’ve already read and get another book in exchange for it in your mailbox. If you want to keep a book – say, a copy of a business book that you’ve scribbled all over – you sure can, no problem, no cost.

I think Bookswim does hit a particular niche quite well, one that isn’t met by the library (late fees, long wait lists) or by PaperBackSwap (sometimes limited selection, cost-per-book instead of per month). If you’re an avid reader, it’s probably worth considering.

My high efficiency washer requires HE detergent, so I don’t know if I can use your recipe. What’s the difference?
- Richard Potts

I do not have any direct experience using my homemade laundry soap in a high-efficiency washer.

However, the laundry soap made in that recipe is a formula that does not produce excessive suds, which is the real danger with HE washing machines. It’s also pretty potent.

Thus, the general recommendation I have is to try half a cup of the homemade detergent in a HE load and see how that works for your clothes cleanliness needs.

Do “The Simple Dollar Artists” cater their work for your posts, or do they have a portfolio that always has what you are looking for? Or something else?
- Mol

“The Simple Dollar Artists” refers to a sidebar section on The Simple Dollar where I highlight two artists that contributed a lot of photography and other stock images to The Simple Dollar early on. I wanted some small, interesting items to use as accent pieces for posts – I wasn’t too picky – and so I asked for it. I wasn’t looking for commissioned stuff – I intended it as just a way for people to show off some of their portfolio work, stuff they’d already made that they wouldn’t mind being used on The Simple Dollar.

I was blasted for this and was roundly accused of trying to “rip off” artists, but two loyal readers – Daizy H. and David Herring – stepped up with contributions. All they did was help out a blog that they liked by digging through their collections of their own art, finding five little pieces, and allowing me to use them in posts. In exchange, they both received permanent thanks on the sidebar of The Simple Dollar.

For being kind and helpful, they’ve both had links to their sites that have generated several clicks a day for years, the Google boost that comes from being linked on every page of The Simple Dollar, and a page on The Simple Dollar highlighting their art contributions. Though David’s site is no longer updated, Daizy’s site is actually pretty interesting and I stop in regularly.

In fact, “Daizy” actually asked me to begin using a pseudonym for her because the link was attracting more attention than she wanted. If she’s still reading, I wonder if she considers the deal to be a “rip off”…

Just came across this article on LifeHacker – http://lifehacker.com/5280491/the-road-to-happiness-in-your-work-lies-in-the-hooray-zone – and couldn’t help but think that this is exactly what you’ve done with your writing. What are your thoughts on this diagram?
- Dave

I agree wholeheartedly with that image. With my current job, I think I’m firmly in the “Hooray!” part of the picture. I think I started off in the “what we want to do” circle, moved gradually into the “learn to do it better” part, and eventually moved into “Hooray!” (though I’m still learning).

With my former job, I think I started in the “Hooray!” part of the picture but gradually moved into the “Learn to say ‘no’” part and failed to escape from it. I found myself responsible for stuff that I simply didn’t want to be responsible for that ran contrary to what I loved about the job in the first place and that hurt my enthusiasm for the work quite a bit.

That’s a very good image – a great way of summing up a lot of the ideas I have about work.

Here’s a question for a future reader mailbag; what to do about failed frugal experiments? Or maybe stories of repurposing frugal moves that don’t work into stuff that does.

Tonight’s example: I have a $1.88 packages of noodles, cream of mushroom soup + lox casserole experiment in the crock pot that for various reasons, is not edible. I’m not out a lot of money as these were all pretty much on sale, but i feel the guilt of waste as I scraped stuff into the garbage.
- Betsy

I simply chalk those up to experience.

The way we look at meals is this: if it’s terrible, we’ve learned never to prepare it again. However, it’s still a meal, even if it’s one we didn’t enjoy. It still provided nutrition and sustenance, even if it didn’t provide enjoyment.

I look at it the same way if I try a generic version of a product. It’s a trial run at a low cost. If it works out, great – I’ve found a good long-term solution. If it doesn’t work out, I’m not out too much and I’ve usually been able to use at least some of the product.

Some experiments are going to succeed. Others are going to fail. But those are short term failures – and long term successes. If you have a bad meal or use a bad product, it doesn’t have to ever be repeated – you can go back to what worked before with only a small loss. If it works, though, you’ve found a new routine, likely one that requires less regular spending on your behalf.

One success – because it’s a long term success – is well worth ten failures, in my eyes.

One of our favorite restaurants is cafeteria-style, but they have bus-staff to clear the tables when done. Clearly they’re not providing the same level of service as a sit-down restaurant, but there’s some sort of service. We’d like to leave a little something, but don’t know an “appropriate” amount…something more than 0% but less than 15%. Do you or your other readers have a suggestion?
- Gumnos

I really don’t worry that much about “guidelines” for tipping. Tip whatever you feel like the service was worth.

By “service,” I do mean the whole package. Many people focus really heavily on the table service, but that’s only one part of the experience. If you get no table service but believe you’re getting exceptional value from the food, there’s no reason not to tip a little in any situation.

If you spend $7.95 at a cafeteria and the food was great, I see no problem tipping a dollar. Just make sure that you do it in such a way that it’s not accidentally thrown away – and also be aware that it’s likely to just vanish into the pocket of the first employee that finds it.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.