Questions about Fruits, Generic Buys, Belts, Emergency Funds, and More!

Reader Mailbag

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Time for a credit card?
2. Saving fresh fruits
3. Chefs and doctors buy generics?
4. Home value and insurance needs
5. Frequency of eating out
6. Writing and personal exposure
7. Housing conundrum with adult kids
8. Buy it for life: belts
9. How much emergency fund?
10. Job ethics question
11. Paying cash for house
12. Overinsured?
13. Cheap wall decorations
14. Short term investment
15. Library recommendations

This past weekend, I built a mousetrap racer with my kids, found about a dozen geocaches, went on twelve miles of bike rides, played frisbee tag in the yard, and made a batch of homemade beer.

It was probably the best weekend of the summer so far.

Q1: Time for a credit card?

I am 24 years old, and have never had a credit card. I’ve always believed that if it wasn’t absolutely necessary, and I couldn’t afford to have it, I shouldn’t be borrowing money to pay for it.

I now realize that there are great benefits in having credit cards, such as earning rewards and earning points where, if I were paying with cash or my debit card, I wouldn’t receive any additional perks.

For the first time in my life, I am working a full time (long term temp) job. I make about $580 weekly after taxes. I live at home and my expenses are mostly limited to food and my phone bill. I currently have about $9,000 in student loan debt, but no other debt.

I have never paid for a credit score, but on CreditKarma.com my score is at 693, and CreditSesame.com says I’m at 720 (has been fluctuating for a while, highest was at 724).

I would like to use the credit card to raise my credit score, earn rewards, and when I am more financially stable, to get into credit card churning. Would it be wise for me to get a credit card?
And a question I’m sure you’ve gotten before– If I pay the balance in full each time I spend, will this negatively impact my credit score?

– Kelly

I think it makes reasonable sense for you to get a credit card. With a credit score like you have, you should be able to get one with a good rewards program.

My suggestion would be to get one with a rewards program that matches what you’re already doing right now and produces rewards you’ll actually use. For example, if you shop at Target a lot, their Target Visa is a very good deal as it just gives you 5% off of all purchases there (though no other rewards at other retailers).

As for paying it off in full each month, that’s been my standard operating procedure for the last several years and my credit score seems fine. It’s important to note that the credit card companies usually report your billed balance to the credit bureaus, not the balance after you paid the bill, so if you use it at all, they won’t be reporting a 0% balance anyway. The best practice is to just pay off the full balance on your bill each month. That way, you won’t get hit with any interest and you’ll get all the rewards.

Q2: Saving fresh fruits

Do you have any suggestions for making fresh fruits last longer without buying products?

This time of year, we pick a lot of berries like strawberries and raspberries and mulberries. I’ll do this during the week with my kids, but if I don’t do something with them within a couple of days, either they start to get mushy (which isn’t bad for some things) or else they start to get a bit of mold on them, which means I toss all the berries out.

My mother has the same trouble with peaches. She lives in the Florida panhandle and she finds that the peaches that grow in her yard seem to have the same problems. Depending on the humidity and where she keeps them, they either get mold or they get really soft fast.
– Erica

Here’s what I do with fresh fruits. When I get them home, I wash them thoroughly with a mix of 20 parts water to 1 part vinegar. So, I’ll get take two and a half quarts of water and to that I’ll add half a cup of vinegar.

I then let them sit out to dry in the air for about an hour (which gets them dry in our relatively dry house), then I’ll put them in a container in the refrigerator.

This seems to keep them fresh for quite a while and definitely keeps the mold at bay.

Q3: Chefs and doctors buy generics?

I just saw this great story on Planet Money about the food items that chefs buy generic and the medicines that doctors buy generic.

http://www.npr.org/blogs/money/2014/07/25/334459041/when-do-chefs-and-doctors-buy-generic

Thought you and your readers might like it!
– Nathan

Chefs buy sugar, baking soda, tea, baking mixes, and soup in a generic form and avoid dried vegetables and generic ice cream. Doctors buy generic sleeping pills, ibuprofen, epsom salts, and laxatives, and avoid generic Alka-Seltzer and… sleeping aid tablets?

I agree with the ice cream at least. I don’t eat ice cream very often, but I think that most generic ice cream is really bad. I’d rather just skip a snack. So, when I do eat ice cream, I’d rather pay more and get good ice cream. Sit a spoonful of generic vanilla next to a spoonful of say, Ben and Jerry’s vanilla, and they’re basically completely different things.

However, aside from that, if I buy any of those things, I buy the generic version. Of course, I can’t remember the last time I bought dried vegetables or Alka-Seltzer or sleeping aid tablets (if I’ve ever purchased them at all).

Q4: Home value and insurance needs

Years ago we bought my husband’s parents’ house, his family home since it was built in 1959, for $1 in order to not pay taxes on it inheriting it. Both of his parents passed away this year and we have partially moved into the house.

We live in Hawaii where the cost of living is sky high – think $5 gallon of milk, $4 loaf of bread. Since we are still paying rent for our previous house as we haven’t fully moved yet, the family trust paid the last homeowner’s insurance on the new house. We asked for various quotes on the new house’s insurance since we will need to pay it next time and found out that they have the house valued at over $500,000. The cheapest insurance we can get and the only one we can afford is over $100 a month, but it doesn’t cover many things we think are essential like earthquake insurance. The house was previously damaged severely in an earthquake and it seems foolhardy to go without this here.

We think the house value is inflated somehow and it isn’t worth that much. The property is very small and the house is old. We think it may need all new electricity by now. How long should a house go on it’s original wiring? There are outlets that don’t work and the others are few and far between and we are needing a lot of extension cords and power strips for normal usage.

My husband says the foundation is eroding because of never having gutters and there is a huge dead tree in the yard that threatens the house. My first thought is to get the house inspected. Then what do I need to do to fight the value of the appraisal?

My dream is to sell and move somewhere where $500,000 will buy us a new home on plenty of land in a low cost of living area, but that is just wishful thinking, because my husband is dead set against selling. He wants one of our children to inherit it and to keep it in the family. This house means a lot to him. What can I do? I am the one in charge of the finances for a change which is great, because I am the forward thinking one in the family, I need to present a solution to my husband. He makes $57,000 a year and I am totally disabled. We are in debt about $20,000 in credit cards and loans and $42,000 for my student loans. I became disabled in my senior year. I have looked into getting my loan discharged because of disability, but I would then be counted as income on our taxes and we would get in trouble with the IRS because we would be unable to pay our taxes. What is my next move?
– Tessa

Here’s the way I would look at it: you live in a fixer-upper. Are you and your husband ready, willing, and able to do the work it takes to remake a fixer-upper? Are you guys willing to remove drywall, do wiring, do lots of painting, do some electrical work, and so on?

If you’re not, you probably need to sell the home before it gets worse. You’re in a situation where that house needs a lot of work. If you have a lot of outlets that don’t work, then it needs attention from at least an electrical perspective. If the foundation is eroding, you have a huge second project on your hands. If the house is as old as described, there are likely lots of other things worth doing.

If you’re in a high-demand area, you’ll be able to find a buyer – someone who wants to do these things. If you just sit on it, the problems with the house will get worse and you run the risk of having a major incident that you can’t cover with the insurance.

Given the annual family salary of only $57,000 a year and the astronomical cost of living in Hawaii, if I were in your shoes, I would strongly consider selling the house and leaving Hawaii. Move to another part of the United States with a much lower cost of living, using the money from the house sale to get established there.

It might not be the thing your husband wants to do, but this current path is lining your family up for disaster unless you’re all willing to work together to do some major improvements to that house – and even then, I’d be nervous.

Q5: Frequency of eating out

How frequently does your family eat out? Do you think you eat out too often or not enough or just right? How much does it cost?
– Danielle

I would say that, on average, we eat a meal prepared at home six out of seven nights of the week. We probably eat out twice a month and we have “pizza and a movie night” twice a month, usually on Fridays.

This is about the right amount for our family, I think. It keeps dining out fully in the “treat” category.

We usually choose family restaurants and go to them when they have a discount on children’s meals, such as “children eat free” day or “children’s meals for $1.99″ day.

Q6: Writing and personal exposure

I am thinking about starting a personal finance blog to share my own story of financial recovery. One problem I have is with the sharing of personal information. It seems like you share a lot of personal material about yourself on The Simple Dollar which seems to have a pretty big audience. How do you do that while still feeling safe? Where do you draw the line between what to share and what not to share?
– Margie

I am very selective about what I choose to share on The Simple Dollar. I’m particularly careful about sharing aspects of the lives of people besides myself, and Sarah and I have discussed in detail about what I should mention regarding her and the children. Remember, they did not choose to have aspects of their lives be presented in such a public way.

It is a difficult line to walk. When I’m unsure about a specific point, I tend to rely on vagueness. I’ve also used pseudonyms for various people and changed their relationship with me to protect privacy, and in a few instances, I’ve combined two (or more) separate people into one profile. Again, this is all about protecting privacy – I don’t want to “out” the specifics of the lives of people I care about. That’s not what The Simple Dollar is all about.

You have to figure out your own policy, but I would suggest principles similar to these. You just have to decide what lines you’re going to draw and what techniques you’ll use to hide the identity of people you don’t want to “out.”

Q7: Housing conundrum with adult kids

About 10 years ago I had decided that I would buy a house ($80,000 from an inheritance) to rent. I do have a son who is pretty handy and he put some money ($20,000) into the house which included a new roof and finishing a basement. I thought this would be a family project, the son that helped me was the only 1 out of school at the time, I do have another son and a daughter.

Well, we got the house ready and I started looking for a tenant, got cold feet, and it ended up the son that helped me work on the house moved in and has been living there just paying the monthly bills including taxes and insurance.

So of course the other kids are not liking this situation – they say “I bought him a house”. Help!

Another way to look at it is that it is an investment that the one son is looking after and when I pass away all of them will benefit as the house is in my name.

I just don’t know what I can do to make this right for all 3.
– Jim

Right now, it does look very much like you bought him a house. You might have reasons for doing this, but I completely understand why they feel that way.

You need to decide whether you’re going to try to stick with a “treating all children equally regardless of time and effort” policy or a “treat children differently if they act differently in terms of time and effort” policy, because those two things are going to lead you to very different answers here.

If you decide to treat them all equally, you need to assess the value of what your son has contributed to the house in terms of both work and money and then also assess how much he should be paying in rent. The “rent” should go against what he has contributed to the house. My suggestion would be that he should have contributed 20% of the fix-up work in line with 20% of the value of the house, and his rent should be 20% lower than normal, too. If he’s split the work 50-50 with you, then you should try to figure out what 30% of the total work is worth and that should be his “rent account,” which he draws against while he lives there. Document all of this and share it if anyone asks.

However, I think this is a situation where treating the children differently makes a lot of sense. If you have one child who was deeply involved in this house and contributed significant money to it while the others did not contribute much, then I see nothing wrong with letting him live there for a while during a period where you have no renter.

Q8: Buy it for life: belts

Do you have any recommendations for a long-lasting but low-cost men’s belt? I used to just buy whatever was available at Wal-Mart or Target for a low price, but I have purchased three belts in a row from department stores and had them literally fall apart within a month, usually due to the fastener falling off completely. I’d like to get a belt that could last years.
– Tommy

I’ve had similar troubles with the $10 belts from department stores. They just fall apart really quickly.

However, I’ve been using a men’s Carhartt anvil belt for years. It has never fallen apart and has worn extremely well. In terms of “bang for the buck,” this blows away my experience with belts from department stores.

I have heard incredibly good things about Orion Leather (yes, you’d have an Orion’s belt). A friend of mine has one and it’s very thick; I think it would last a very, very long time, but they’re quite expensive.

Q9: How much emergency fund?

Here’s our situation:

I’m 29, she’s 26. We’ve been married for three years.

We are completely free of debt.

I have 24K in my 401(k). She has 14K in her Roth IRA. Both are invested aggressively.

We both have strong jobs. Our combined household income was about 77K in 2013.

We live in an apartment and have no plans to buy a home. We also have no plans to have children.

Our question is how much emergency fund we should have. Right now we have enough in cash savings to live on for three months. I think we should have more. She thinks what we already have is plenty. What do you think?
– Ozzie

I actually think three months is a pretty good number. I usually recommend that people have two months of living expenses in an emergency fund for themselves, plus another month for each other person living in that household. In your household situation, that would mean two months for the “primary” person plus one month for the other person.

For us, that would mean six months – three months for Sarah and myself, plus three months for our three children.

I suggest that much because “emergencies” often seem to multiply when you have several household members. They seem to come in threes around here a lot…

There aren’t too many situations that you would have as a child-free couple that would draw down three months of living expenses. The situations that would do that would draw down pretty much any emergency fund.

Q10: Job ethics question

I’ve interviewed with a company and was given an offer, I’m now waiting for a counter offer. Things are progressing very slowly. In the meantime I’ve been contacted by another company and I’m moving along in that process. Things are moving faster with this second company. If everything goes well I should be getting the counteroffer soon and within the time frame of that and me leaving my current job I may get an offer from the second company. The second company is a much better offer and opportunity. The question is, how unethical is it to accept the first then unaccept it to take the second?
– Alex

As long as you haven’t started working there yet, I don’t think it’s a real problem at all. They will not have invested any money in you yet.

If you get that first offer before the second one, I’d sit on that first offer for a bit. If you can, accept the second offer before you make a decision on the first one, but if you have to, accept the first one.

Then, if you’ve accepted the first and the second one comes through, simply tell the first employer that you can no longer accept the job offer due to personal reasons. You don’t need to say any more than that.

Be aware that doing this might prevent you from future opportunities with that first employer, especially in the short term. However, this isn’t a major disaster and time does heal all wounds. You would probably be able to find a job there in a few years if you needed to.

If they gave you a bonus, you will probably have to return the bonus, so don’t spend it.

Q11: Paying cash for house

Strange situation. My wife had a trust fund set up for her that gave her a large amount of cash at age 30. After we received the money, we decided to pay cash for a house. When we told our real estate agent this, he pretty much went crazy on us and told us that the worst thing we could do is use that cash for a house. He said we should just pay the down payment and invest the money elsewhere and we would be far better off. What do you think?
– William

I understand what the real estate agent is saying, but I don’t think it’s the best advice in the real world.

In a perfect world where everyone only spends the minimum of what they need to and has a tight grip over their discretionary spending and the stock market goes up 7% a year like clockwork, then the real estate agent’s advice is absolutely correct.

However, this isn’t a perfect world. Right now, investments that return over 2% introduce risk, which means that the average return will hold over a long period, but in a given year (or three years or five years) it might be way higher or way lower. Also, it becomes very tempting to start drawing down a big pile of cash that you just have sitting there in order to improve your house or buy a car or other things, allowing you to relax in other areas of financial discipline.

There’s also the cash flow question. If you have no debts, the gap between your paycheck and your required bills will be very large, giving you a lot of leeway in terms of life choices. You can switch jobs much easier, for example. If you do the 20/80 split and find that, say, your house doesn’t really go up in value and you draw down some of that 80% for improvements and other expenses and the stock market enters a bear run, you could find yourself in a sticky position.

Basically, the 80/20 split has more upside, but it has more downside, too, and normal human behavior pushes people toward the downside. I’d pay cash if I were in your shoes.

Q12: Overinsured?

Since 2008 I have had a long-term disability policy that I purchased independently. I am a single 43 year old woman with no dependents, and I wouldn’t want to be a burden to my immediate family if anything were to happen to me. I pay $80.21 per month for the policy and coverage begins within 90 days.

My employer (a local county government) offers excellent short-term disability benefits. Although they do not offer long-term disability, I recently discovered that our state retirement system (of which I am a vested employee) offers the option of applying for disability retirement. If an employee has a condition or injury that prevents them from doing their job with the county and a doctor says the condition or injury is likely to be permanent, then the employee can apply and have a medical review board contracted by the state retirement system make a determination on the claim. If awarded disability, the employee would receive a monthly paycheck from the state retirement system.

Do you think the state disability retirement would be sufficient to cover a worst case scenario, or should I keep my disability policy? If I canceled the policy, I would invest the money in my Vanguard Total Stock Market Index fund. I am currently maxing out both my Roth IRA and 457 Deferred plans annually, and I have sufficient savings to live on for at least a couple years. I will qualify for early retirement at age 50 and would have enough income to live on if I’m careful with my money.
– Sharon

Without seeing the policies, I can’t tell you whether the state disability plan is “good enough” and whether it matches your current policy.

In this situation, I would probably contact the office of the state disability plan and talk to them about it. Compare the specifics of what they describe to your current plan and see how well they match up.

You’re right, though – there’s no need to double-dip on this insurance.

Q13: Cheap wall decorations

Do you have any suggestions for how to decorate the walls of an apartment cheaply without just sticking up posters with poster tack (that looks pretty low-rent)? I want some interesting wall decorations on these bare walls but I don’t have a lot to spend. Even picture frames are expensive!
– Danielle

If I were you, I’d stop by your local secondhand stores and see what they have for frames before buying anything. Start by looking for inexpensive frames that you like.

Trust me – you will eventually find some frames. There seem to always be picture and poster frames when I visit secondhand stores.

Once you have those frames, consider the dimensions and come up with your own ideas to fill them. Personally, I actually enjoy it a lot when people fill their walls with photos of their family, their friends, and their travels – it makes looking at their walls feel very personal and provides great conversation starters.

Q14: Short term investment

I have a little bit of money in the bank that I’m not sure what to do with. I will probably not want to put it into anything big for at least 1-2 years (house, education, etc.), but would rather not just let it rot as inflation rises above my interest rate. Should I throw it in the stock market in some sort of index fund?
– Adam

If you’re okay with the possibility of losing some of the balance, an index fund is a very good choice. You just need to keep in mind that it’s not a guarantee of a return. You’ll have years where it loses 40% of its value (like 2008) and other years where you get a 15% return. It’s only the long term trend that balances out around 7% or so.

If you’re not okay with that, then you have to move to something lower risk, which means lower return, too. A savings account is just fine – it earns 1% a year, but it’s a very steady 1%.

It all comes down to whether you’re going to need a specific dollar amount at a specific time. The more specific you are, the better off you are in something like a savings account.

Q15: Library recommendations

I love it when you share lists of books that you’ve liked recently. It gets me to the library. I liked most of the books you have talked about.
– Adele

Here are the five most recent books I’ve read that I’ve really enjoyed.

The Divide by Matt Taibbi was a really eye-opening read. The book takes very similar legal situations for people in different social and economic backgrounds and shows how drastically different they are treated. Often, people who are well-off can commit far worse crimes for far less punishment than people who are poor. Taibbi uses specific cases to show this split – and it’s frightening.

Mr. Penumbra’s 24 Hour Bookstore by Robin Sloan is a great novel about an unusual bookstore in San Francisco that ends up going on some very unusual twists and turns. I had no idea where the train was going most of the time, but the ride was certainly fun.

The Circle by Dave Eggers is a novel focusing on the inner workings of a company that’s like a mix of Google and Twitter that slowly becomes more and more cavalier with personal privacy. It has frightening echoes with today’s use of social media while still being a great story.

The Martian by Andy Weir is one of the best hard sci-fi novels I’ve read in a long time. It chronicles how a person abandoned on Mars during one of the first manned visits to the red planet manages to survive for more than a year by himself in an incredibly inhospitable place.

The Unwinding by George Packer is a great book that takes a real look at whether the “social contract” is unwinding in America. What happens when the social obligations of community begin to disappear?

I loved all five of these books. They’re probably my favorite five that I’ve read this year (out of 40 or so books).

Got any questions? The best way to ask is to email me – trent at thesimpledollar dot com. I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.

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