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. Insurance and breast pumps
2. Donations and religious groups
3. Cosigning on a mortgage
4. Cashing out whole life policy
5. Planning a “national parks” vacation
6. Baby bottles and BPA
7. Contributing to a 529
8. Aggressive salary negotiations?
9. Pocket notebook recommendations
10. Cash-back credit card questions
11. Marrying into money
12. Home development advice
13. Wine and dinner parties
14. Internet without cable
15. Best board games for three?
I just returned home from a long vacation throughout the southwest that involved stops in multiple national parks and forests as well as a stop at Disney World (expect a “frugal notes” article on this vacation as I’ve done for previous summer vacations).
In fact, it was such an energetic vacation that I actually feel more worn out after getting home than I did before I left.
I may need a vacation from my vacation.
Anyway, here are fifteen questions from readers this week.
Q1: Insurance and breast pumps
Folks should call their insurance company if they are interested in getting a good breast pump for free (or at a reduced price). I was able to snag a pretty good breast pump (Medela advanced double) for free and could have upgraded to the pump in style for $75 or so. The pump is meant for a couple of pumps a day. Also you are eligible for a new pump every 36 months. I believe providing access to good pumps is the result of ACA provisions.
This is great advice!
If you’re an expectant mother, it’s worth checking with your insurance provider to find out if they offer assistance for purchasing a breast pump. A breast pump can significantly reduce the expense of feeding your baby throughout the first year or two of life, particularly if the pump is inexpensive.
However, it’s worth noting that recent studies indicate that clean water and modern formulas do a very good job of providing nutrition for babies, so mothers who are unable to take advantage of this should not feel guilty.
Q2: Donations and religious groups
Is it better to donate to religious groups or non-religious groups that provide the same services? For example, in my town there is a food pantry run by a church and one apparently run by volunteers. I’m not associated with either one but I want to take some donations for people in need. Which one is better and will use my donations better?
It really depends on the specific groups more than anything.
It’s likely that these are local charities and thus haven’t been graded by an impartial charity site like Charity Navigator, but if the charities are listed on that site, you should certainly use that information to help make your decision.
If I were you, I’d stop in at both pantries and see how they handle people who come in for help. Which one do you feel does the best work for the people who need the help? That’s where my donations would go.
Q3: Cosigning on a mortgage
I am 62 years old. My wife is 59 years old. We have no debts and have adequate savings for retirement. We both plan to retire at 70.
We have four children. Our youngest child has been having difficulty securing a mortgage due to credit card issues when she was in college. She is now debt free and she has shown us her credit report to prove it but there are still some defaults from a few years ago on there.
She is trying to buy a townhouse and has most of a down payment for it. She has asked us to cosign on the mortgage to help her get it because our credit is strong.
What are the risks of doing this? I understand that we will be on the hook for the mortgage if she doesn’t pay. What other concerns should we have?
The risk of being stuck with a townhouse mortgage is your biggest risk. There’s also the risk that your daughter might be unable to make payments but not communicate this to you, meaning your credit would be damaged essentially without your knowledge.
If something goes wrong with this mortgage, it’s likely going to cause irreversible damage to your relationship with your daughter, plus it will have financial consequences for you. Even if things go well, sibling rivalry and a sense of favortism can also rear its head. The only good outcome here is if everything goes perfectly and if her siblings have no conflict with the idea.
I find it’s very rarely worth it to mix family and finances. The potential bad outcomes are so horrible that they blow away the potential good outcomes.
Q3: Cashing out whole life policy
Should I cash out my whole life insurance policy, I started it around 10 years ago or so and there is just shy of $10,000 in it. Will I lose most of that money? To my understanding term life is the way to go and then just take the extra money and invest, but I had no idea what I was doing 10 years ago and now I know just enough to be dangerous.
As I don’t have your exact policy, I can’t answer for sure, but knowing what I know of lots of different whole life and term policies, I would strongly lean toward cashing out the whole life policy.
Generally, whole life policies are just a mix of a life insurance policy and an investment that isn’t particularly good at either one, but it tends to look “better” than a term policy because you can earn returns and “better” than investments because it can insure you.
In my experience, a term life policy is the best way to get insurance and paying off debts and investing in index funds or real estate is the best way to invest personal money.
Q5: Planning a “national parks” vacation
How does one plan a low cost vacation in the national parks? You have visited several in the past and seem to incorporate national parks into most of your travels. Got tips for keeping it cheap?
For such a trip, you’ll need a National Parks pass, which usually costs $80 per year. This gives you full access to the parks with your automobile as well as a discount on camping rates.
The best way to enjoy a national park is to camp there, in my opinion. This means you also have to pay for a camping spot at a park. However, the daily rates are really low – for example, it’s $20 or less per day at Yosemite.
You’ll also need to bring your own food and basic camping gear, but you’ll be prepping all of your meals yourself, so the cost there is low, and camping gear can be reused.
If you already have the gear, a week at a national park can cost as little as $200 plus food, plus you’ll have a pass that gives you access to the parks for a year. That’s a pretty cheap vacation, particularly one that provides such amazing places to explore as a typical national park does.
Q6: Baby bottles and BPA
What do you think about baby bottles and BPA? Is BPA something worth paying extra to avoid? I have seen sites saying that BPA is really dangerous and others say it doesn’t matter.
The evidence is pretty clear that BPA that’s present in plastics can function as a synthetic hormone. The question is what kind of long-term effect it can have on children and, honestly, we’re not sure yet. This article from the Mayo Clinic sums things up.
At this point, if I were starting over with my kids, I wouldn’t buy plastic baby bottles of any kind. There’s evidence that even BPA free bottles can contain synthetic hormones.
Glass bottles are pretty clearly the safest option, but the problem is that they’re comparatively expensive. If we were starting over again, we’d probably put a set of sturdy glass bottles on our baby shower list.
If you can find a low-cost quality glass baby bottle, that’s what I would recommend using.
Q7: Contributing to a 529
My partner and I opened 529 accounts for our grandchildren – a girl now 7 and a boy of 3. The accounts are with Vanguards Nevada fund and are doing ok, given market realities.
The question is how much we should continue to invest? The sum of both accounts is at about $120k, with hers being nearer to 80K. In first grade, she is already in an accelerated math program, so we figure MIT or Cal Poly might be in her future; we have less of a sense of his talents.
The parents are, wisely, investing in their retirement accounts, so the 529s are our project. How do we figure out how much is enough? I’d like some travel, but the college funds are a priority.
That’s really up to you guys. At this point, with 7% market growth, the older child’s fund will be over $200,000 by the time she graduates. That’s enough to cover four years of MIT at current rates. It is extremely likely that the child will go to a less exclusive school, likely with lower rates.
Also, are you planning on paying for all expenses, period? I think there is value in letting young adults face at least a little of the burden of college so that they understand the value of the education that they’re receiving.
There’s also a concern that they have too much in their 529 accounts compared to the cost of their schooling, at which point it becomes fairly redundant. If they take out money for non-educational expenses, they’ll get hit with taxes and an additional penalty.
I think you guys are already doing extremely well. You can continue to contribute, of course, but I think their funds will have more than enough to cover undergraduate expenses at almost every school in the country as is.
Q8: Aggressive salary negotiations?
I recently received a job offer. However, rather than giving me a salary offer, the asked me to make an offer. I feel like this is some kind of final test for my interview, so I’m trying to figure out how to respond.
I am 26 years old and engaged. I have previously held one job in this field for about four years. I am well qualified for my new job but at the same time I don’t want to lose the offer.
What should I do?
Here’s what I would do. I would look up the nationwide average salary for the job you’re applying for, then add 25% to that. Then, I’d look up the cost of living index for the city you’re applying to. Take your salary plus 25% number, divide it by 100, then multiply it by the cost of living index for that city. Round that number to the nearest $1,000 and then submit that as your offer.
To me, this is a fairly aggressive offer, but not insanely so. It shows that you’re not a pushover, but also that you’re not out of touch with reality.
Naturally, the specifics of the situation can vary this. If you’re going into a field with a fat profit margin, you might ask for more; a field with a thin profit margin might be different.
Q9: Pocket notebook recommendations
What notebook do you use as your pocket notebook? I tried using those cheap Mead notebooks with a spiral at the top, but within a week the spiral had bent and the pages became ratty. I really like having a notebook in my pocket as I have been doing that for the last month but I want a notebook that doesn’t look like a disaster when I pull it out.
I absolutely positively love Field Notes. They fit well in a hip pocket and are practically indestructible. They’re pretty much perfect for quick pocket notes.
You can get a three pack of these notebooks on Amazon for $9.95. I find that one of these lasts me approximately a month, so a three pack will last for three months.
They’re a little pricier than other notebooks, but I’ve never, ever had a problem like what you describe with these. They’re incredibly resilient in the pocket.
Q10: Cash-back credit card questions
My wife and I currently have a CitiCards American Airlines card and ewe have about 350K miles on it. We feel that we do not need to accumulate any more miles. I think we now have plenty. It is the only credit card we have ever owned. We have had it for probably about 12 years now. It has a credit limit of about $45K. We both have totally flawless credit histories and have very high scores – both in the high 700’s, possibly close to 800.
So, now we want to enter the world of cash-back credits. We are most interested in having both the American Express Blue Cash Preferred and also the Capital One Quicksilver Rewards (1.5% cash-back) for those non-grocery/gasoline items.
I was wondering if you could advise me as to which credit card we should apply for first? Groceries/Gas are only a minority part of our credit bill each month. Therefore, it seems to me that it is more important that we have a higher credit limit with the Quicksilver card than the Blue Cash card. I hear that the more credit cards one has on their credit report, the less likely a new credit card issuer will be in giving one a higher credit limit. Do you find this to be true? If so, do you think I should apply for the Quicksilver card first, to help ensure getting a higher credit limit?
Lastly, does it matter how much time goes by in between getting the first card and applying for the second card? If I let a significant amount of time go by, will that help me in getting approved and also getting a higher credit imit with the second card? If so, how much time do you recommend I wait before applying for the second card?
Here’s the scoop. Your FICO score, the most common type of credit score, is made up of five factors: 35% payment history, 30% amounts owed, 15% length of credit history, 10% new credit, and 10% types of credit used. Beyond that, credit card issuers also examine your total credit available as well as your debt-to-credit ratio and use their own internal guidelines there.
Applying for a new card will only cause a slight dip to your credit score, as it will have a short term negative impact on just the new credit section of your score. This dip won’t be enough to affect your eligibility for much of anything.
What will matter is your total credit available. Credit card companies tend to get nervous if your total credit starts to approach your annual salary. Different companies have different guidelines here.
So, what I would expect to happen is that you’ll get approved easily for both cards. The first card will likely have a decent credit limit and the second one will have a smaller limit. Thus, your plan makes sense. I don’t think waiting a while between the cards will make a tremendous difference, as all that will happen is that your credit scores will go up a slight amount and I don’t think that will be the factor the credit card companies care about here.
If you are planning on fully migrating to these cards, I’d use them at the low limit for a while, then ask for a credit limit increase on each card depending on your usage.
Q11: Marrying into money
I am about to propose to a woman who comes from a wealthy family. My family was extremely poor when I was growing up and our cultures were completely different. I have met her family and they seem to like me okay. She says that they have only said positive things about me.
I am still worried about this, particularly in terms of the ring and the wedding. The only wedding I went to with her family was so far financially out of any sort of price range that I couldn’t pay for it. Not only that, my family would be really uncomfortable at such an event. I also don’t know if a huge ring is expected here or not and, if it is, how I’m going to afford it.
I have talked to her about this a little and she has told me that she doesn’t care if I propose with a “Cracker Jack ring,” but I still feel like I’m going to mess this up and disappoint everyone and maybe lose this wonderful woman. Advice? Should I stick to my own financial sanity and expect some disappointment?
From what you’ve said here, I think the family you’re marrying into – and the woman you’re hoping to marry – seem like realistic and down-to-earth people.
The reason you’re afraid to spend the money – and it’s a good reason – is that you don’t want to put both of you into a financial hole right at the start of your marriage. That is the best reason to not have an extravagant engagement ring or wedding.
Your best approach is openness and honesty. Talk to your potential bride-to-be and make it clear that you’re talking about your shared future. You want this future to be as bright as possible. What does she envision for her engagement ring? What does she envision for her wedding? How much of a role will her parents play in putting on a nice wedding?
You seem very level-headed here. I think that if your wife-to-be is expressing financial desires that are way beyond the pale of what you consider appropriate, it’s a harbinger that your marriage might have troubles. If she’s the right woman for you, she’ll be on approximately the same page as you are when it comes to this decision.
This doesn’t mean you should literally buy her a Cracker Jack ring, of course, but a very modest ring and a simple wedding should please everyone.
Q12: Home development advice
I recently bought a home that came with an adjacent piece of land. The home is in a very desirable downtown area and, as the economy has improved, the prices of homes have risen dramatically. I now have equity of roughly $100,000 in the house. Additionally, another home can be built on the land, so the land itself is roughly worth $150,000. That being the case, if I sold both, I could probably walk away, tax free, with around $250,000.
This financial windfall came at a perfect time for us, as we have about six months left in our three year process of paying off roughly $150,000 of school loans.
We really like living in the house, but it’s becoming a bit cramped for our family. We’re tempted to sell, pocket the money, and buy a cheaper house somewhere else. We’re pretty young, so that would be an awesome opportunity to get a head-start toward financial independence and early retirement (I’d love to retire at 50).
However, we’re also tempted to sell our house and build a new house on the land since we like the area so much. Doing so would tie up all the money in home equity, though. I’m torn between being living in a great location with a new dream house and walking away with a quarter million dollars cash. What should we do? Note that buying another home in the area doesn’t work because of crazy property values.
The first thing I’d do is get rid of those student loans. They’re hurting your monthly cash flow and restricting your decisions big time. Sit tight until they’re gone.
Once that problem is out of the way, you have a number of options. The biggest thing you need to do is figure out what exactly you want from a home. You mention that the current home is cramped, but you seem to think that there are cheaper and also larger homes relatively nearby. What are the reasons for not selling the land and moving into one of those cheaper and larger homes? What’s keeping you from doing that, and is it worth staying put?
If staying put really is the best option, I’d go to the bank and talk to them about your plans. You have a number of possible options here and without a full view of your financial state I can’t tell you which one is the best one.
Q13: Wine and dinner parties
In my social group, we host a lot of dinner parties. Someone is hosting one at least two or three nights a week. When you go to one of the parties, the only thing that’s expected is that you RSVP a day or two in advance and that you bring a bottle of wine with you. Cool, right?
The problem is that people get teased hard if they bring cheap wine. If you were to bring a bottle of Charles Shaw or something, everyone there would give you a hard time and, if you did it repeatedly, you’d be on the outs. There are several lower-cost wine brands that receive this kind of response – Yellow Tail, Columbia Crest, and a few others.
This pushes people to buy more expensive bottles of wine, making this whole dinner party thing expensive. This is basically our entire social circle, but we’re spending $40-50 a week on wine and maybe $50 more when we host every 2-3 weeks. It really adds up. Any ideas on how to handle this?
Assuming everyone in your group is in roughly the same financial state as you are, most of the people in the group that are financially self-aware are probably feeling the pinch, too.
If I were you, I’d approach the person in the group that you feel would be most likely to agree with you and discuss the matter with that person. Is there a way to maintain what’s fun about the dinner parties without the ongoing expenses?
It may be that just one couple is driving this attitude toward more expensive wines. If that’s the case, they’re quite likely to cool it if they see that the rest of the group has a different take.
If that doesn’t work… perhaps you could buy wines by the case?
Q14: Internet without cable
I LOVE the idea of getting rid of cable and just steaming stuff but I can not find any providers that will allow me to get just internet and not cable- any suggestions??
In some areas, an internet-only option simply isn’t available – and I consider that really unfortunate. That’s the end result of allowing a handful of large media companies like Time Warner and Comcast to dominate both the cable and home internet scene. They want to bundle everything to get as much money out of you as possible.
I would spend some time looking at every option that’s available to you in your area. Start by Googling “internet service in [city] [state]” where [city] is your city and [state] is your state. You’re very likely to find options you hadn’t even considered yet. Give some of them a call and see what they have on offer. Often, smaller ISPs will offer packages that don’t include bundling.
Q15: Best board games for three?
Do you have any suggestions for really good board games for three people? My husband and I have noticed that our son is really into gaming and we found out that he plays quite a few board games and card games with his friends. We have a few family nights a week and we thought it might be fun to have one of them be a “game night.”
There are a lot of options here.
Here’s a brief list of ten highly regarded games that work well for three players. All of these take an hour or less to play and aren’t particularly complex. Most work with at least one additional player. I have played all of these and they’re all enjoyable with adults and work well with teenaged and some pre-teen children. I would recommend that you check out each of these and choose one that thematically seems the most compelling.
I would happily play any of these games at virtually any time with my family (when my kids are a bit older) or with my circle of friends. They’re all great games.
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.