Updated on 10.17.16

Questions About Retirement, Family Thanksgiving, Cookbooks, and More!

Trent Hamm

Reader Mailbag

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. Figuring out bills in collection
2. Finding a better budgeting system
3. Finding a better credit card
4. Car loan concerns
5. Roth IRAs and spouses
6. Starting an unusual side hustle
7. Saving too much?
8. Will or trust?
9. Close to retirement at work
10. Nearby library and bus stop?
11. Cost of hosting family Thanksgiving
12. Cookbook question

A few days ago, I had to chair a public meeting with about 50 people in the crowd. A big part of chairing that meeting was handling a discussion on a topic that upset a lot of people centering around the sale of a property. There were some people in the crowd that bitterly opposed it and others that were strongly in favor of it.

Chairing that meeting did not seem appealing at all. There was the issue of standing up in front of a crowd. There was the issue of talking about a challenging problem. There was the issue of making sure that no one got too upset and that everyone had their voices heard.

Rather than stressing out about it, I prepared for it. I talked to people with differing opinions on the issue. I asked all of them to tell me what points they most wanted to make sure were covered in the meeting.

So, what I did right at the start is that I laid out that research. I talked openly about all of the concerns I had, from all sides, and basically laid out all of the main points at the start. I expressed the feelings of both sides as well, pointing out that some people have a historical and meaningful attachment to the property, while others do not.

I let everyone who wanted to speak have their time on the floor, almost without limit. I stopped anyone who interrupted.

The thing is, no one got upset. It didn’t turn ugly, which was something I was concerned about. The only time I sensed that it might turn ugly, I stopped it immediately and pointed out that just because different people care about things at different levels doesn’t mean that they don’t care and it doesn’t mean that they deserve to be attacked.

The meeting went very well. I attribute it to one thing far above everything else: preparation. I learned about the sides that would be presented going in. I knew what made people emotionally invested in the issue on all sides and did my absolute best to understand those viewpoints. I nipped negative talk in the bud. I did a lot of those things because I visualized them happening in advance and also visualized how I would handle it.

If you’re about to do something scary, prepare. Think about the outcomes that might happen and what you’ll do to handle them. Visualize them in your head as they might happen and visualize yourself handling them effectively. If you’re unsure how to handle things, talk to a mentor or to someone you trust. That’s the best you can do and, usually, that’s enough.

Q1: Figuring out bills in collection

Unexpected divorce. Bank accounts drained by ex. Medical billing in collections. Financially stable and wanting to get collections paid off. 1. How do I find out what is in collections? 2. How do I pay without getting ripped off?
– Bradley

The best way to find out what debts you have, how much you owe on them, and how late they are is to grab a copy of your credit report. The federal government gives you a free copy of your report each year; you can get it at AnnualCreditReport.com.

When you get a copy of your report, it will list all of your currently owed debts along with their current balance. You can then use that as a checklist of sorts to get them all paid off.

You can negotiate your debts, of course, particularly if the debt has already been sold to a debt collector. If that’s the case, they’ll often negotiate with you so that you can pay a lower amount. Carrie Smith wrote a very nice article for The Simple Dollar a while back about negotiating with collectors that will help you with this process.

Q2: Finding a better budgeting system

I will be graduating in May 2017 and already have a job lined up where I will be making far above the average salary (~90k). Thankfully my parents have been able to help me pay tuition, and lifeguarding/internships have payed for my living expenses while at school. So I have ZERO debt, which I know is a great starting place. However, as I move from LA to Seattle and start working I feel like I will have a harder time keeping my budget in check.

Throughout college I have used a simple spreadsheet with various categories that I manually tally up each month. For the most part, it was simple to stay within my set boundaries because all of my friends spending habits were similarly cheap and I did not have many major reasons to purchase more than the basics. If I did go over a category in a month, I would just reduce my future spending(which did not always work perfectly).

I know that after graduation I will likely have more expenses due to relocating, the new jobs needs, and switching stuff like insurance and phone bills from family plans to personal, which will make having a manual spreadsheet harder especially before I know the baseline of what I will be spending. Is there a product that you would recommend for budgeting that is easier than going over my statements at the end of the month and adding everything up? Something similar to the enveloping method, but with debit/credit cards, so that I have a better idea of my spending throughout the month? Also, how would you go about creating a budget for a new lifestyle? I do not plan to go crazy and increase my spending to match my income increase, but I definitely will change some aspects by a somewhat unknown amount and am unsure as to how to deal with that.
– Bonnie

My preferred budgeting program is You Need a Budget 4. This is the still-supported previous version. They have since moved on to a subscription version that I am not a big fan of, mostly due to the idea of subscription model software for personal budgeting. I have used YNAB 4 for years and it is hands-down my favorite personal budgeting program. It matches up really well with the features you’re looking for.

I think the best way to build a budget after a major life change is to spend a few months just being a little careful with your spending and then looking at how much you’re actually spending. Spend like you’re going to spend going forward, but don’t just throw money around foolishly. Your actual spending patterns should be the guide for your budget, because the most effective thing a budget can do is keep continued lifestyle inflation in check.

YNAB can really help with this process. It functions very nicely as an expense tracking program and you can then use all of that data to build a great budget.

Bonnie has a second question.

Q3: Finding a better credit card

Another thing I would like your opinion on is the best rewards credit card to get. I have an account with Wells Fargo currently, that I have had since I was 16, but it has no cash back, points, or miles. I also think that getting another credit card will help me build credit (my FICO score is around 780 and says it is impacted due to lack of accounts and revolving balances). I think I want cash back, rather than points or miles because it seems more straightforward and less restrictions. I have seen the Simple Dollar promote Chase Sapphire and Freedom cards in the past, which seem like pretty good cards. But there are tons of options out there that all seem very similar and hard to compare. Does it really matter much which I choose once they have the same % cash back and no yearly fee? And having never actually applied for a card, how likely is it that I am accepted/rejected and would that factor into which one to try for? Obviously there are some that are more selective than others. Also, does the timing effect me much? Someone told me to get one a few months before I graduate so that when I have credit checks for a car loan or an apartment enough time has passed to benefit my credit.
– Bonnie

I think that Chase Sapphire and Chase Freedom are both great credit cards. I think they’re both perfectly fine for general use.

Having said that, I think that if there’s a particular retailer that you use a lot, whether it’s a store like Target or a gas station like BP, your best choice is to get the Visa or MasterCard associated with that chain. Almost every time, the discounts associated with that card offer benefits related to that chain that are far better than a general use card; however, the benefits don’t really accrue at places besides that chain.

I do recommend with the general idea of getting a credit card and using it responsibly to improve your credit. I think that the two recommended cards are great general use cards for most people. I also think that a retailer-specific Visa or MasterCard makes a great complement for use at your most-frequently-visited retailer, and might be the only card you need if most of your purchases are at that retailer.

Bonnie has a third question.

Q4: Car loan concerns

Lastly, I do not currently have a car but will need one for my job. I will not have the cash upfront to buy one before I start working, but I think that with my future salary I could quickly pay off a car loan. I plan on getting a late-model used car as you and many other people have advised. Is it better to get the loan and throw all my excess money at it for a few months until it is payed off? Or is it beneficial to keep such a car loan and pay it off over its full (or near full) term with my excess money going towards other savings? I assume this also depends on the amount and interest of loan which I don’t know, so feel free to use average numbers.
– Bonnie

Unless the interest rate is extremely low – say, below 2% – you’re better off paying the debt down rapidly. There are a lot of different philosophies on paying down debt, but my belief is that unless the loan is almost interest free, you should be eliminating it quickly because of the personal freedom you get from having fewer bills each month.

Having said that, as soon as you pay off that car, you should start making normal car payments to a savings account. Putting $200 a month aside when you’ve been throwing much more than that at a car payment each month won’t be a big deal.

Why do this? After several years, you’ll have more than enough in that savings account to simply buy a very nice late model used car right out of pocket. $200 a month for eight years into a 1% interest savings account adds up to almost exactly $20,000 saved, which is going to be perfect for your next car.

Q5: Roth IRAs and spouses

Concerning Roths: If I have $6,000 each year to distribute between my and my wife’s Roth IRA’s, is there a most efficient way to do so? For example: Should I contribute the full $5500 to mine and then drop the remaining $500 in my wife’s, or is it beneficial numbers-wise to do an even $3,000-$3,000 split, or somewhere in between? I’m sure there’s a formula for this, but I’m not sure where to start.
– Jerry

My recommendation is to do it equally. Assuming that you’re married to each other for the rest of your lives, it really makes no difference how you split it up (assuming that the investment portfolio and management company are identical). In the event of a divorce, it’s split up according to the judge’s ruling.

Since you can choose the investment house and the exact investment for each Roth IRA, there’s not going to be any difference between the investments in each account unless you choose to make them different. My suggestion is to simply mirror them – contribute the same amount to each in the same investments.

There’s no real reason to do anything else.

Q6: Starting an unusual side hustle

Onto my question. I am considering turning my hobby of folding origami into a small side hustle with an Etsy store. This is something I think I’d genuinely enjoy doing. I figure if I can cover the cost of the supplies I’d buy for my hobby anyway (in the neighborhood of $200/year), it will be totally worth it, and anything I might earn beyond that would be a great bonus. So I’m talking a very modest scale here, but I’m still a little intimidated by the business side of things.

I’m wondering what general advice you have for starting an online side hustle? And more specifically, what would you recommend in terms of a business plan, legal structure and taxation concerns for a very small business? I might well not make enough money to have any tax liability at all, but I definitely don’t want to be caught off-guard there. I’m also wondering how to decide on a business structure, if any, either to prepare up-front or as a possible later development if it grows. Sole proprietorship? LLC? I have fears of inadvertently committing copyright infringement or something and wonder what steps I should take to protect myself and my family if for some reason I get sued. I am a career counselor in my day job, so like many professionals I’m very aware of liability issues–but I can’t tell if I’m being smart or just being paranoid when it comes to my possible side hustle. What do I need to know before I make a move?
– Kelly

My recommendation is to test the waters with this endeavor by leaving it as a sole proprietorship for now. That basically means you just start selling on Etsy with your personal tax ID and treat all profit as normal income.

As for your concern about stealing ideas, just make your best effort at due diligence along the way. Most patterns and recipes don’t restrict you from the thing you make from that pattern, they merely restrict you from selling the pattern itself.

If the business grows, you can consider forming a business structure, but at the level you’re talking about, it’s probably not worth the effort. You’re not doing anything that any reasonable person would sue over or a judge would do anything about.

Q7: Saving too much?

I have one question for you. Am I putting too much away in my savings account? I have 35K in a savings account in the hope this will be used towards a down payment on a house sometime. Im a single 30yr old guy and dont need a lot of space so I don’t foresee myself buying anything too large or expensive. I’m pretty confident I have more than enough for 20% down on a modest house. Im still currently putting $500 a month away in my savings and only putting $575 a month away in my employer sponsored 401k. My question is should I put less in my savings and then increase my 401k contribution to max it out?
– Axel

Assuming you don’t have any other debts and you have at least 20% of the cost of any house you might buy already in savings, I would definitely reduce (or eliminate) your savings contributions and move all of that to your 401(k) contribution.

Honestly, though, if you’re 30, have no debt, have $35,000 saved up for a house, and are already contributing $575 a month to your 401(k), you’re in good shape. If you bump that monthly contribution up to $1,000 a month, you’re going to be in really good shape going forward and probably trending toward an early retirement.

In short, provided you don’t inflate your lifestyle, you’re looking quite good financially going forward, especially given your age.

Q8: Will or trust?

My husband and I just had a baby and we can’t figure out what’s better for our situation, a will or a trust. We aren’t rich, but we own our home and started a college find for him as soon as we decided to get pregnant.
– Denise

I tend to follow the advice from CNN Money regarding whether you need a trust or not:

If you have a net worth of at least $100,000 and have a substantial amount of assets in real estate, or have very specific instructions on how and when you want your estate to be distributed among your heirs after you die, then a trust could be for you.

If that describes your situation, then get a trust. If it doesn’t, then you’re fine with a will.

Right now, our estate plan is to split things into four pieces, with three of the pieces going to our children and a fourth going to charity. It’s a very simple estate, really, so we currently just have a will.

Q9: Close to retirement at work

I’m 63 and I’m close to retirement. According to my math I am going to be fine when I retire, but I’m still worried about that ~5% chance that things go wrong so I keep working to reduce the possibility of a bad outcome. My boss is doing everything in the world to encourage me to reitre as it will save money when they replace me. He wants me to spend a lot of time doing documentation and such things so they can transition really fast whenever I go. I have this sinking feeling in the back of my head that they’re going to push me out the door before long.

My retirement savings is mostly in a 401(k) with a little in a Roth IRA. I am single (my wife died almost fifteen years ago of natural causes). In retirement I am going to work for Habitat for Humanity across town from my kids and grandkids as both of my children live in the same suburban area about four hours from where I live right now. I also want to do some traveling with my sister who is also single with a spouse that died recently.

I’m trying to figure out how hard I should “fight” retiring and I hope you have some words of wisdom for me.
– Stanley

If I were you, I would listen to your heart. I’d spend time at work quietly documenting the things you take care of, but I wouldn’t make a big deal out of it. Basically, if I were you, I wouldn’t write yourself out of a job, but I would do everything possible to set yourself up so you can leave easily on your own terms.

I think that, very soon, you’re going to wake up and just know that it’s time to walk away from this and do other things with your life. That day hasn’t quite come yet, but I can almost feel it coming with every word you’ve written. So, what I would do right now if I were you is continue doing my work, but use your spare time to make your transition away from the job as easy as possible for you.

Another thing to consider is that your employer might give you some sort of compensation for retiring immediately. You could quietly broach the topic with your boss. A small compensation package might be enough to help you transition to retirement right now.

Q10: Nearby library and bus stop?

How much of a premium would you put on an apartment within 0.1 miles of a library and a bus stop and within 0.25 miles of a grocery store? It would obviously save a lot of money but the apartments are a little pricy.
– Anna

I think it varies a lot from person to person. Assuming you’re a single person who enjoys reading and has a job on the bus route, I think that position would save you hundreds of dollars a month. I can tell you that, if I were single again, this would basically be my ideal situation.

You need to really look at your own situation, though, and decide how much those things will really save you. Will you actually use the library more if it’s 500 to 1,000 feet from your apartment door compared to, say, a couple of miles away? I can’t assess that, but I can say that I probably would if I were in that situation. Will you cook at home more if there’s a grocery store 2,000 feet away? If the grocery store had good prices, I’m pretty sure I would, and that would save me a lot of cash on food, but you may not feel the same.

I also don’t know the actual difference between apartment prices. If the difference is several hundred dollars a month, I might be hesitant to make that choice. If the difference is $50 or $100 a month, I’d go for the apartment with all of the nearby features.

Q11: Cost of hosting family Thanksgiving

In January my mother had a stroke and although she seems to be almost fully recovered mentally, she’s still struggling with motor skill recovery. My father asked me out of the blue over the weekend if my husband and I could host our family’s Thanksgiving dinner.

I don’t mind the work, but I am worried about the expense of it. I’ve been doing some estimation and I think it is going to cost us about $200 to pull off the usual style of Thanksgiving dinner that my mother always put on. We can afford it, but just barely, and the truth is that it will probably cut into our family Christmas.

Help? I don’t want to say “no” but I don’t see how we can pull it off especially if this expense becomes annual.
– Nancy

Go to your father and say that you’ll be happy to do all of the work for everything at their house provided that they buy the ingredients. Basically, you’ll just agree to replace your mother for labor.

That way, you’re not suddenly burdened with the cost of the food, but you can step up and do the work that’s needed for your extended family to continue to bond.

This might also help your mother to feel as involved as she can be with the preparations and be right there for advice along the way (because, trust me, pulling off a Thanksgiving dinner for the first time will require some advice).

Q12: Cookbook question

What value do you get from a cookbook that you don’t get from a blog or a recipe database? Why not just look at recipes on your phone when deciding what to make or when you’re cooking? I guess to me that cookbooks seem outdated and overpriced.
– Chris

There are several reasons. One, the recipes in most well-regarded cookbooks are very well vetted, which means that they’re good and they work. Recipes from a blog or from a recipe aggregation site do not have any such vetting. Two, they’re incredibly nice to flip through for inspiration and bookmark when you find something interesting, and the experience is different enough than web browsing that it seems to itch different parts of the brain. Three, the pages are usually larger and easier on the eyes than a phone or a tablet and the format is much more convenient than a laptop screen. Four, they’re usually very good at explaining technique, something you don’t find in random recipes.

I certainly do use many online sources for recipes and food ideas, but cookbooks definitely have a big role in my food prep process. For me, it comes down to trust, inspiration, and convenience, things that a good cookbook can provide much better than online sources.

There may come a time where electronic vetted recipe collections are delivered in a format that’s as readable and usable as a great printed cookbook, but we’re not there yet. Trust me, I’ve tried a lot of such options. The printed cookbook is still king.

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. 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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