Reader Mailbag #37

Each Monday, The Simple Dollar opens up the reader mailbags and answers ten to twenty simple questions offered up by the readers on personal finance topics and many other things. Got a question? Ask it in the comments. You might also enjoy the archive of earlier reader mailbags.

As usual, we’ll start things off with a few links to older articles that directly answer questions I’ve heard recently. A few people have asked questions lately about how to get by on a very low wage, particularly after exiting a higher-paying job. Here are three articles that might help.
Ten Steps to Financial Success for a Minimum Wage Earner
Ted’s Dilemma: Planning for the Future on Minimum Wage
Everything’s So Easy for Pauline: Thoughts on Luck, Fate, Money, and Life

And now for some great reader questions!

I started a Roth IRA with the financial adviser my entire family uses. The thing is that he charges a 100$ fee every year to maintain the account no matter what. Is this the standard or am I just paying for the convenience? What are my options here? Can I move my account? Is it difficult?
- Paul K.

It depends entirely on your agreement with the advisor, but you should be able to roll that Roth IRA into another Roth IRA that you manage yourself. My suggestion would be to contact an investment house that lets you self-manage, explain the situation, and ask for their advice. I use Vanguard for my own Roth IRA and I’m extremely happy with them – they certainly aren’t charging $100 a year. In fact, they charge nothing beyond a small percentage of the investments themselves – 0.2% or so in most index funds.

Situations like this – which pop up with alarming frequency in my email inbox – are the reason I am often loathe to recommend financial advisors to people. There are some good people out there doing financial advising work, but there are a lot of sharks in the water, too. If you’re considering turning to an advisor, only use one that accepts an up-front fee for the work – no commissions at all.

I hereby challenge you do get into good enough shape to ride RAGBRAI (the full week event) in 2009. I, personally, need to lose weight and get into better shape. So, are you up to riding RAGBRAI with me (or other friends who will be riding in 2009)?
- Carlos

I would love to take you up on this, but a week away from my wife and kids just to ride a bicycle is not something that’s high on my priority list.

Instead, my focus is to train to run a good time in a 5K run late next summer. I’m mostly focusing on getting in good cardio shape during the winter using home exercise and then intend to work on the actual running during the spring and summer.

Could you address how folks with disabilities or who suddenly become disabled can mitigate some of the financial issues they may face like long term care, life/disability insurance for those who often get refused, and perhaps resources folks should look to for a little bit of help?
- Nicole

The first place I’d start looking for information would be DisabilityInfo.gov, the federal government’s site on disability issues. This site actually answers many of the questions you raise here in an easy-to-use format.

I would also strongly encourage you to contact the leaders of local churches. These people are usually intimately involved in the charity work of the local community and will be able to point you to resources that you can use locally to help yourself get back on your feet.

At 9 p.m. I am in bed with my youngest reading a story until both he and I are asleep. My alarm signals a new day at 415 a.m. that next morning. There are so many things I would like to learn with regard to finances and other interests, but I cannot seem to find dedicated time during the regular day. My choices are forcing myself to wake-up after I put my son to bed and work “after hours” or I get up at 3 a.m.? Which would you do?
- Chris

My first suggestion would be to delve into audio books for your commute. Audible.com is a great place to start.

Another suggestion would be to turn off the television. Institute a family reading hour in the evenings where everyone is involved with books. While my children are too young to really grasp this, I know many families with older children that do this quite well.

I usually devote an hour of my “work day” to learning new things, and that usually revolves around reading all sorts of things, many that are only tangentially related to personal finance. Perhaps your job enables you to do something like that.

Please suggest a “Simple Dollar” for the folks in their early/mid 60s who are learning what retirement really means, i.e. retirement does NOT equal permanent vacation, thank God I saved/prepared enough to enjoy it, and there are still a lot of questions needing answers, new questions, new answers. Thanks for letting me/us know if you can recommend anybody/thing.
- Michael Bash

I think there is a huge audience for a retirement-age personal finance blog. The only problem is finding someone to write it.

The truth is that most bloggers tend to be young – in their twenties or thirties – and are simply not facing these issues. That’s not to say there are not older bloggers, it’s just that the blogger demographic tends towards Generation Y.

Why is that? I think there is more of a willingness among the young to reveal their flaws openly to others, to tell the truth. I don’t know whether that’s a generational divide or a old versus young thing, but I know I’ve heard from many older readers who seemingly can’t believe I would admit to giant mistakes so freely.

I would love to see an older blogger in his/her fifties or sixties take on the issues of people facing retirement.

Thanks for the freezer recipes. My question is, how long do they last in the freezer? Not too long ago, I threw away some sausage that had in my freezer about a year and a half! (I felt really guilty about it.) I things tend to get lost in there.
- Sally Villarreal

I would not keep a prepared meal in the freezer for more than three months, no matter what the meal is. The texture of the meal would be extremely poor beyond that point.

Given that, it’s okay to freeze most uncooked meats for a year or more. Here are some useful guidelines as to how long to freeze various kinds of meats.

As a rule of thumb, I don’t keep frozen vegetables for longer than six months with the exception of juice or pureed vegetables.

I know that your children as still quite young, but do you have any plans to handle spending on “luxuries” for when they’re in their teenage years? For instance, will you purchase a cellphone for them, and allow them to choose their own clothing? The reason I ask is that my parents were very frugal with things they didn’t deem to be necessities, and this had an impact on my social life. I was constantly “out of the loop” due to not owning a cellphone, and I was frequently teased about my clothes.
- Amanda

My plan is to basically include such services as part of their allowance. If they want more pocket money, they go with the cheap cell phone and the cheaper clothes. If they want less pocket money, they get nicer clothes and the iPhone 7.0.

This allows the kids to make some choices – and to realize that those choices have consequences. You don’t just get the snazzy phone – it has a cost, and that cost will be reflected in limiting their other choices.

I am not in favor of letting kids run rampant with spending. My children will have pretty strong caps, but they’ll have opportunities to earn more – I intend to encourage both of them to be entrepreneurial in their spare time.

You list the books you read all the time, but you never tell us what you actually like. What books have you read in the last year that you’ve ENJOYED the most?
- Fran

The Brief Wondrous Life of Oscar Wao by Junot Diaz is the best book I’ve read this year, bar none. Run, don’t walk, to your local library or bookstore and pick it up. I thoroughly enjoyed it.

The Demon-Haunted World: Science as a Candle in the Dark by Carl Sagan is the best explanation for the necessity of scientific exploration in the modern world. We must ask hard questions – and we should never throw out answers that are backed with evidence simply because we don’t like them.

Watchmen by Alan Moore and Dave Gibbons is the best graphic novel I’ve ever read – and I’ve read a ton of them. If you think it’s a “superhero comic book,” you’re selling it – and yourself – short.

Those are my three picks from my most recent reading.

Why are CDs such a popular investment choice? They don’t return nearly as much as stocks do.
- Billy

CDs are popular because their return is stable. If you buy a long-term CD now, it will return that nice, steady 4% (or so) annually without losing a drop of the balance.

If you invest in stocks, on the other hand, you put your initial balance at risk. For example, if you had bought stocks a year ago, you would have likely lost 40% or so of your holdings, whereas with a CD you’d be up 4%.

The reason people invest in stocks is because over the long haul, the good years tend to outweigh the bad, resulting in a long-term annual growth rate that appears better than CDs. An individual year, though, might be a 2006 – with a 15% return – or a 2008 – with a 35% loss.

The people who buy only CDs are either in it for the short term – less than five years, say – or are highly risk-averse. Most people just use CDs as one element of a wider portfolio, treating them as the “safe” part of their investments.

I’ve tried to cut my own hair, but every time I do so, it looks disastrous. Do you feel that the $20 invested in a good men’s haircut is worthwhile if you’re single and can’t do it well yourself?
- Ed

It depends wholly on your career, actually. If you are in a situation where your appearance is an important part of your job and you can afford it, then a quality haircut is definitely worth the investment.

However, if your job is one with low responsibility and low wages, then $20 a month is an unnecessary expense. A pair of clippers can give you hundreds of haircuts for just that price.

In this case, let your situation guide you.

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

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  1. Lauren says:

    Concerning frugal kid issues: did you make your own baby food when you started introducing solids to your children? If so, can you describe what you did. I’ve read a lot about this and I was hoping to get your take on it.

  2. Tom says:

    Being a fellow Iowan I know you will have a tough time getting out to run this winter. I have had fun following this http://fitness-solution.blogspot.com/

    20 minutes a day. You can add in some extra cardio if you wish but frankly done at any sort of speed this is cardio and strength. The best thing from a finance point of view is no equipment, from an ADD point of view different every day!!

  3. Veronica says:

    @ Lauren, I made my own baby food for my kids and they have turned out to be great eaters. You can use a mini food processor or a mini baby food mill (great for travel). I used a book called “Mommy Made and Daddy too” that had great ideas and taught me about what foods to introduce in what order. At the time I was a full time college student, working part time and it wasn’t as time consuming as you would think. You can make large batches and freeze them in ice cube trays- it really saves time

  4. Sally says:

    As a former hair stylist – I will have to say that HAIR is IMPORTANT! Especially for men – a clean shaven face and a good haircut is all they can “change” or spruce up. If you are going for a buzz cut – you still need the stylist – you cannot properly shape the back of the hairstyle – around the neck, ears, etc. I think $20 is very reasonable for something that everone sees and makes a judgement on!

  5. For about 5 years now I’ve had my hair cut by either my fiance or a friend with clippers. I keep my hair short (and save hundreds every year).

    Spend money on your hair if you look better with some style. I look better with short hair and a nice outfit.

    Trent your expected policy on children and money is spot on. I have no kids and won’t for a few years, but I’m right there with you in spirit.

  6. Michael says:

    Who has to pay $20 for a good men’s haircut? I pay $9.75.

  7. Sally says:

    In the northeast – it’s around $15 + tip (and that’s at Supercuts) If you can find someone to do your hair (and do it well) for less than $20 – then more power to you.

  8. steve says:

    I keep my hair fairly short and do it using only a scissors and my bathroom mirror for visual checking. It has taken me a while to get good at it, but I think my hair looks as good now as when I used to get it done from an average hairdresser (not as good as a fantastic hairdresser, as good as an average hairdresser). People often compliment me on my haircuts and I just say “thank you!” and maybe “I wasn’t sure I liked it at first but I think it turned out well”.

    Of course they could be lying, but there’s no easy way to tell. My double check is I look in the mirror and my hair looks great. So the compliments are probably honest.

    I do not use clippers (mine broke), and in general prefer a “scissors” cut anyways, but just the scissors that came with my clipper kit and pinching the hair between first joint of my straightened middle and index fingers of my left hand and pulling up to gauge the length by feel, then cutting with scissors with my other hand. I do the back almost entirely by feel, cutting whenever a pinch of hair “feels” too long.
    It is also possiple to pinch the hair with the tips of your index, middle, and thumb, while using your third finger as a depth gauge against your head. I generally prefer the other method, though.
    This (pinching and cutting) is the same way your hairdresser handles your hair, but they have the advantage of always being able to see.

    For the back of my neck and hairline, I use one finger to form a border and a straightrazor to shave the hair off in a smooth line. Again, by feel.

    It can be learned and it works. $240 or so per year for hair is ridiculous to me given my income, it’s basically 3-4 days. work. So now I spend $0.

    Also, because I do it at home, I can keep on top of it and touch it up weekly if I wish. Which means it never gets out of control, and I never have to make an appointment–it’s very convenient.

  9. Battra92 says:

    I get my hair cut once every 6 weeks or so. That is, I actually now get it cut super short and almost shaved bald due to the fact that I am losing my hair. I pay around $8 a cut.

    So if you can’t cut it yourself or find a cheaper barber, just switch to every 6 weeks. $240 for once a month vs. $180 a year for every 6 weeks is a savings of $60 and you still get to hear the gossip.

  10. luvleftovers says:

    Freezer recipes? where are they?????

  11. Sally says:

    Ok guys I hear you about the haircuts – but just don’t start cleaning your teeth with the sharp instruments that the dentists use – or don’t purchase a stethoscope and listen to your heart. Some things are best left for the professionals (she said tongue in cheek.)

  12. K says:

    About the haircuts… A men’s haircut is not difficult, especially if you do it all one length. The only tricky part would be shaping/shaving around the neck. And most men’s haircuts look better with it longer at the top. I would start by finding a cheaper salon. I think $10-11 plus a $1-2 tip is average and that’s at a salon. Barbers I think would charge less. But the best option would be to find someone who would cut it for you. I do my husbands and I have no background in haircutting at all. I just use a 1″ clipper on top, a 3/8″ on the bottom, and then I use one in between to blend them. Then I shave the neck. The trickiest part is getting around the ears, but it’s not that hard. Get your wife, girlfriend, mom, or sister to help you out. You could even ask a guy friend to help out and do his in return.

  13. Mia says:

    Retirement blogs – plenty of them exist. One I read is http://www.myretirementblog.com/

  14. Jen says:

    I think that for most men and women, a haircut is something worth spending money on so that the hair looks good without too much fuss. Not every guy looks good in a buzz cut.

  15. Bernardo says:

    Trent,

    If you like comics, give Neil Gaiman’s Sandman a try. You will absolutely love it.

  16. Valerie says:

    About haircuts: one way I save money is by using a beauty school in my area. I’ve been able to get great cuts by students who are about to graduate. Last time I looked, it was $8 – $12.

  17. cv says:

    Chris’ question about finding time for reading and learning new things reminds me of people who write in and say “I make $x per year but I’m always short of cash. What should I do?” Everyone on the internet can pitch in with advice – cut out the lattes or don’t watch tv – but without knowing how you’re currently spending your time or money, it’s hard to be really helpful. I’d suggest doing what you can to track how you spend your time for a few typical days, and then taking a look at that record for ideas. Are you spending lots of time making dinner each night? That might suggest looking at some slow cooker recipes or cooking large batches of stuff on weekends. Do you find yourself stopping at the store every other day to pick up last-minute items? Think about ways you could plan ahead more. Etc.

    Just as the first step to finding extra money in your budget is to really look at your spending, I think the first step to freeing up time is to look at how you’re actually spending your time.

  18. IRG says:

    RE: The age of most bloggers
    Trent, I don’t know which type of bloggers you are referring to, or what you’re basing your information on, but there are plenty of bloggers of all ages, including way over 40, working online today.

    They may not always capture the media’s attention, regardless of the area of interest, but they are out there. With advice that is relevant to all ages. (Just as your blog is.)

    You perpetuate the myth (and it is a myth) that most bloggers are Gen Y and younger, whether in finance or other areas.

    A lot of bloggers simply don’t address their age because of age discrimination issues (nobody over 30 knows anything relevant to living today, for example) and other “stuff.” Too many people focus on age and other irrelevant characteristics when evaluating information online. Hence, the “cloaking” that sometimes goes on.

    You make it seem as if younger bloggers are the only ones who tell the truth and admit mistakes. Hardly the case. Again, given how many blogs there are, no individual, even those who prowl the web regularly, will come across them all. Yes, there is a tendency of some younger folks to “tell all.” Perhaps what you refer to is the fact that older folks, thankfully, do self-editing (which is not withholding). Frankly, there is often way too much information (irrelevant and unrelated) shared on some blogs.

    The age of the blogger, on either end, should not make a difference to a good blog’s content. In some people’s minds, you, for example, may be too young to give certain types of financial advice. I don’t think that is the case because you do such an excellent job of giving context to your advice and putting it in perspective, that it’s always relevant. That’s good blogging. And it has nothing to do with your age, but rather with your skills and experience. And your point of view and insights, which are unique and well thought out.

    So, just a small request to qualify your comments as being from your observation, and not necessarily the total universe of bloggers.

  19. Andy says:

    Running will destroy your knees! Road biking is the best!

  20. Mary says:

    Thanks for the links to the low-income articles. I made a choice to work at a low income job in order to be more available to my children after my divorce. As it turned out being frugal to the max was the only available strategy; sorting wants from needs and paying absolute necessities first. (We would have been better had my ex paid his child support.) I was a stay at home mom before the divorce and I wanted by be as available as I could for them. Faith in God to provide was very helpful in quelling the worry.

  21. Michael says:

    @IRG:
    You’re reading a lot into Trent’s answer that wasn’t there. Re-read the Q&A.

  22. WhirlMind says:

    Here is my question for one of the future mailbags.

    There is something basic I don’t understand about economics. Why are people always encouraged to spend ? And given loans to do so ? At the industry level too, many economics primers say that credit boosts consumption, therefore production, therefore growth and so on. Why can’t we have a world that’s probaby zero debt and within our means, both at the individual level and at the societal level ? Why should I aspire to grow using credit, to grow beyond what one’s capable of using one’s own funds and not using external money ? Whats not okay if I don’t build the house if I don’t have cash for all of it ? And whats not okay if a company decides to grow at the pace it can afford on its own funds? What are the flaws that arise when we try to extend the old values of frugality, zero debt and growing slowly within our means to macroeconomic scenario ? I know something is amiss here, what gives ?

    May be I have bundled up too many issues and over-simplifying here, but I hope you get the general picture. Please edit the question as you deem fit if its too unclear.

  23. Battra92 says:

    @Whirlmind: In many ways borrowing or debt in business is to take advantage of today’s opportunity with tomorrow’s money.That in itself is simplifying it as well but take the example of the farmer.

    It is late winter and his neighbor is selling off a good plot of land for $5,000 (using small numbers to make it clearer) The farmer only has $1,000 in the bank yet he believes that if he buys that land adjacent to his he can increase his income by growing twice as many crops. So let’s say he goes to the bank and gets a loan for $6,000 at 5% interest. ($5,000 for the property and $1,000 for the extra seed, work etc. he will need on the land.)

    Now a year passes and that land is good and he is seeing a 30% increase in his yearly profits from the sale of grain though this is not enough to pay off the $6K loan in full plus the added taxes and such. So he shouldn’t have bought the land, right? Not necessarily.

    See, he now owns the land (at least in theory) and can continue farming it (or sell it if he decides to) and if he works it right he made a profit (either off of the increase in income or the resale of that property) and the bank made a profit so everyone’s happy.

    And honestly, find me a period in history where no one had debt. It’s been around since caveman days.

  24. WhirlMind says:

    @Battra92: You are right about debt having been around since a very long time. Just trying to understand why it’s been so.

    I think, philosophically speaking, at the root of it lies the desire for man to look for growth and, to some extent, his search for security. However, I still fail to understand, why governments scream on rooftops to people to spend more and easing this and that rates to get them to spend, when people may not have such an inclination, for ex., during recession-like times. Why can’t they leave it off, like, okay, people don’t want to spend, fine, when they feel like it and can afford it and are driven by a desire, they would spend again, right ? Why should we have an especially enabling environment to promote spending ?

  25. Battra92 says:

    Well, that’s government. They don’t always do what’s right, they do/say what gets them (re)elected.

    Besides, the more that people spend the more money brought in by companies and thus the more taxes the government gets. Government is always out to maximize their income, of course.

    Thrift isn’t the virtue it once was. While Calvin Coolidge, for example, preached thrift it was largely ignored by the Roaring 20s.

    I guess it goes back to Trent’s post on good debt vs bad debt. If we could stop financing bad debt (plasma TVs, flashy cars etc.) and instead focus on maintaining good credit and only borrowing for “good” or “productive” debt, we’d be better off. Sure there would be less sales of Plasma TVs but I think we can live.

  26. Kevin says:

    WhirlMind – the government encourages us to spend more than we make so they don’t feel so bad about doing it themselves with our tax dollars.

    I think the problem is the world has shifted too far to the consumer side of the pendulum, at the expense of the “saver/investor” side. Part of this was fueled by ultra-low interest rates of recent history, and of course greed and a feeling of entitlement. I believe/hope some people have come to the realization that money and “stuff” isn’t everything and choose to be more careful what their money is used for. Maybe I’m just being naive.

  27. Jon D says:

    RAGBRAI, the ultimate cheap vacation for the whole family!!!

  28. Anne says:

    @ Michael Bash:

    funny-about-money.com/ writes pretty extensively about retirement and finances. I like her writing style quite a bit, she’s quite frank.

  29. “I would love to see an older blogger in his/her fifties or sixties take on the issues of people facing retirement.”

    Trent – Your wish is my command.

  30. WhirlMind says:

    @Battra92 & Kevin: Okay, let’s say the govt is at fault. But decades of economic analysis seem to endorse these pro-spending views. Does anyone know of any macroeconomic theory, that flips the coin around and discusses the macro benefits of “national-level” frugality and living within the means as a society ? Any links will be helpful too.

  31. Claire says:

    I recently visited a Paul Mitchell cosmetology school in my area, had my hair cut and triple-highlighted for only $47, and was very pleased with the results, as opposed to paying $125 in a salon (and that is a low salon price).
    Claire

  32. Jane says:

    A friend of mine referred me to your website. I wish I knew about it a year ago. Here’s my problem. I am 33 yrs old and I bought my first home a little over a year ago. I lived with my parents for several years to save money before I bought my first home, and I paid off all my debt, car, etc., because well, frankly, the thought of having to pay bills other than my mortgage and utilities stressed me out. I knew this might not be realistic long term, but I wanted to start off this way. And, it worked for a while. Well, a year later, because of personal crises and miscalucations, I have depleted my savings and accumulated credit card debt in about 15k that feels overwhelming. I am the point to where I can only afford to pay the minimum and I’m not prepared should any emergency occur. For the first time in my life, I understand the phrase living “pay check to pay check.” After several weeks of reviewing my finances and soul searching about where I went wrong, I feel like I need to do something drastic to pay off the debt. I am thinking of doing one of two doing things: (1) Withdrawing 10k – 15k from my 401K from a previous employer; or, (2) Applying for a personal loan in the same amount. From there, I plan to pay off the credit card debt, (one card at a time), while keeping some of the money in my account to have some cash on hand. I estimate that I can pay off the debt and the majority of the loan in a little over a year. As an aside, I am painfully and acutely aware of where I went wrong and how not to make the same mistakes again. I’m so angry at myself for getting myself in this situation, when I had been so careful about money before I puchased my first home. I just don’t know which of the two options is better, or if they are other options I’ve not thought of, e.g.: The credit cards are maxed out, so i don’t think a balance transfer would apply, but I’m not sure. I’ve read that debt consolidations negatively affect your credit, so that’s why I was leaning towards a personal bank loan. I am also conctacing my credit card companies to reques lower interest rates, selling unnecessary posssesions, and I’ve set a budget for living on half my income. But without doing someting more drastic, I feel like I’m spinning my wheels. The stress and anxiety is becoming unbearable. Please help. JaneOxford, Mississippi

  33. S says:

    “Running will destroy your knees! Road biking is the best!”
    This is a myth, though most often spoken not by active road bikers, but by couch potatoes who want a good excuse not to run.
    http://www.coolrunning.com/engine/2/2_5/194.shtml

  34. Debbie says:

    QUESTION:
    My daughter graduated college in May and has a pretty good job working for salary plus commission. She is still living at the college level–sharing a house, living low on the status chain, etc. She has no debts. She is also saving 10% of every paycheck (it’s in CDs and ING at the moment). Where would you suggest she invest her savings? I figure she is in a great “no lose” situation with regards to the current stock market and should be buying in, since it’s so low. Is this a good idea? Where would she go to accomplish this?

  35. Jeff says:

    That’s funny, I was just having the haircut discussion with my wife last week. She wants to cut my hair herself. To be honest, I don’t trust her. I’ve seen too many bad haircuts by wives/girlfriends over the years. They get better with practice, but those early cuts are sometimes pretty rough.

    I found a place that cuts hair for $12+tip and does a great job. I also get it cuts short and let it grow longer than I probably should before the next cut, so I think I’m doing okay there.

  36. Kevin says:

    @WhirlMind – I was mainly being sarcastic (although true), but I agree with you. From what I remember of my econ courses in college, they mainly assumed rising prices and such. I guess that is the historical trend though, so it makes sense to have the course follow. I don’t remember much about frugality theories, unfortunately.

    @Debbie – first off, tell your daughter congrats. Sounds like she’s starting off living in the “real world” in a sensible manner. Where should she invest you ask? Does her job have a 401(k)? If so, I would go there first and contribute the top amount needed to get the full company match (Roth 401(k) if possible). If the fund choices in her 401(k) are as limited as most, I would then opt for a Roth IRA and fund that fully using either low cost index funds or target date funds(Vanguard, T. Rowe Price) or good, dividend paying stocks if she is willing to do a little research. She can do most of the stuff online herself rather than going through a broker, and save some money doing so.

  37. bethh says:

    To the person with old food in the freezer: I’ve started attaching a list to the freezer door, and I update it every time I add or remove leftovers, including the serving size & the date. It’s the only way for me to know what’s in there and not waste the food!

  38. Kevin says:

    For the haircut thing – try bartering. I get mine cut for free in exchange for doing her taxes. Of course, she’s also my sister-in-law, so that helps.

  39. guinness416 says:

    Also try ethnic barbers. My husband gets his haircut at either a Chinese or an Indian place, depending on the queues. Five bucks before tip (and this is in a downtown location). The conversation can be a bit tortured, but they do a nice job on his hair.

  40. steve says:

    @Sally:

    Actually, it’s too late for your warning: I HAVE been known to clean my own teeth with the “sharp instruments dentists use”!

  41. Cambo says:

    I think cutting your own hair is taking it a bit far, but I guess it depends what’s important for you.

    My theory is:

    Be sensible but not boring, spend but don’t overdo it, spoil yourself and your friends but leave a bit for later.

  42. steve says:

    @Jeff:
    Yes, it is almost certain that the first four or 5 haircuts will not be up to spec. So, since you have a need to look a particular way, you might
    consider having an agreement with your wife that for the first five or so haircuts, you will then plan to go to a pro to touch up any “blips”. That way, over time you will both save money and she gets the chance to have fun learning to cutyour hair. (I am assuming she is looking at this as a fun challenge). Then, after she has learned her chops, you will be able to cut out the barber trips altogether.

    Haircutting is a craft and there are books you could get from the library that would explain the essentials. I’m sure it’s within her ability. The key would be getting some pro tips, and watching professionals carefully.

    Of course, she would have to have the personality that could accept it if you don’t like some aspect of the haircut.

    Complimenting her on the haircut first, then putting in a gentle suggestion, then complimenting again (the sandwich technique) could work well here.

  43. steve says:

    “And whats not okay if a company decides to grow at the pace it can afford on its own funds?”

    Nothing wrong with that, I know businesses that do it–but usually they either are family businesses that are content with the status quo (until a generation later it catches up with them, hard) or they are cash cows (like Apple–no debt, all cash).
    Unfortunately, if you completely refrain from borowing and investing and other firms don’t refrain, the firm that makes optimum use for debt will become more efficient than you, gain market share, and put you out of business. The trick, as always, is to guess right and not to overdo it. That’s why there are traditional guidelines to the optimal ratios of debt to capital. And, in most cases and industries, it isn’t zero debt, it’s around 20% debt to capital.

    To some extent, when credit is available, it behooves you to make use of it–(productive use, not buying consumption stuff)–because everybody around you will be doing so, and can gain an advantage over you if you refrain.

    Of course, the guy standing with a pile of cash right now (after the bubble has popped) is in a great position to invest.

    It’s not like debt is bad–it’s like a knife. We wouldn’t choose to throw away all the knives because they are dangerous, because we have decided their overall usefulness to us is greater than their occasional danger. Debt, too, is both useful and dangerous. Useful when we use it to acquire things we want that we wouldn’t otherwise be able to acquire (a house is a good example), dangerous when we overestimate the value and benefit of the “goodies” we buy with it, go overboard, and forget fundamental life values.

  44. Katy McKenna says:

    I’m a 55-year-old blogger, who’s been posting for 8 years over at http://www.fallible.com. Now I’ve started http://www.lateboomer.net, a PF blog for those in and nearing retirement years. Hope those interested will pay a visit!

  45. Sharon says:

    The financial challenges of disability are NOT ethically, morally or even reasonably addressed by commiting insurance fraud. If you become disabled, OF COURSE you cannot buy disability insurance. The purpose of insurance is to spread the risk. If you want to have insurance income should you become disabled, BUY DISABILITY INSURANCE NOW. There is a reason they won’t sell life insurance policies to people with a terminal diagnosis, either. The whole system would collapse, and that is why it is called FRAUD.

  46. Battra92 says:

    @WhirlMind: If Kensyean Economics are to be believed the government can and will influence the economy by means like interest rates, taxes, the supply of money, government saving etc.

    To quote Wikipedia (I know, not the best source but I sold all my Econ textbooks)
    “To Keynes, excessive saving, i.e. saving beyond planned investment, was a serious problem, encouraging recession or even depression. Excessive saving results if investment falls, perhaps due to falling consumer demand, over-investment in earlier years, or pessimistic business expectations, and if saving does not immediately fall in step, the economy would decline.”

    It holds some water but I’m not a blind follower of Keynes so take it as you will.

  47. Griffin says:

    QUESTION:

    I have a strong reason to believe that my young sister (elementary age) will soon be coming to live with me. Because of that I am looking into getting a better job and changing apartments ASAP.

    I am a college student and currently work few hours at a great company. I live with my girlfriend and her parents in a two-bedroom apartment (so us +1 would be a big strain on our living quarters).

    Aside from making more money, do you have any advice for someone who might suddenly have a school-age child to take care of?

  48. Sharon says:

    Griffin, look into situations where a senior citizen has space and needs some housework and companionship in exchange for a place to live. That might solve the needing a better job issue. Also, if you become her legal foster parent there may be funds available. Check with your local social services agencies for help. Good luck! Your little sister is lucky to have such a great big sister.

  49. Saver Queen says:

    Chris, do you get a lunch break? Find a place to escape the office and read during your lunch hour. You will save money taking your lunch, enjoy a quiet break, and still get to learn. I do this frequently myself and find it really refreshing as I get completely engaged on a different subject. I’m not sure where you live – if you live in a cold climate it will be more difficult now that park benches are out of the question – but even a nearby cafe, bookstore, cafeteria, library or mall will do the job.

  50. Shevy says:

    @Sharon

    I don’t think Nicole’s intent was to commit any kind of insurance fraud. I think you read that into what she said. You’ve made a couple of recent comments (for instance, that parents should not ever consider having one parent stay home if it would mean not having health, disability, etc. insurance unless they’re prepared to deal with a ventilator dependent quad from their own resources) that make me think you may have had to deal with some difficult health issues within your own family or friends.

    While I sympathize if that’s the case, I have to disagree with the notion that a person with the infamous “pre-existing conditions” can’t or shouldn’t be fully covered by health care (and without committing a crime).

    Fortunately I live in British Columbia (Canada) where a family of 3 or more pays $108/month for health coverage with *none* of this nonsense that you have in the US about excluded conditions, copays, paying for being in the hospital, etc.

    If I’m sick I can go to a doctor, clinic or ER with no charge. I can go to a specialist, get a 2nd opinion, have an ultrasound, CT scan or MRI and nobody tells me I have to see this specific doctor or pay for necessary tests.

    The idea that, for instance, an American who had once had gestational diabetes for a few weeks during pregnancy could be denied coverage for full blown diabetes that developed later in life is repugnant to me.

    For a person without major financial resources, something like that could easily be a death sentence (albeit one that might play out over a number of years).

    So, what do people who have something like this happen, or have a catastrophic car accident *do* if they don’t have health coverage or very deep pockets?

  51. WhirlMind says:

    @Steve, Comment No. 37 on Economics :

    Thanks. That reasonably explains a firm’s approach to debt for the most part. That something that was amiss in my question was : competition and market dynamics.

    However, I am not sure whether the following applies as much to individuals :

    “To some extent, when credit is available, it behooves you to make use of it–(productive use, not buying consumption stuff)–because everybody around you will be doing so, and can gain an advantage over you if you refrain.”

    Did you mean it to be applicable to individuals as well ?

  52. JT in the Army says:

    Trent-
    I have a 401K from when I left my job in Iowa to relocate sans-job to Oregon earlier this year. Since I settled in Portland, OR, I’ve been in part-time jobs without a 401K option and have been funding my Roth IRA. Now, in the lead up to deployment to Iraq, I am on orders with the National Guard and have left civilian employment. With the goal of education after I return in 2010, I’m not anticipating having an employer with a 401K until 2012 or later. Currently I cannot find a way to merge a 401K with my military Thrift Savings Plan.
    What is the best way to merge my 401K with my Roth IRA?

  53. Joan says:

    Trent: I have a question about 401K’s. My daughter has been putting money into her 401K all year, when she checked on it this past week, ALL of the money she had put into it was gone except for $56. The stocks had gone down from 29% to 51%. WHO DID THE MONEY ACTUALLY GO TO? This included the matching funds from her company. By the way, she had changed jobs two years ago, and she rolled the 401K from her past job into a CD which brought in interest instead of just vanishing.

  54. reulte says:

    JT in the Army (#46)
    You should be able to merge your 401k into the TSP. Go to the bottom of the page …
    http://www.tsp.gov/features/def_ch1-TSP-service-office.html … and it gives you where to mail the rollover form. Call them first (same URL page) to get the forms.

  55. Kevin says:

    JT in the Army – you cannot merge your 401(k) with a Roth IRA unless you first move the 401(k) to a regular IRA and then roll the regular IRA into a Roth.

    However, you’ll pay tax on the rollover from regular to Roth, so beware of that and make sure you have the cash to pay for it.

  56. Andrea says:

    Last week you mentioned specifically that you make money by being a blogger. I dont mean to sound completely out of touch, but who pays you to write? How does it work? Thanks.

  57. Gretchen says:

    First of all, to the guy who puts his youngest to bed at 9:00 – I say, why the heck is your child’s bedtime that late? My kids go to bed at 7:30 at the latest, sometimes 7:00. A grownup needs adult time. Period. If they aren’t sleepy (usually they are though) I let them have lights on quiet time for 10 or 20 minutes until lights-out. I know almost everyone in the U.S. puts their kids to bed later but seriously I think I am right on this!

    Also, to the person asking about kids and material goods: A very simple and effective way to make sure your teen does not become spoiled if you yourself have plenty of money is to simply not get your child everything they want. This doesn’t mean that you can’t get them anything. Just not everything. It is seriously as easy as that!

  58. Gretchen says:

    @Shevy: I believe the way it works is this: someone who doesn’t have insurance or deep pockets and has a big medical problem gets the medical treatment anyway and then gets on a payment plan with the hospital/doctor’s clinic. Then they pay it off as best they can over the years, most likely going bankrupt, etc. along the way. The other route that people like this sometimes take is to not seek treatment at all as they feel it will be denied to them.

  59. Ed says:

    Trent, Here’s my question:

    Is it ever a good idea to scale back on my 401K contributions in order to pay off my credit cards faster? I’ve been contributing 5% of my salary and my company matches that. So with their match I’m contributing 10% of my salary. I’ve been doing this for close to 7 years now. With the market the way it is, I’ve been thinking about contributing less and using that money to dig out of my hole faster.

    Thanks,

    Ed

  60. Kelly says:

    Trent’s suggestion of disabilityinfo.gov is right on, especially for federal information related to disability. Also, check your state’s website and with your municipality for more local information–Vocational Rehab in particular provides a wealth of services, from job placement/training to vehicle adaptation to adaptive technologies. Search online for your local Center for Independent Living–it will be full of local folks with real life experience. And look into disability-specific organizations and webgroups. Really, the google is an invaluable resource.

    Also, apply for any assistance you even have a shot in hell of qualifying for. If you find yourself in the position I was in when I woke up quadriplegic, you can’t afford pride. Social Security Disability and Medicaid may be what you need to keep you off the streets, especially if you are left unable to work in the near future or for the duration.

    In ten years I’ve never found a long term care or life insurance policy that would cover me–obviously I’m the very picture of “high risk.” It’s protection we have to learn to live without. I’ve learned to save everything I can and plan, plan, plan instead

  61. Toni says:

    Since you mentioned that you liked the Watchmen novel, are you looking forward to the movie? I didn’t know anything about Watchmen. I saw the trailer and became intrigued and I’m looking froward to the book and the movie.

    Thanks for a great blog, btw.

    Toni in Chicago

  62. Teresa says:

    For haircuts, beauty schools are cheap!

  63. Robyn says:

    you mentioned Audible.com as an option for downloading books…did you also know that many libraries offer this same service for free (with the use of your library card)? Overdrive and Recorded Books are companies that many libraries partner with to offer downloadable audiobooks. Granted, the selection may not be the same, but I’ve always been able to find great things to listen to – fiction, non-fiction, music, language instruction.

  64. Jon says:

    Do you have any suggestions on how to save money when renting cars?

  65. Erika says:

    I’m trying to figure out if there is anyway to get involved with parents’ finances BEFORE they totally blow it. I am 40, married with 2 young children and am in reasonably good financial condition. I have 2 brothers. My dad left my mom and divorced about 10 years ago. My mom, 62, never really worked nor had/has any desire to work. She is working a $10/hr job which provides her benefits but she’s looking to quit ASAP, like 66. She is getting alimony from dad. Dad, 62, is a highly educated but perhaps overly optimistic guy. He’s remarried and he and his wife bought a B&B/wedding venue Jan 08. His dad passed and left him alot of money which he as blown on the business (“You have to spend money to make money”) as well as medical bills because his new wife’s breast cancer came back with a vengence this same year at a time his COBRA ended so they had no insurance. Dad is saying he’s going to file bankruptcy for the B&B which is an LLC. He hasn’t been paying mom and there is still resentment that she’s not supporting herself. So while I suscribe to letting these 2 adults run their life how they want, I want them to take care of themselves exhausting every option while they are young. Both my parents could easily live to 90 if earlier generations are an indicator. Dad has an MIT EE degree and an MBA and is planning to return to the workforce in the spring. Mom feels she’s entitled to dad’s money and any time we bring up getting a better job or something else to help her out, she digs her heals in and doesn’t want to be told what to do. I don’t understand and will resent my mom if she doesn’t help herself and then turn around and start asking me for money. This situation will certainly cause a lot of stress for my husband and I. How do I balance giving them their free will but not resenting when they don’t do everything they can to help themselves before coming to me? I work and have always prided myself on being able to support myself and my children if need be.

  66. Sharon says:

    Shevy, I was talking about DISABILITY insurance. I know a rather large number of people who don’t get it until they have symptoms, and that is indeed insurance fraud. And that is quite specifically what I talked about in my post.

    I also have a serious problem with the cherry-picking by health insurance companies because they in turn destroy the insurance system by denying people who get or who MIGHT get sick any coverage.

    However, if you don’t have health, life and disability insurance and you choose to expose yourself and your children to the financial risk, it is quite simply irresponsible.

    I am seriously against people acting irresponsibly in any way. Having children you can’t afford, quitting jobs without making sure you have insurance coverage, riding bikes without insurance or helmets, etc. are NOT simply consequences that the individual bears. EVERYONE ends up paying through the nose for these individual, reckless decisions. And the ones who pay the biggest price are the family members who are victims to the decision.

  67. Sharon says:

    Kelly, I am sorry to learn of your situation. And you are an object lesson for why young people should immediately get disability and life insurance policies when they get their first job. These policies should be policies you own, independent of your job, and keep those premiums paid even if you are eating nothing but beans and rice the last week of the month. Do some serious research about what constitutes a good policy, and make sure it is a policy that you can raise the coverage on it as you need more coverage, like when your family grows in number and age.

    Long term care insurance is another issue, and requires very careful research and isn’t necessarily a good idea for everyone.

    I hope you are working with vocational rehabilitation to try to get your life back, Kelly. Quadriplegia isn’t the end of your life.

  68. I love that Carl Sagan book! I read it several years ago and immediately wanted everyone I knew to read it too. No one would, of course, but he became my true hero! Thanks for reminding me. Now I’m going to re-read it!

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