What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Why not get an ARM?
2. Value of old information
3. Paperless statements
4. Used camping equipment
5. Sarah’s contributions
7. Tankless water heaters
8. Political arguments
9. Laundry soap for front-loaders
10. Feeling worn down
Over the last week, we’ve been collecting caterpillars. Unfortunately, we’ve only found one type, but we’ve found several of them.
The one we’ve found is the tomato hornworm, which is enormous, green, and with white stripes. Eventually, they burrow into the ground and emerge as a moth in the spring.
Our “luck” in finding several of these has encouraged our kids to wander around in the weeds searching for more caterpillars, but no luck.
My wife and I just built a house and feel like it will be our home for the next 10 years or so. We have a 30 year fixed at 4.65% that originated in June 2011.
Obviously our thought is that our situation will either remain unchanged or better yet, we will both be doing better financially in 10 years. We also would have no real issue with staying in the house for 30 or more years as it is big enough for us and our 10-month old. We also plan to have at least one more child soon.
My question is, how would you handle a mortgage if you did not plan on being in the home for the life of the term? Would you get the longest term possible? Would you go for a short ARM (7/1, 10/1) to keep monthly payments low?
I would never, ever get an adjustable rate mortgage. Those things only work if your life goes almost exactly as planned. If you lose a job, face a dehabilitating injury, don’t get raises or promotions, don’t move when you expect to, or experience a bad housing market, those things easily wind up being ropes around your neck. If the housing bubble collapse has taught people anything, it’s that ARMs often end in disaster.
If you’re mostly concerned about monthly payments, get the term loan with the lowest monthly payments. The entire reason to get a term loan is that it locks you in with very clear payments and no adjustments no matter what. If you live there five years or you live there twenty-five years, your payments will remain the same, regardless of your credit or situation or finances. A thirty-year term loan doesn’t mean you’re going to live there for thirty years.
Of course, if you’re going to live in an area for five years or less, your best move is to rent, then build up your savings thanks to the much lower costs. Buy when you move, because the longer you’re going to be in a home, the better the value proposition becomes for buying a home.
The general principles are usually good, and the specific lifestyle tips for spending less money are mostly good.
Older financial books tend to run into trouble when they start talking about investments and such. That information changes all the time with the advent of 401(k)s and Roth IRAs and index funds and so on.
They’re worth reading, but do further research with newer material before you take any action.
Q3: Paperless statements
How do you feel about paperless statements? Every account (bank, cc, utilities) asks me to sign up for paperless statements. So far I have resisted and get a paper copy. But I use Quicken to track (religiously) all my finances and expenses. So essentially I just read and shred the statements. It does seem like a waste of a lot of paper when I can just as easily read it all online. I’m just hesitant to stop receiving paper copies ‘just in case’. Am I just being paranoid? I haven’t missed a bill in about 2 years now (slowly working on fixing a number of financial missteps)
There’s nothing wrong with paperless statements. In fact, I prefer them. I save them all on my computer so I can look back at them for future reference. (I even scan in my paper statements, though I’m a bit behind on that at the moment).
The trick with paperless statements is the same as it is with paper statements: you have to have a bill-paying routine and you have to stay on top of everything.
It sounds like you’re doing that, so there’s no problem with going paperless.
Unless you want to go to their house, set the tent up in the yard, and run a hose on the top of it to check for leaks, you don’t know. The original owner would probably not want you to do this, because if you don’t buy, they have to deal with drying out and folding up a wet tent.
In other words, on this kind of purchase, it’s caveat emptor. I wouldn’t pay a whole lot for a used tent unless I had some other way to verify that it worked.
For other items, like a Coleman grill or a firestarter or a sleeping bag, I’d be much more flexible.
Q5: Sarah’s contributions
I am wondering what some of your wife’s thoughts/tips/tricks are? I’m sure many of your ideas are the similar (you are married, after all!) but I’d be interested in learning about some of her contributions to the frugal household.
Sarah is the master at preparing a meal out of seemingly nothing. She’s far better at it than I am. She says that her trick is to just have several meal frameworks in her head – one grain, one vegetable, one protein is one common recipe she uses.
She’s also a big fan of making homemade things, like homemade soap and homemade gifts. Again, I’ll often help with this, but she tends to be the driving force.
She says the number one thing that people need to remember when trying to save money at home is to focus on the things you spend money on without getting enjoyment. Do you feel happy and excited after dropping money on laundry soap or dishwashing detergent or plain tomato sauce? Probably not. Those are things to target – make them as inexpensive as you possibly can so you can feel okay about spending more on the things you actually care about.
When I cook something with a strong odor in the kitchen (like fish), the smell can linger for days. I know there are sprays that will take care of it, but they also add scents to the air that I don’t like. There’s surely a cheap way to remove the odor without getting that artificial “lavender” scent.
Since Sarah’s offering up tips above, I asked her for a suggestion here.
She suggested taking a spray bottle, like the ones that are used to spray windows, and fill it with two tablespoons of baking soda and water until it’s full. Then shake it gently until the baking soda is dissolved, then mist the room with it. Just give a spray up in the air.
Another trick that I’ve used is to just put a plate with some baking soda on it in the place where I’ve been cooking. It just eats up the odors.
Q7: Tankless water heaters
Don’t get one!!! It was wonderful at first; never running out of hot water and freeing up floor space in the utility room. With the mid size tank in NC we could even run the dishwasher at the same time. Yes, you have to have special wiring. It costs more to run, but it doesn’t run much, so our electricity bill actually went down. Now for the bad stuff …………… After 2 years it quit working. Nobody around here knows how to work on them. I finally found someone and found out the circuit board was bad. A new circuit board was almost as much as a whole new heater, so we ordered a refurbished one online. Same thing – got about a year and a half out of it. The first time we were without hot water for a week. I thought I’d send in the broken one, have it fixed, and keep it as a spare (my husband can install). Big surprise: you can’t send it in, they don’t do repairs. So where did my “refurbished” one come from? We tried a Bosch and a Powerstar. Definitely stay away from these because the electrician said the circuit boards were very cheaply made, probably in China. We immediately went back to a traditional tank. The only thing that goes bad is the heating element, which is less than $5 and my husband can install immediately.
If you don’t have a repairperson in the area that’s willing to work on tankless heaters and you’re not able to do the repairs yourself, then I wouldn’t get a tankless heater.
The simple fact is that many heater repairpeople are trained on how to repair tank-based heaters, not tankless heaters. If they don’t know how to repair a tankless heater, they’re not going to be of much use.
Before getting one, make sure there’s at least one repairperson in the neighborhood who knows how to handle one. Preferably, there’s more than one (in case someone goes out of business).
I usually don’t say anything on the points I disagree with. You’re rarely going to change anyone’s mind in a situation like that.
If you’re really bothered by the issue, go home, research it yourself, find evidence to back up your perspective, and write it all out. Don’t bash their perspective. Focus instead on evidence that aids your perspective.
If you feel good about it, send the information to that person. I’ve had many good discussions open up that way.
Q9: Laundry soap for front-loaders
Do you have, or could you create, a recipe for laundry soap suitable for front-loading washers? We recently found a used pair of front-loading machines and as our water bills are high in Southern California and these machines wash clothes cleaner with less water and impact on the environment, we decided to buy them, only to discover that the special detergents they use are costly. With my husband’s income reduced 90% over the last 3 years, our savings depleted, our investments all upside down, frugality has morphed from personal preference to absolutely mandatory.
The laundry soap I’ve made before has been reported to work fine in high efficiency washers as long as you use a smaller amount. The soap recipe I’ve shared doesn’t produce an incredible amount of suds.
If you use the recipe above, I’d use about a quarter of a cup of the soap for most loads, or half a cup for a particularly dirty load.
You can also use the powdered ingredients alone, in which case I’d use just a teaspoon of the ingredients per load.
Q10: Feeling worn down
I’m a single mother with three kids (10, 7, 5). My husband died in an accident two years ago and since then everything has been up to me. I work, I manage the house, I try to be the best parent I can to my kids, I keep track of our bills and money.
The problem is I’m feeling worn out. I feel like I am always “on,” from five-thirty until ten or eleven when I collapse in bed. I feel like I’m pushing the envelope and I’m going to get a major illness soon or simply have a mental lapse at a bad time.
What can I do?
You need to ask family and friends for help in this situation, no doubt about it.
I know a single mom who is doing a great job of raising two children on her own. She’s able to make it work because her parents come to visit very regularly.
She also has a “babysitting sharing” arrangement with a few people near her, in which they watch her kids for an afternoon once in a while and she watches their kids on another afternoon. Often, she’ll have two or three batches of the kids at once so that she has one afternoon that’s full of lots of children, but three free afternoons to either relax or get caught up on things.
Rely on the other people on your life right now. You don’t have to shoulder everything alone.
Got any questions? Email them to me or leave them in the comments and 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 hundreds of questions per week, so I may not necessarily be able to answer yours.