Reader Mailbag: Goals for 2014 Edition

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 retire early?
2. “Dumb” at money
3. “Food for a year” kits
4. Legal advice for consumer disputes
5. Men’s hair tip
6. Christmas gift card question
7. Children and long road trips
8. Extremely outdated house
9. Cell phone contracts
10. British health care for American

In past years, I’ve shared my 2014 goals in a separate post. This year, I’m simply going to include them here, at the start of the mailbag.

In 2014, my goal is to lose another 30 pounds, matching my progress in 2012. I plan to read 100 books. I also plan to relaunch TrentHamm.com with some new writings.

Also, I plan on self-publishing a novel. This last one might be the hardest one.

Q1: Why retire early?
i’m not sure why people are so determined to ‘retire early’. what does that mean? my husband is 68 and has just transitioned his primary care (solo) medical practice to a lower overhead location but will continue to work for the foreseeable future. when he transitioned the practice, i ‘retired’ on august 16 and began my ‘new life’ as a volunteer and other projects on august 19, in addition to the hours that i will put in handling the books for my husband’s practice. we have always saved, but we are not rich. we could retire – but then what?? it takes a LOT of money to travel. it takes a lot of money to do all those hobbies and activities one always tells oneself will be part of retirement. the reality is that when you’ve loved doing something for 40 years, there is no rush to stop doing it – nor is there a rush to stop working just because my job(s) were not dream jobs. the idea of all that unstructured time each day is not a dream situation for many of us. we appreciate the structure that having jobs to go to offers us. we will also take the opportunity over the next few months and years to take small trips and do a few more fun things. but, the reality is that the house needs repairs (which we cannot do ourselves), our kids are still in need of occasional financial support (3 attorneys, 2 of whom are in private practice together and one still seeking her dream job), our 91 year old mothers still require assistance with many things even tho’ they are healthy, and we have no compelling needs or desires that supersede our ‘right to work’. just some thoughts. early retirement is not necessarily a worthy goal. having money in one’s ‘golden years’ is a far better reason to save and live frugally.

- Karen

I think the idea of “retiring early” means a lot of things to different people. For some, it means the ability to take on a completely different second career without financial worry. For others, it means being able to do something like work for a nonprofit during those later years. The more people focus on “retiring early,” the earlier they’re able to make those choices.

In short, I don’t necessarily think “retiring early” means that people are moving to lives of full leisure. It does for some, but far from everyone.

However, people who dream of that life of leisure should plan in much the same way as people who want to “retire early” for a second act in life. That “second act” isn’t necessarily an income producer, so having all of your ducks in a row before you make that leap is a really good idea.

Q2: “Dumb” at money
I am a forty year old man with a Ph. D. in history. Why can’t I manage to figure out how to actually get out of debt? I’m sinking in student loans, credit cards, car loans, and a giant mortgage and even though I have a university teaching position our situation is actually getting worse. I look at our finances and I have no clue how we ever get out of this. Why am I dumb at money and smart at everything else?

- Archie

You’ve shown yourself to have extensive skill at acquisition and processing of knowledge. Unfortunately, those skills are secondary when it comes to personal finance.

Personal finance is about self-control. It’s about making personal choices that value the long term over the short term. It’s about the ability to separate the idea that you could afford something from the idea that you should afford something.

That type of self-analysis is rather distinct from academic learning. That’s why there are a lot of people who are highly educated who have financial problems, while there are many people without much formal education who do quite well financially.

Q3: “Food for a year” kits
A store near here sells a kit that supposed to provide food for a year for an adult. The price for the full kit is pretty reasonable when you do the calculations. The kit is $2,000 so it’s about $5.50 per day. Would this be a reasonable purchase for personal use?

- Adam

My experience with these kinds of kits is that they’re generally full of canned foods and some additional foods that don’t go stale for a long time, like dried meats and crackers. They usually account for some sort of calorie amount per day – 1,600 or 2,000 or something like that – and the kit adds up to 365 times whatever that calorie limit is. The food is reasonably balanced but not strongly healthy. Some kits are made up of mostly just military-style MREs (meals ready to eat).

These packages provide plenty of calories to get you through a year and reasonable nutrition balance, but they’re not a substitute for a diet based on fresh fruits and vegetables.

A better approach would be to garden heavily and supplement the garden’s produce with these items. That would cause your diet to be a lot more healthy and cause the non-perishable food to last for longer before you need to replenish. Plus, if you’re concerned about a disaster of some kind, having a lot of food in the basement can bring you peace of mind.

Q4: Legal advice on consumer disputes
IÕd like to comment on your item about refund concerns. IÕm a lawyer and while I work for the government now, I used to handle a ton of consumer related issues. The problem with seeking a lawyerÕs advice in consumer matters is that often the cost of the lawyer exceeds what you could reasonably expect to recover.

For example, in today’s column the amount in dispute is actually only about $200 plus shipping. A lawyer will burn that amount in a few hours. Generally, I found that although my clients may have had a sure fire winning case, the costs just didnÕt warrant litigation. I found the best bet after attempting to resolve with the company is to see if your local government has a consumer affairs office.

Cities, counties, and many states have consumer affairs offices that will investigate complaints and will often do much of the work for you if you file a complaint. You pay taxes for those offices to be available, use them thatÕs what you pay for. The quality and availability of the services does vary widely by jurisdiction.

Better Business Bureau can help if it is a legitimate business that actually cares about its reputation, but in general, it is a toothless tiger.
- Marcus

Marcus is absolutely correct. Your first line of defense in a small claims consumer situation is to turn to the consumer affairs office in your state and see where that leads, though, as he says, quality varies widely.

If you do hire a lawyer for a small amount – anything not well into the four figures – it’s likely that the legal fees will eat up everything you get. You could theoretically try to tackle this yourself, but your only real hope in that situation is that the company’s legal team essentially ignores the case and just pays to get rid of the problem.

Marcus makes another good point, too. You pay for a lot of government services. Regardless of how you feel about it, you’ve already paid for it, so you might as well use it. Never feel bad about using a government service.

Q5: Men’s hair tip
Here’s some advice for shampooing hair. If your hair is short (anything shorter than shoulder length), use just a drop of shampoo to shampoo your hair. If it’s really greasy, use just two or three. You need just enough to barely get a lather going. If you use more than that, your hair will look all dried out and you’ll need to use more conditioner, adding to the cost. The next time you shampoo, just stick with a drop or two of the stuff on your hands and see how that works. You’ll be surprised.

- Andrew

Andrew sent in this tip about two months ago and I saved the email until I could try it. I have a fairly short men’s haircut and I started using just a drop of shampoo per day to shampoo my hair. I’ve found that it works pretty well if I shampoo every 24 hour period for the level of oiliness of my hair.

If I go longer than 24 hours between shampooings, I need to add more shampoo and it’s not directly linear. In other words, if I wait 48 hours to shampoo, I’d better use several drops or else expect to shampoo three times or so with just one drop.

Still, what I learned from this is that I use way too much shampoo. If you have short hair, you really don’t need much at all.

Q6: Christmas gift card question
This year, my grandfather gave all of his adult grandkids gift certificates to restaurants. This is fine, except that he gave us a gift card to Red Lobster and there isn’t one within several hours of where we live. The nearest one seems to be about two hours away from what I can tell. My point is that we’ll probably never use this card. What should we do with it?

- Andrew

You should re-gift it. That’s my honest take.

If you have an opportunity to give the card to someone who can actually use it, you should do so. Likely, it will save you the money of buying a gift for that person, meaning you essentially converted the card back into cash and covered a social obligation.

Until that opportunity comes about, you (or your spouse) should keep the card in your wallet, just in case you ever find yourself at a Red Lobster or one opens up in your area.

Q7: Children and long road trips
I used my children’s candy bags on road trips. They each brought a bag along. For any misbehavior they had to give me a candy. And this included anything that I didn’t like – whiny voices, arguing, etc. instead of asking them to stop the behavior or wishing they would behave, I just asked them for a candy. Every hour, they could eat one of their candy – also helped teach them to tell time.

- Andy

This is a really good idea!

Our approach for car trips is to have a music playlist that encourages a lot of family singalongs. There’s a good handful of songs that our family either knows all of the words to (or at least the chorus) and we sing along loudly. This actually works really well for making trips pass by quickly.

We haven’t run into the “disruptive children” problem on road trips. The most disruption they typically cause for us is requests for bathroom stops with a suspiciously high frequency.

Q8: Extremely outdated house
My wife and I inherited several acres of land with a house on it. The house, while reasonably well-maintained, is also extremely outdated. There is no indoor plumbing and only one electrical outlet in the whole house. The house is pretty small, too. Is it worth it to try to update this house or should we just knock it down and start over?

- James

First, is this work you would want to try to do yourself? Second, is the house, as it sits right now, a house you would want to live in?

I don’t know the answer to either question. It would be far cheaper to update it if you felt confident doing so. However, if you’re hiring help for this, the costs are going to add up extremely quickly, undoing much of the financial beneift. It would still likely be cheaper, though.

It’s also important to decide if you like the house as-is. A rustic old-time house like this one can have a lot of appeal for some… and very little appeal for others.

Q9: Cell phone contracts
Some of my friends say that it’s never a good idea to get into a cell phone contract. Can you summarize the advantages and disadvantages?

- Sam

In the United States, providers either lock you into a contract or offer a pay-as-you-go system. Generally, the pay-as-you-go option is cheaper for people with limited usage of their devices, with contracts looking more appealing for people with heavy usage, particularly extensive mobile data usage.

My guess is that your friends are relatively limited mobile users, in which case it doesn’t make a ton of sense to sign a contract.

Which is right? I’d suggest asking your non-contract friends how they use their phones as well as how you actually use your own phone. If you’re a light user – mostly calls and texts – a pay-as-you-go solution is probably cheapest.

Q10: British health care for American
My son, age 31, is a PhD student at Cambridge University – UK. He will be there through 2014. As you may know he is covered by the British Health System… what does he need to prove of such insurance? What are his responsibilities vis a vis ACA?

- Jeff

This article is probably the best collection of information on American students and expats living abroad with regards to the Affordable Care Act.

From what I understand from this document and the linked documents, your son is exempt from ACA requirements while living abroad. The clearest federal statement of this I’ve found is at http://www.healthcare.gov/exemptions/.

As with any major change like this one, it takes time for everyone to understand all of the rough edges of it.

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

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