Reader Mailbag: Morning Coffee

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. Vehicle or credit cards?
2. Handling snobby and rich sister
3. Why not a 30 year?
4. Boredom of being a caretaker
5. To move or not?
6. Microwave cost-effective?
7. Cost-effective home upgrades
8. Paying for child auto insurance
9. Housing upgrade
10. Vote for self-interest or ideals?

Several years ago, I had adopted a routine of drinking coffee in the morning. Since then, I’ve dropped the habit.

Why? For one, it messed with my energy level throughout the day. If I drank one cup of low-caffeine coffee, my day was vastly different than a day where I drank three cups of highly-caffeinated coffee. My energy would soar and plummet in ways that I didn’t like.

For another, it wound up being surprisingly expensive, even if I made it at home. These days, I usually just drink a big glass of water in the morning, so the cost is much less.

It was hard to break the cycle. I had quite a few mornings with caffeine headaches. Now that it’s passed, I don’t miss it, though coffee still smells good to me.

Q1: Vehicle or credit cards?
I am in the position where I will need another vehicle in about 6 months.

My question is, would it be better to save all I can for 6 months (roughly $12,000) to put towards the new vehicle (cost of vehicle we are looking for is roughly $36,000) or should I take that $12,000 and pay off some of our credit card debt? I realize that no down payment will make my monthly vehicle payment higher, but then again, I will be able to pay off 2, maybe 3 credit cards so I won’t have those monthly payments.

Or do I pay down some of the debt to get to less than 50% of the credit limits and use the rest as a down payment?

Car loans are 3-5% in my area, whereas our credit card debt is 9.99% – 12.99%. Total credit card debt that is no 0% interest right now is about $12,000
- Desmond

My first suggestion is to look at a less expensive car. When you take out debt to buy something that depreciates quickly – like any car over about $8,000 does – you’re going to be taking a significat loss on that money.

In your shoes, I would be targeting the least expensive car that does the job. Doing that moves you toward freedom from debt as fast as possible.

However, assuming you’re ignoring that suggestion, you’re better off minimizing your higher interest debts and maximizing your lower interest ones. That would mean, in this case, paying off your credit cards now and then getting a larger low-interest car loan.

Q2: Handling snobby and rich sister
My sister married into a family that’s immensely wealthy. At first, it didn’t seem to affect things a bit, but after a while, she began to really look down upon us for not being wealthy. She more or less accuses us of choosing to be poor and criticizes a lot of things about us. None of the rest of her siblings like this, of course, but are we bad people for starting to exclude her from family choices? For instance, last year we pitched in to buy our mother a new couch but our sister called it shabby and cheap and bought our mom a $3,000 couch on her own.

- Geoff

Your sister is changing as a person, and she’s changing in a way that you find to be less compatible with your values.

If I were in your shoes, after that couch incident, I would simply tell her that there should be separate gifts in the future. Then, you can go in with your other siblings on a gift for your mother and let her buy one (likely an expensive one) separately.

I’ve seen families drift apart because of differing economic situations and choices. It’s painful, but sometimes lives point in different directions.

Q3:
You mention getting a shorter term mortgage and I’ve always understood the pros associated with it. What I’ve never seen addressed, though, is the idea of getting a longer 30 year mortgage with the intent of paying it off faster.

The benefit as I see it is that you have the option to add additional money to the monthly payments to pay it off faster, but if you run into financial trouble you can always cut back to the lower monthly payment. A shorter mortgage may be paid off faster, but you’re locked into a higher monthly payment.
- Reginald

I’ve looked for statistics on the percentage of Americans that actually make extra mortgage payments, but I couldn’t find any well-sourced ones. I can tell you from my own experience – and from interacting with many, many readers over the years – that the percentage of people actually doing this is low.

It is very easy to tell yourself that you’ll make extra mortgage payments when you get your mortgage, but when you’re faced with the usual litany of family expenses and you know you’re just fine if you make the minimum mortgage payment, you’ll make that minimum mortgage payment. I’ve seen this in my own life and in countless other reader stories.

A shorter term mortgage usually comes with lower interest rates, so the payments aren’t doubled if you cut the term in half. In my experience, the monthly payment goes up about 30%-40% when comparing a 15 year term to a 30 year term. However, with the 15 year term, it’s paid off in about half the time and the total amount you pay over the entire mortage is significantly lower.

Q4: Boredom of being a caretaker
I’m 26 years old. I’m serving as a caretaker for our father, who had a stroke a year ago and is in pretty poor shape. I have to feed him and he sleeps almost all the time. About once a month, he has a major seizure and if someone isn’t there, he will die, so my job is mostly to just be there in case something happens. We have considered putting him in a nursing home but we just haven’t quite done it yet.

Anyway, most of the time I’m bored. I watched TV quite a bit at first, but that’s gotten boring. What can I do that doesn’t cost me much and can fill a lot of hours that I can just walk away from immediately if I’m needed?
- Rhonda

My first thought is books. Lots and lots of books. I’d suggest getting a library card and visiting the library. Check out several different books that you think you might be interested in. If one doesn’t engage you, just move on to the next one. Find ones that you enjoy and that you get some value out of.

If that doesn’t excite you, there are many other possibilities. Start a garden on your father’s land (if possible). Do some freelance work on the computer while you’re sitting there with him. Make a large batch of handmade holiday cards for you and for your father and get them mailed out. Dig into some minor home improvement projects.

There are many low-cost things you can do with all that time. I’m actually fairly jealous of people who have so much free time that they become bored.

Q5: To move or not?
i am 31, my wife is 27. we are married for over a year. we have no kids as yet, my wife stays at home and tutors kids part-time. We live in a rented two bedroom apartment, we dont have major debts. we are saving for that dream home.

Problem: I recently got a great job offer from one of the top 5 companies in my line of work with 33% pay hike and great benefits. The catch is we have to move all the way across the country. I want to make the move but my wife is against it. My current job is actually great but for the pay and the brand value of the company.

From my point of view, this pay hike would mean that proverbial belt can get a bit loosened. this job switch could give us a little bit more freedom and breathing room especially when kids come along, and more importantly, it is a great boost to my career.

From her point of view, both her parents and my parents are couple of hours drive away but they can’t move with us, we all get along well, and she feels having parents around will be a big help when the kids come along.

I can understand the merits in her argument too. What should I do?
- Jason

It sounds like you each have different pictures of what your life will be like in ten years.

Your absolute first step should be to sit down together and figure out what you want your life together to be like in ten years. You each have different visions, so bring those visions to the table.

You’re both going to have to compromise a bit on some aspects of the future. What you should focus on are the things you each really hold dear and don’t want to change and the things you can live with changing.

Sarah and I have done this several times. Each time we’ve found our marriage in a better place.

Q6: Microwave cost-effective?
Is it more cost-effective to cook an item in the microwave or on the stovetop or in the oven?

- Kelly

It depends on a lot of factors. Is your stovetop or oven gas or electric? What is the cost per kilowatt hour of electricity and of gas in your area? How old are your kitchen appliances (newer ones are usually more efficient)?

In our situation, everything is electric, thus our comparison calcuations were pretty easy. For most tasks, our microwave is more efficient than the stovetop, so for many things, we’ll do much of the heating in the microwave (think things like water and pasta sauce).

As a general rule, I’d rely on whichever appliance is newer, as newer appliances are much better in terms of energy use.

Q7: Cost-effective home upgrades
It is very likely that my husband and I will soon be embarking on a cross country move for excellent new career opportunities. In preparation for the possibility, we are assessing our house and looking at what upgrades/nice touches we can do before listing it on the market. The problem is that we have only owned the home for three years and did not anticpate moving so there are many remodeling projects still half-complete. The projects that need finishing out would require sinking a lot of money into. Should we bite the bullet and finish some of the costly renovations before selling? Or should we leave them as-is? Even the half complete remodel is 100% better than what the house looked like three years ago. I really hate spending money on a house we’re leaving so soon but don’t want to deter potential buyers because projects are incomplete. (Projects include finishing out trimwork, removing popcorn ceilings in the bedrooms, landscaping a courtyard, retiling bathrooms, and replacing carpet in several rooms).

- Jenny

The problem is that a lot of homeowners don’t like walking into a home where there is a lot of unfinished stuff. When they see that, they see extra work on top of the move that they’re about to make and, in a buyer’s market, they’ll keep shopping.

You want your home to look good during both the inevitable drive-bys that potential buyers will do as well as the open houses and visits that potential buyers will make.

If I were you, I’d make sure any partially-completed projects that give a poor appearance were finished, but I wouldn’t dive into any new major projects unless you’re certain you can finish them easily before you move.

Q8: Paying for child auto insurance
When your children get old enough to drive, are you going to pay for their auto insurance? I would imagine with three kids reaching driving age within a few years of each other that it will cost you a pretty penny.

- Marcus

For us, I think it depends on the track our children are following as they grow older. In other words, we don’t know yet.

For example, if we have children that have after-school jobs and are starting side businesses, we will have different expectations than children who study a lot and have educational extracurricular activities that will prep them for college.

I think that a lot of it will be determined by our oldest child, as he’ll set a precedent. I’m wary about not paying for one child’s insurance and then paying for another child’s insurance later on, as that can cause serious conflict.

Q9: Housing upgrade
I am 42, married with 2 kids, 7 and 4. Our household income is approx. 100,000 combined. My wife works for a company that have good insurance policy, I am a contractor. We have $25,000 left on the mortgage and then we’re debt free. We don’t have any other debts as we have tried to lead a very simple life. We own 2 pretty new cars, have a decent home in a good neighborhood. My wife max out 401K through her work and we even have ROTH IRA on our personal lives.

My question to you is, after we have paid out our house, hopefully in a near future, should we rent this house and start moving into a bigger, nicer house? Then we can pay for the new house and use the rental fee to pay for the tax of the 2 houses, maintenance and the mortgage of the new house? Tax for the old house wood be $6,000 a year and for the new house, it will be $8000 a year. On top of that, we may have to pay $1,000 mortgage for the new house. We bought this 8-year-old house approx. 3 years ago and it fit us perfectly then but sometimes we think we may need a little more space because the current house is very basic, a den, a small dining room, kitchen, 4 bedrooms.

Do you think we should do that and the end of the day, have 2 houses or just keep saving our money now for our children’s colleges?
- Lori

I would save for the educational expenses, as they’re going to be numerous and large.

Also, for comparison’s sake, we have three children in a four bedroom house in which one of the bedrooms is used as an office. After considering moving, we decided not to move (but we are considering another bedroom as an add-on).

Another big reason we decided not to move is that we know people who bought big houses for their children to have plenty of space, but when their kids moved out, the houses became empty caverns that they had a very difficult time selling.

I’d rather have a home that’s a bit cozy during the teenage years than have a home that felt really empty after the children leave the nest.

Q10: Vote for self-interest or ideals?
It seems to me that every time we are called to vote, we’re asked to choose between our short-term economic self-interest and our long-term ideals. These are almost always incompatible with each other. How do you choose between them?

- Darren

For starters, I’m not one of those people who thinks others are wrong or bad for having different viewpoints than I do. This is not Red Team versus Blue Team.

That being said, I don’t think there’s a correct answer in that choice. It depends a lot on the life experiences that person has had, what trajectory their life is on, what ideas and philosophies they’ve been exposed to, their current financial state, and so on.

Personally, I almost always vote for the individual that I think will lead to the best possible world for my children to live in as adults. What does “best” mean? Again, it has to do with my own life experiences.

In other words, I tend to vote for my long-term ideals. However, my long-term ideals are often drastically different than even my neighbors, let alone people who live in other parts of the country.

If I can give you one piece of advice, it’s this: recognize that everyone has a different set of life experiences to draw on, a different set of philosophies and ideas that they’ve learned, and a different set of morals and ideals that they base their choices on. It’s very hard to simply say that they’re “wrong” and that you are “right” when you disagree. The best thing you can always do is challenge yourself by learning more about what their ideas are and where those ideas come from. That will put you in a better place when making decisions for yourself. Refusing to listen or to learn just ensures that you’ll be unable to adapt your mindset when the world changes.

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.

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