Reader Mailbag: Old School

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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. Smart phones and grocery flyers
2. Building connections at conferences
3. “Culture” and home value
4. How much is “better” worth?
5. Maximum mortgage payments?
6. Income inequality idea
7. Dollar coin?
8. Ending a friendship over money
9. Letting go of the past
10. Becoming a teacher

Less than a week ago, I overheard someone refer to a song that was popular when I was in high school as an “oldie.” That person then astutely pointed out that the local radio station that plays the best of the eighties and nineties is essentially an oldies station.

Has it really been twenty years since I was in high school? It does not seem like nearly that long ago, yet twenty years ago I was finishing up one of those high school summers.

Time flies when you’re having fun.

Q1: Smart phones and grocery flyers
I liked your blog on grocery store flyers and their specials. I’ve been doing that for some time. In fact I learned that from my father when I was little, 60 years ago, or so. I’ve updated that idea by using the memo section of my smartphone as a grocery list. Each item I check off from the weekly ads is added to my smartphone. That way I always have my grocery list with me, not being at the store wishing I had remembered the flyer. I also have lists in the memo section for Costco, Walmart, Target and Home Depot as well as my local bookstore. Those of us with memory problems really need these helpers.

- Connie

I do almost exactly the same thing, except I use my iPod Touch. I use Remember the Milk to create a grocery list, upload it to my iPod Touch, and then head to the store. It just works like a checklist while I’m shopping and I don’t have to have a smartphone to do it since I don’t need internet access.

Technology can really help with the things we ordinarily do.

Also, one thing I do like about the grocery stores around here, though, is that they usually have a copy of their flyer near the entrance of the store. This has been helpful to me in a pinch when I’ve been unable to make a meal plan beforehand.

Q2: Building connections at conferences
I attend four or five conferences a year connected to my work. While I enjoy them, I don’t seem to get any long-term value out of them. I’ll come back with a few new ideas, but I could have obtained them by being more diligent with my reading. I meet some people at these conferences, but the connection to them is fleeting at best. What can I do to make conferences more valuable uses of my time?

- Jane

For me, the biggest value of any conference I attend is in the relationships I build and carry away from the conference.

Whenever I go to a conference, I make a point to get the contact information of at least 20 people a day, along with some sort of a point of reference where I can carry the conversation forward when I return. Usually, I just try to get their name, their email address (or Twitter handle), and something that I can contact them about when I return. I jot these down in a notebook that I constantly carry with me during the conference.

When I get home, I make an effort to touch base with each of these contacts within five days of my return. This way, the exchange is still at least a little fresh in their mind.

Some of those contacts end up developing into much deeper relationships that I get a great deal of value from.

Q3: “Culture” and home value
My family is looking at a buying a new house to reduce commuting time (currently 1 hour each way). We currently live in the Bay area of California (near Silicon Valley) Our income is estimated to be about $~250k/yr. We are both starting 40 and we have a “comfortable nest egg”.

There are 2 neigboorhoods we are looking at, both have below national average crime, good schools, and are “good” living areas. The difference between the 2 communities is that 1 community is more rural, 36% of the population has a BA/BS or higher, and the homes are affordable at ~$450k. The other community, 58% of the population has a BA/BS or higher and is definitively the more “affluent” area. The homes sell for $800k to $2m. We could afford a house there.

I want my child to grow up and have great oppertunities and expectations for her life. Being around more potentially successful people we believe will help shape her future.

Is the culture worth say an extra $450k over 18 years than a more rural area? We could afford the $800k house, but it’s hard to pass on $450k+ in savings. The savings for $450k could either buffer our retirement or allow our daughter to complete college – debt free.
- Olivia

It depends entirely on what you value the most.

Are you an active participant in your community? Or are you a homebody? Will you get extensive and repeated use out of the cultural events and services around you? Or do you just get comfort from the idea that they’re nearby? Will you actually be interacting with and socializing extensively with the “potentially successful people” you mention? Or do you hope that your child will pick up these things through simply being near them?

How you answer those questions will point you in the right direction as to where you should live. It’s really about your personality and how you intend to spend your time.

Q4: How much is “better” worth?
When I was a little girl, my mother used to make homemade “pop tarts” for me. They looked almost exactly like the ones you would buy at the store, but they tasted delicious. She would make a bunch of them at once and we’d have them for breakfast for several days in a row. Then, maybe a month later, she’d make another batch. We didn’t have a whole lot of money, so these were big treats for us.

So now I have a little girl. I want to make these homemade pop tarts for her and I can make them, but it takes hours to make a batch of them. I save about $0.12 per tart over the ones at the store.

If I make 24 of them (that’s how many is in a batch), I save $2.88 on my efforts. I invest hours in these. I don’t understand how this is a worthwhile frugal thing to do.
- Annie

It’s a worthwhile frugal thing to do because you’re producing something of a much higher quality than you can buy in the store. You’re engaging in a project that your child can participate in with you and teaching her the art of making food from scratch. You’re filling your time with something that has a positive net return. And you’re still saving a bit of money.

I’ve made homemade “pop tarts,” and it’s an insult to them to be compared to the pop tarts one might buy in a store. Homemade ones are fantastic: the dough is tastier, the filling is tastier (and far more customizable than “cherry” or “blueberry”), and they’re not loaded with extra sugar and preservatives.

If that’s not an adequate value for you, then don’t make the homemade pop tarts.

Q5: Maximum mortgage payments?
Do you have a good rule of thumb for the maximum your mortgage payment should be? Whether it’s percent of pre-tax earnings, post-tax earnings, or whatever else. Thanks!

- Evan

You’re going to get a lot of rules of thumb for this.

I would not get a home loan that results in a mortgage payment that’s larger than 25% of my annual salary. I would avoid anything higher than that, because it is going to put a sharp restriction on your life.

Some sources advocate amounts anywhere from 28% to 36%. Those amounts are pretty high for the average American. The average American family brings in less than $60,000 a year and has four dependents. A 36% mortgage payment would be somewhere around $1,800 a month. If anything unexpected happens to that family, they’re going to be in a major crisis.

If you want more house than that, save up for it.

Q6: Income inequality idea
One suggestion for your reader whose husband makes more than her is to each pay the same percentage of their paycheck toward their common bills. They could have a joint checking and savings account. Each spouse puts a percentage of their take home pay into these accounts say 80 percent. That money is used for all bills, the savings used for a car …etc. They would each have 20 percent of their pay available for whatever spending without discussion with the spouse. As one spouse’s income increases the amount contributed increases but the percentage is the same.

- Chloe

I think this makes complete sense.

As long as both partners can agree on what expenses come out of the shared account, this type of arrangement can work really well. It’s pretty similar to the arrangement that Sarah and I used for the first year or two of our marriage.

Of course, as with all things in marriage, communication is the key. If you’re frustrated with the arrangement, explain why you’re frustrated. If you can’t be open with your partner, then your marriage isn’t working and you may need counseling.

Q7: Dollar coin?
I keep hearing talk that the government is going to move us from the dollar bill to a dollar coin. How would that even work?

- Joe

The government would mint a large number of dollar coins and then stop printing dollar bills. Eventually, the dollar bills in circulation would wear out and the coin would be our mechanism for exchanging a dollar.

Most likely, the dollar bill would go the way of the two dollar bill. You could still get them, but you’d have to specially request them at a bank.

Lots of things would switch to using the dollar coin. Vending machines wouldn’t accept bills any more and would just accept the coins. Businesses would only pay out the coins as change. Eventually, the coins would be the only thing in circulation.

Q8: Ending a friendship over money
I’ve stopped speaking to my closest friend in the world. We’ve been friends since childhood. It’s all over money.

I make more money than she does. I have a job as a receptionist and she works at Subway. All the time, she’s asking me to borrow money and never pays it back. By “borrow,” she means “give,” I think.

I finally told her I didn’t want to lend her money until she can pay me back and she got really mad at me. She told me that I had all of the money in the world (which I don’t) while she has nothing (which she doesn’t) and that I’m a bad person for not sharing with someone who’s been by her side through thick and thin. Since then, she’s not spoken to me.

What should I do?
- Ellen

Sometimes, money changes everything.

You’re just going to have to give this one some time, I think. It may be that this is just a bump in the road, or it may be that your life paths have diverged enough that the friendship isn’t salvageable.

In either case, be patient. Don’t push to rebuild things or you’re likely to just re-enact the fight that got you here in the first place. Don’t be afraid to spend time right now building up other areas of your social network. Eventually, send her a text and suggest that you do something together, but give it a bit of time first.

If it’s meant to work out, it will.

Q9: Letting go of the past
I’ve found your stories about hitting rock bottom and making big life changes very inspiring and helpful. I wonder if you have any advice as to how to stop berating yourself for the past once you actually start to change. This is where I slip up (and give up). I know it’s self sabotage and needs to stop, but I find that regretting past mistakes keeps me from seeing the positive in changes i try to make. Did this happen to you when you started to change? Just curious as to whether you have any tips for squashing these types of demons.

- Nicole

You’ve just got to repeat to yourself that everything before today doesn’t really matter. You can’t undo the mistakes of the past. All you can do is work forward from where you’re at.

It is very, very easy to be angry at yourself for the mistakes you made, but look at it this way: you now have the maturity and insight to see that they were giant mistakes and now have the ability to not repeat them. You are in a better place now than you were then. The person you are right now will make better choices.

All you can change is what is about to happen, not what has already happened.

Q10: Becoming a teacher
I love teaching people how to do things, anything from cooking to fixing things at home. I would love to transition this teaching into something that can earn money, but I have no idea how to even start.

- Jane

My suggestion is to get a video camera and start making YouTube videos.

A YouTube video is a great way to show someone how to do something. Once the video is made and posted, you can step back from it and a small revenue stream will eventually begin (usually $1 or $2 per 1,000 views). These videos can eventually become the backbone for other things you might want to do, such as write or actually teach classes.

I know that I often search YouTube when I’m looking for help on how to do something. A video can be a very effective way to learn, and it can be an outlet for your teaching as well.

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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