Reader Mailbag: Running for Beginners

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. Online education for gifted kids
2. Steam sales
3. Student loan consolidation question
4. Making money while watching TV
5. Timing of house purchase
6. Tapping retirement savings early
7. Lyoness
8. Candy savings
9. Accelerated Death Benefits rider
10. GMOs

Here’s a tip: if you’re not an experienced runner, don’t overdo it. Even if you feel like running and running and running, don’t. If you haven’t built up to it, you’re going to strain something and you’ll be right back where you started.

I can’t tell you how many times I’ve been through this cycle. I simply don’t take it slow enough when getting started and I wind up with shin splints or a twisted ankle or something, every single time.

Take it slow, Trent. Take it slow. You don’t need to be running a marathon in a month.

Q1: Online education for gifted kids
I wondered what your take was for online educational programs like Khan Academy or Coursera? Assuming a person has broadband internet access, the ability to challenge a gifted kid seems both free and top notch!

– Eric

These are great materials for gifted children. In fact, I’d recommend them for anyone with curiosity about a subject, really.

I particularly like Khan Academy and have used it for years alongside Wikipedia for helping me fill in the basics on different topics.

When our children start getting curious about particular topics, I’ll be sending them there. In fact, I already have in a few cases, though some of the material is still over their heads.

Q2: Steam sales
I don’t know if you’re aware of this but Steam is having some tremendous game sales right now.

– Jim

If you enjoy playing computer games, the semi-annual Steam sales are a great way to pick up games at a very low price.

I don’t mind playing games that were the new hotness a year or two ago, so the Steam sale is perfect for me. The top games from a few years ago are on sale for just a few bucks and they’re still great games.

I have a fair number of games on my Steam account. Virtually all of them came from Steam sales or from Humble Bundles.

Q3: Student loan consolidation question
My daughter has approximately $17,000 in student loans with interest rates between 4.9% and 6.5%. She would like to consolidate them but I am not sure how to advise her to do this. She has been making the payments regularly but i feel the interest rate is too high.

– Mary

The interest rates are a bit on the high side. She may be able to find better rates by consolidating.

The problem is that the process for consolidation can be a bit messy. The easiest route is to start by contacting the lenders you already have and seeing what they offer in terms of consolidation. Many lenders don’t deal with consolidation at all, but some do. If you’re looking to consolidate federal loans, start here.

For more information, I recommend this website, as it seems to spell out the process in the clearest way I’ve found.

Q4: Making money while watching TV
My husband and I usually watch television together for an hour or two in the evenings. My hands (and half my brain) are idle during that time. Do you have any suggestions on how I could use that to make a few extra dollars?

– Anna

The obvious answer (for me, anyway) is to learn how to crochet or knit. You can produce countless different kinds of cloth items if you know how to crochet or knit, from blankets to sweaters.

You can also keep a laptop open and do tasks on Mechanical Turk during commercial breaks. These are usually simple surveys or other tasks where you can earn a few cents during the time a commercial runs.

Television watching is also a great time to hunt for, clip, and organize coupons, or to exercise. While these things don’t directly make money, they do help you save money in the form of directly reduced grocery bills or in indirectly reduced health care bills.

Q5: Timing of house purchase
My partner and I would like to buy a house soon. 3-bedroom houses in the area most convenient to our jobs are priced in the 200K-250K range. We make about 100K a year, are debt-free, and are dutifully investing. Because of some large upcoming expenses (my car desperately needs replacing, and I’m in the process of starting a side business), we only expect to have a down payment of 20K saved by the time our current lease expires next spring. Our rent is $1400 a month, which is typical for rental houses in our area. If you were in our shoes, would you wait an additional year to save up the traditional 20%, or purchase before interest rates have a chance to creep up? Paying down the principal the following year would be a possibility.

– Jean

I would keep saving and watch the interest rates, particularly any hints about what the Federal Reserve might be doing to change rates. I would not jump right now when you can continue to save without interest rates radically escalating.

If you can reach that 20% threshold before buying and before interest rates go up, you’ll be in the best possible shape for the long haul.

The only thing I’d ask is whether you need a large house for just the two of you. Are three bedrooms necessary for a couple without children? Have you considered buying smaller and then waiting until later to upgrade to something larger?

Q6: Tapping retirement savings early
My husband is 52. He’s been putting tons of money into his 401(k) since he started his job and now has more than a million in there. He’s thinking about retiring to his wood shop to make wooden deck furniture and starting early withdrawals from his 401(k) using the 72(t) rule (meaning he has to start making regular withdrawals). I’m not sure the money he has saved will actually last until we’re old. What do you think?

– Emily

It depends on a lot of things. How much is he planning on taking out annually? He shouldn’t be taking out more than 4% of the balance and preferably less. How much can he make from his wood shop? Will it be relatively easy for him to find other employment if things don’t work out? Are you guys free from debt? What does your income look like?

There are some situations where it would make sense for this fellow to walk away. There are other situations where it would not make sense. It really depends on the other numbers.

If he does do this, I would strongly urge him to take the furniture making seriously as a business. Don’t just make chairs and toss them out in the yard hoping they’ll sell. Come up with a full business plan.

Q7: Lyoness
I am curious about a financial/shopping product/scheme going around called Lyoness. It purports to save you money and allow you to make money off of signing other people up. It’s hard to find info online because it seems that so many of the people involved are muddying the waters. It smells fishy to me. Would you be interested in doing an article on it?

– Margaret

It’s yet another multi-level marketing scheme, not too different than the many others out there like Pampered Chef and Scentsy.

Much like the others, the way that people make money with Lyoness is by convincing other people to sign up. Without those other signups, it is rather difficult to find value with Lyoness.

In terms of the product, you’re essentially buying good coupons. With Lyoness, you have to invest money up front in order to receive savings on products at certain retailers.

It just doesn’t add up to enough for me. Of course, neither do the other multi-level marketing organizations.

Q8: Candy savings
The other day I saw a mother buying her son some candy at a checkout. I have three kids and I don’t think I’ve ever done this. My strategy is to go to parades and save candy from holidays in a big candy tub and allow them one piece a day. We usually accumulate more candy than we ever use.

– Jen

This is exactly what we do with candy.

Whenever our kids get candy, whether at parades or elsewhere, we put all of it into a shared tub. Each evening, if they’ve behaved well, the kids can each pick a piece of candy out of this shared tub. We usually leave it to them to remember, so it doesn’t happen every night.

Because of this, whenever they want candy at a store, we can simply say that they already have a bunch of candy at home in the tub and it’s easy to simply say “no” with a reason they understand.

Q9: Accelerated Death Benefits rider
What’s your opinion on having a life insurance policy with an Accelerated Death Benefits (ADB) rider included? I’m not interested in having additional life insurance, per se, but the ADB rider seems like a nice option to have if I ever need it (for assistance with chronic or terminal illness expenses, etc.). My financial advisor has recommended a $100K policy that includes ADB; premiums are $200/mo. My boyfriend is dead set against life insurance if I have enough investments to cover my burial, etc. (and recommends term ins if anything).

By the way, I’m not interested in leaving my kids a boatload of money when I did; I’m 54 and way behind on saving for retirement, but also want to consider things like the ADB and long-term care insurance.
– Connie

The price seems a little bit on the high side, but if an ADB helps you sleep better at night, there’s nothing wrong with it.

For those unaware, an Accelerated Death Benefits rider means that, in the event of chronic or terminal illness, you can get some of the value of the insurance up front to help pay for those medical costs.

I’d shop around a little before throwing cash at this to see if you can get the same package elsewhere at a better rate. You should also make sure you know absolutely what kind of insurance you’re buying and what that gives you. I’d suggest taking a look at The Simple Dollar’s life insurance guide for more info.

Q10: GMOs
You do know that the USDA Organic label means that the item is GMO free right?

– Angie

It is essentially impossible to guarantee that any food source is wholly GMO-free. If you’re buying food from someone else, not only are you trusting that producer, you’re trusting everyone else up the supply chain from that producer. Given the ease of which a genetically modified plant can wind up in a large field or that someone can make a sorting mistake or that undesired pollination can occur and on and on and on, you can’t “guarantee” that any foodstuff is GMO free. You just can’t.

A company can pledge that they’re striving to make an item GMO free, but if anyone guarantees it, they’re lying to you. They cannot guarantee it unless they’ve genetically screened every seed and genetically screened every single element in their fertilizers and they’ve made their own soil out of screened GMO-free materials and they’ve grown everything in a greenhouse that’s sealed off from the rest of the world in which they’ve gone through a clean room before entering the room where the plants are. Even then, they’d be really stretching to provide a full guarantee of being free of GMOs.

If you truly want to avoid GMOs in a semi-realistic way, your best bet is to acquire seeds from a known heirloom plant line and grow the plants yourself, fertilizing the plants with your own compost that you’re sure is GMO-free. Even then, you’re probably going to have something in there that’s a GMO. Still, it’s safer than trusting a long and largely unknown production chain.

If you’re worried about where your food comes from, take control of it yourself. Don’t assume that a long supply chain of food and food production items are all flawless. Don’t assume that a label guarantees anything.

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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