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. Quality item – or just expensive?
2. Pay down by interest rate
3. Married into poverty
4. Why pay for “freemium”?
5. Frugal professional fashion
6. Coupon organizaton
7. Time to switch jobs?
8. Office cuts
9. Coping with child care costs
10. Thanksgiving and prayers
During this coming week, quite a few of you will be doing what I’m doing – spending some time with extended family members that we might not see too often.
As I’ve said before, I’m not particularly social in face-to-face situations. In fact, I often have to force myself to talk around people I’m not strongly familiar with. I’m great around my immediate family, my closest friends, and my parents, but once you get outside of that, I have to make myself talk.
It’s worth it. I find that once the ice is broken, things end up being wonderful. If you’re a touch introverted like I am, spend some time this week thinking of things to talk about and bring them with you in the back of your mind. Toss them out there and before you know it the conversation will be great.
Q1: Quality item – or just expensive?
How can you tell when you are investing in something that is higher quality and will last, vs something that is just expensive but wont end up much better than the cheaper version in the long run?
For example I tend to buy cheap jeans because I feel that brand name jeans are mostly the same with a different logo. But maybe I’m wrong and those brand name jeans last much longer and would be much more efficient than replacing my cheaper jeans every 4 years or so.
Or, when I shopped around for a television I didn’t even look at cheaper brands I’d never heard of, since I just assumed these weren’t made as well and would break sooner. But what if I’m wrong here and I just spent a thousand dollars on a television, when i could have bought a generic version that works just as well for a fraction of the cost.
These are bigger examples but I run into tons of similar situations on a smaller scale daily it seems. Anyway, just thought it might be interesting to talk about when to go for something cheap like a generic version of your favorite food, vs spending a little more like on a high end umbrella.
In these situations, I do research. My first source for figuring out things like this is Consumer Reports. My local library keeps several years worth of the print issues, but I actually have an online subscription so I can easily look stuff up.
I do read other comparative reviews, but CR is the one I trust above the others.
One of the biggest factors I use in their reviews is reliability. I generally try to find items that seem to have good reliability data and stick with those, seeking out the best bang for the buck in that regard.
Q2: Pay down by interest rate
I don’t get why you always tell people to pay down by interest rate. Dave Ramsey says to pay them off by balance so that you can get a debt paid off faster which makes sense to me.
If you pay down debts by order of interest rate, you’re going to end up paying the smallest possible amount over the long term.
Sure, you might have to wait quite a bit longer to actually get a debt paid off, but the first one you pay off is the one that’s accumulating the most interest each month.
A friend of mine analogized this as being like rabbits in his garden. If you’re paying off debts by size, you’re taking out the smallest rabbit first so you reduce the number of rabbits in your garden the fastest. If you’re paying off by interest rate, you’re taking out whichever rabbit is eating your vegetables the fastest so you slow the rate at which your vegetables are getting eaten.
Q3: Married into poverty
Long story short, my wife sends a lot of money to her family in her home country. When we lived there, she earned $200 a month, and gave it to them. Now she is sending almost double that, and it stings. It is probably around $4,000 a year gone, like that. On the one hand, her family is super poor. So I get it. They need help and I can’t really expect her to just let her family go hungry. On the other hand, I feel like they are to an extent taking advantage of her, because I don’t know why they would need that much more money than they did before. I think she is supporting her parents, her 3 brothers, and each of their families. It eats me up inside, because I think of how $4,000 a year could go into a retirement account for her. I think of how much money it is. She doesn’t know about the US yet, she still has a Nicaraguan mindset. So she doesn’t think about college costs for our son, or retirement accounts, or saving. I am super frugal and do think about those things. Her attitude to money is “whatever, its fine”.
On the other hand, she makes 30K a year. So if she wants to send 15% of her salary to her family, then who am I to say anything about it. After all, I should have expected it when we got married. I mean, I knew her family and that they were poor.
But imagine losing $4,000 every year. Just skimmed from your take home pay, like taxes. It is frustrating to me.
The worst is that I feel like her family may not even be looking for work that much, since they know Maria will send money. I mean, Maria started with good intentions. And its true, there is no work out there for her family. I mean, her brothers go to Costa Rica to cut sugar cane in the winters, but during the summers I guess it is very hard to find work. But there is no supervision. I am sure my wife has no clue what her family and brothers do day to day. And it hurts me to see her working hard, with responsibilities here and with her son, and to be sending all this money there. I mean, I read that a divorce costs like 25K max. And this means that, every 5 years, she is incurring the cost of a divorce. Do you know what I mean? Its like she is being ruined financially…even if its just 15% of her salary. If she saved 15% of her salary, she’d be super set during retirement. But she saves nothing.
I now get it why finances are the leading cause of divorce. What do you think? Any advice? Am I being super selfish? Or do I have a point? I just want her to really look at what her family needs, what they can earn themselves, and to send what is necessary. She thinks I am against her sending anything. I just question why, if they all got by on $200 a month before, why do they all of the sudden need $400 a month now. And why is nobody thinking about how to get over this. I mean, sure, its the 2nd poorest country in the hemisphere (behind Haiti). And sure, they have faced adversity. But her brothers chose to drop out of highschool. She didn’t. Her brothers chose to cut sugar cane for a living and to have no marketable skills to actually earn a living. She didn’t.
Can you offer me any advice? Am I justified in feeling this way?
For one thing, their needs might be going up. I don’t know where her home country is, but many South American nations are experiencing rapid inflation. Their costs may be growing in unexpected ways. Take a look at this chart, for example.
It also could be that your wife is coming from a culture where this type of familial support is expected and now that she’s earning more money, she feels obligated to send more. By telling her not to do this, you’re causing more than just a money conflict – you’re potentially causing a cultural conflict.
You need to sit down and have an honest and thorough discussion about this with your wife. No secrets, no hidden thoughts. You need to both understand what the other is thinking and why for you to get through this.
Q4: Why pay for “freemium”?
When a company offers their product for free and then wants people to pay for “pro” options that don’t amount to much, how does the company ever make money? I use a lot of products for free that have a “pro” version but I have yet to see the point.
There are a lot of reasons. Sometimes, they just hope for goodwill from users who use the product constantly. At other times, there are “pro” features that are really useful to a small segment of their user base.
Some computer games allow impatient people to pay to advance more quickly through the game or to get premium visuals or graphics.
I tend to like to support tools I use all the time, so if I find a free tool that uses this model and I find myself using it quite a bit, I don’t object to paying for it.
Q5: Frugal professional fashion
How does your wife handle clothing or do you have ideas for ladies’ frugal fashion? I think trying to keep up with fashion trends is a total waste of money and energy, but at the same time, I like to look nice and not totally out of style. It’s harder to be a frugal woman shopper because men’s styles just don’t change as drastically or as quickly, and honestly, I think women get judged on their appearance to a higher degree than men do (whether we like it or not). I don’t go shopping often, and when I do, I try to buy classic, basic things that aren’t too trendy. I also try to do more of my shopping at resale shops (for economic as well as ethical reasons with the big box stores), but I’m very curious to hear how your wife or other women handle fashion. Or maybe that they don’t.
My wife buys basic but very well made clothes that mix and match really well. If she can get a top or pants or a skirt that mixes well into her wardrobe, it actually appears as though she’s added several outfits when she’s actually just added one garment. She’s a teacher, so her wardrobe involves sweaters and long skirts and the like, for the most part.
I did the same thing during my “working in an office” years, particularly in my later years. I had several pants and several shirts that were well made along with some basic ties for times when I wanted it to appear that I had more clothes.
Now that I work at home, I’m pretty much a “t-shirt and jeans” guy. I have a very small amount of nice clothes that I can easily mix and match.
Q6: Coupon organizaton
My sister-in-law is a big couponer. She has a really elaborate system for her coupons and does it each night when she’s watching TV with her husband, doing things like putting coupons into her system, pulling old ones out, cross-checking with flyers, and stuff like that. It seems like a ton of work to save a little money. Is there an easier system?
Couponing is one of those things where you generally squeeze more value out of couponing with more time that you put into it. How much you save really depends on your situation.
For example, for a while, Sarah and I got really into couponing and usually had 15 or so coupons that matched our grocery list on every trip. We would easily save $20 or $30 on a food and household supplies shopping excursion. However, preparing for that trip could easily take 2-3 hours.
Now, we still coupon, but it’s mostly doing a bunch of online coupon searches before we go to the store. We might spend 15 minutes on it and we’ll usually save around $5 on a trip. All we do is go to a few coupon sites and search for name-brand things from our grocery list to see if there are coupons. All you have to do here is just visit coupon websites just before you go shopping and look for things already on your list, then print them out.
I don’t know whether an hour of couponing can return minimum wage to you or not. It probably depends on that person’s situation and buying habits. However, if it’s something you can do while watching television, it seems reasonable to me.
Q7: Time to switch jobs?
I have been in the same dead end job for the past seven years; I am getting more miserable by the day. Two years ago I decided to get out of medical office administration and finish my bachelors in anything as long as it ended with a degree in something I liked that would lead to a career ambition. I will graduate in June and had hoped I could stick it out in my current thankless job until then. Recently I have felt even more anxious and stressed about going in to work, and I don’t think I will make it. Since I am hoping for a career change anyway, would you recommend looking for other employment? My total debt in credit cards amounts to about $4500 and I am paying about $12,000 left on my car (I want to maintain or exceed the $400 a month I pay for the credit cards and $265 for the car, plus $200 insurance, $300 rent and $300 various expense like food, train (cheaper than the lot) etc). Is it wise to start looking for something else?
Sure. Why not?
Be aware that not quite having that degree in hand might hinder your job search a little. You might get through the initial screening for candidates, but when they check your resume for degrees and see est. June 2014 for when you got that degree, some may balk.
Ideally, you can use your current work experience to leverage that.
If you’re miserable at work, though, it’s never a bad time to start searching for another position.
Q8: Office cuts
I love my job. I work for a small business of about ten people. The owner works here too – he’s really involved – and he leaves the books open for any employees to see at any time. He pays all of us well and is extremely open about any bonuses or anything like that (it’s usually directly related to a sales goal and he gives credit for sales to all employees in the store at the time of the sale so we’re not competing with each other). I have worked retail for many years and this is by far the best place I have ever worked.
Here’s the problem. Our boss works on the profit of the business and so far in 2013 he’s not making much money. He would be the lowest paid employee here. So we had a meeting and he said that he hated to do it but he either had to get rid of someone or cut all wages by 10% or else close the business. He let us vote on it and we cut wages by 10% and since we were all making a pretty good income for retail it didn’t take any of us down to anything close to minimum wage.
While I love working here, I am realistic that the city we are in is slowly shrinking and it is affecting this business. We aren not in a booming area any more and I am afraid that the business is going to continue to slowly shrink unless a major change happens. Does it make sense to start looking for other work now?
I think that would be reasonable, but not immediately.
The first thing I would do is help the business owner look for ideas to turn things around. Would a new location help? What about a change in advertising or appearance? Is he advertising at all or just assuming the city knows about the business? Does he have any in-store events or programs to draw in people?
Some business owners keep doing the same thing that worked when they first started and never try new approaches, or they try new approaches very blindly without asking how they help the business. I think some employee brainstorming sessions could be very worthwhile here before everyone gives up.
Q9: Coping with child care costs
Families who are struggling to pay for child care have options in almost every state to help them pay for high quality care. This is usually federally funded with additional state dollars to help in implementation. Families may qualify for a percent of their child care to be paid for or for 100% coverage. This applies to care for full day children under the age of five and for before and after school care. For more info on this, you can visit http://www.acf.hhs.gov/programs/occ/resource/fundamentals-of-ccdf-administration
This can be incredibly valuable information for people considering a child on a relatively low wage. I know of at least two people who have taken advantage of these types of programs.
It is also an example of why anyone with a low income should look for starting points within the community for help so that they can connect with people who can help them find such programs. Talk to people at the food pantry or a pastor at a local church, for example. Quite often, they know of such programs or know of people you can talk to in order to discover these kinds of programs.
You might disagree with the idea behind these kinds of government services, but they are designed to help people who need a bit of a boost when they’re in a rough patch.
My parents start Thanksgiving dinner with a prayer. It is something they have always done. We also have a family prayer at the dinner table.
A few months ago, our oldest son (who’s 22) announced to us that he is an atheist and does not want to participate in prayers. In being polite, we dropped our family prayer at the table when he’s there or say it quietly to ourselves rather than as a group. He didn’t confront us about it – we just dropped the prayer.
We are struggling with figuring out how this should work at Thanksgiving dinner. We are hosting this year. We basically feel like having a prayer would offend our son’s beliefs and not having a prayer would offend my parents’ beliefs. We do not want a Thanksgiving fight about it. Do you have any ideas?
My feeling is that private gatherings should be inclusionary of the beliefs of everyone involved, if at all possible. This would mean having the prayer. It is polite to at least be silent if not participating in this type of expression of belief.
I am not sure how to incorporate an atheist perspective here. My suggestion would be to take your son aside and suggest that he also offer a toast besides the prayer that focuses on non-religious aspects of Thanksgiving – family and togetherness – if he feels comfortable doing so. Suggest that he say, right after the prayer, he simply say, “Before we get started…” and raise his glass to say a few sentences that expresses in a non-religious way what he values about the day.
I think it would be fully expected that the people at the table would respect what he has to say as much as he would and should respect the shared prayer. Plus, at his age, it would give him a prime opportunity to show his growing maturity. It should be a reminder that being a functional adult doesn’t mean demanding that everyone believe what you do, but respecting the diversity of ideas and backgrounds that we all have.
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.