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. Raising chickens
2. Guidelines for handling phishing
3. Credit cards and scores
4. Exercise expenses
5. Is cheap wine worth it?
6. Why recommend slow cookers?
7. Factors in favor of homeownership
8. Trustee for wealthy relative
9. Grandparent spoiling one grandchild
10. Multiple checking accounts
A friend of mine is embarking on a really cool project in 2014.
Over the last several weeks, she’s made a list of fifty two people who are deeply important to her. Coworkers, family members, friends – all kinds of people.
During the coming year, she’s writing a handwritten letter to each one of them, one per week. The letter is simply telling that person how much that person means to her and why.
I am sorely tempted to steal this idea. It seems like an incredible yearlong project.
Q1: Raising chickens
I don’t know whether it’s something that’s relevant to you personally, since it’s very location-dependent — and certainly raising chickens isn’t something for everyone — but have you ever explored the costs and benefits of keeping backyard chickens? We keep a few for their eggs, and while there are certainly costs associated with it (the biggest recurring cost is feed), there are a number of economic and non-economic benefits: chickens are great at turning waste food and yard clippings into eggs (ours get all of our compost and meat scraps, except chicken scraps); they provide fresher and tastier eggs than anything you’ll find in the supermarket; you get to know where your food comes from; you gain experience with husbandry and self-sufficiency, etc. I’d be curious to hear if you’ve got any thoughts on the matter.
When I was a child, my family raised chickens, both for eggs and for meat. We kept a rooster and regularly bred hens so that there were often chicks around in the chicken pen and there were fresh chickens on a pretty regular basis on top of the fresh eggs.
We did not make money on this venture. However, as you mention, it did provide a great use for excess food and yard clippings and we did get some return on our investment due to selling of the extra eggs to neighbors.
I think that raising chickens is one of those hobbies that end up being really cheap because they recoup some or most of their costs or possibly even turn a small profit, much like gardening is. I think raising chickens is probably more work than gardening and more location restrictive, but it can certainly be a nice hobby.
Q2: Guidelines for handling phishing
Do you have any suggestions for how to deal with fake emails that try to steal your personal information? My mother received one. She thought it was from her credit card company so she clicked on the link and signed in. Everything seemed normal but then a bunch of charges were put on her card.
Never, ever click on a link in an email from anyone. That’s the simplest rule to avoid phishing.
If the email includes something that you really want to check up on, fire up a web browser and type in the URL yourself. If you have an email from Amazon, type in www.amazon.com for example. Don’t trust any URL that came in the email – just start with the normal URL for the site, log in, and if it’s important, you should be able to find it.
That’s the best protection you can give yourself. Never, ever, ever click on a link in any email, even if it seems to come from a friend.
Q3: Credit cards and scores
I have two credit cards. One has a credit limit of $500 and the other has a credit limit of $1,000. I keep them both paid off. I want to buy a new laptop using the $1,000 credit card but it will use up most of the credit limit. I have heard that it is a bad idea for your credit to use more than 20% of your credit limit. Do you have any suggestions? Should I just pay cash for the laptop?
The impact of having a short term boost in your credit utilization on your credit score is pretty small. We’re talking about a few points here, assuming that you pay the balance in full off at the end of the month.
Unless you’re really worried about getting a loan in the next few months, I really wouldn’t worry about it. I’d buy the laptop, then pay the card off in full when the bill comes in.
Not only will you get some additional consumer protection from the credit card, you’ll also likely rack up some rewards from your card in the process.
Q4: Exercise expenses
I exercise on a regular basis (3-5 times a week) and feel that it is a very important part of my life to stay healthy. We have a gym in our building which is free to use. I used it while I was unemployed but don’t like the gym very much so I didn’t spend as much time exercising as I would have liked to. I love yoga and since I started working again I began attending classes. I love doing yoga with a group and the studio I go to is amazing. I was lucky that they have an intro pass ( $30 for 30 days – unlimited classes) and have been taking advantage of this. Here’s my dilemma: My unlimited pass will run out soon. I have looked into their cheaper/community classes but even if I only go twice a week, it will cost me roughly $60-75 a month. Doing this also limits me to a couple of classes on specific days, some which I am unable to attend because of my work schedule. I found out that they sell an unlimited pass for $90 a month. This would enable me to go anytime I am available (they have a lot of classes daily from early to very late) so I’d be able to do yoga on a regular basis anytime no matter what my schedule is. That being said, I have looked into many other studios in the city, some even offering free classes but the times and days (as well as locations) are not very convenient for me. My question is this: Is it worth spending that money every month? Or do I suck it up and try my best to attend some of the free classes (and perhaps one cheap one a week) and supplement this with one or two gym workouts?
If you are getting value out of the unlimited pass that is substantially above and beyond what you would get from the other options, I’d think seriously about it.
The important thing is that, as with any non-essential expense, you need to make sure that it fits into your budget. You should not be giving up life essentials for the class, nor should you be going into debt for the class, nor should you be abandoning savings goals for the class. The money should come out of your pool of “leftover” money – the money that’s left after you pay all of your bills and meet all of your savings goals while not incurring debt.
That will likely mean some difficult choices about what you want to do with your money, but if this class is important to you, it’s probably worth squeezing something else out of your monthly spending.
Q5: Is cheap wine worth it?
My wife and I have started to drink wine with our meals a few times a week mostly because we had several bottles we had received as gifts that we had never opened. We went through those and now we’re going to start buying them, but when we go to the store, the price range is unbelievable. Some wines go for $3 and others go for hundreds.
We were at Trader Joes and I picked up several of their Charles Shaw bottles that were $3-4 each but my wife wanted me to put them back because she thought they would be “rotten.” My thought was that we wouldn’t really know the difference.
I actually side with you here.
What you should have been doing while trying the wines your friends gave you is figure out which wines you like and which ones you do not. Try to find at least a couple of red grapes and white grapes that you both like and focus on buying those.
My experience has been that it’s pretty hard for a wine novice to tell a huge difference between an “okay” bottle of wine and a “great” bottle of wine. It’s easy to tell when they’re disastrous, but there honestly aren’t many truly bad wines on the shelves at most stores. The enjoyment of wine is heavily shaped by the people you’re eating with, the environment you’re in, and the food you’re eating.
Given that, start with the Charles Shaw wines. If you don’t know what you like, pick up a number of different inexpensive wines and compare your thoughts on them as you go through them. You’ll get a sense of what you like and what you don’t. Then, start exploring different years and labels of the wine types that you do like. Another thing to do is to go to a local winery and taste everything they have so you can get some side-by-side comparisons, though this usually means you’ll walk out with a bottle from them.
Wine does not have to be expensive to be enjoyable.
If you’re getting “bland” or “paste-like” foods from a Crock Pot, the problem isn’t with the slow cooker, it’s with the recipes. I can cook pretty much anything in a slow cooker – over the last decade, we’ve cooked whole game chickens, pot roasts, lasagna, and countless other things in our slow cooker and almost everything has been enjoyable.
If you’re finding that things are “paste-like,” you should wonder whether you’re adding too much flour or not enough water to the mix. Are you trying to directly use a recipe that isn’t designed for a slow cooker? My experience is that slow cooker recipes need significantly more moisture.
If you’re finding things to be “bland,” I’d look at the seasonings. Are the recipes themselves flavorful?
A slow cooker is just a means of preparing a meal.
Q7: Factors in favor of homeownership
I do want to comment on the value of owning a home, such as being able to paint or redo the home or landscape, the value of not being told you have to move because landlord changed his plans. The value of knowing a set amount of payment (fixed rate loan) as rents do change. The value of children being raised in one area and having friends from early years to grow up with. In other words, the emotional stability of one place that becomes yours and is yours to enjoy without upheaval while it gains equity or gets paid off….even if it never appreciated.
I agree wholeheartedly that there are a lot of intangibles when it comes to homeownership that can be really appealing and you’ve certainly listed some of them.
I just tend to be wary of advising people to leap into homeownership. I have read emails from a lot of readers who jumped in to homeownership too soon and are now really, really struggling or have a giant hole in their credit report.
Homeownership is great when you are financially prepared for it.
Q8: Trustee for wealthy relative
I’m really stuck here. I have been close to my great aunt my whole life. She was married when she was young but her husband died about forty years ago. She worked and retired not long ago. Anyway, over Christmas she took me out to dinner and told me that she wants me to be a trustee on her estate and that she actually has almost eight million in the bank. When her husband died, their lawyer reached a settlement and she just banked all the money. She said she thought she would use it someday if she ever got remarried but now it’s not happening so she’s been figuring out what to do with it.
I feel really uncomfortable doing this. She has asked me to keep it between us but that I can tell everyone after she dies, but I’m afraid that will start a big family war especially given how she intends to dole out the money.
You have to talk to your aunt about this.
If I were in your shoes, here’s how I would handle it. I would tell her that you will unquestionably follow her wishes and that you’re really honored by this, but that you need some help figuring out what exactly to do regarding dealing with family relationships. Let her help you walk through these worries.
No matter what, though, make it clear that you will follow her wishes to a tee and that you just need help navigating the familial waters. She needs you for this as much as you need her for advice.
If anyone gives you any problems because you followed your aunt’s final wishes… frankly, I wouldn’t have much respect for those people. You’d have to be pretty low to resort to negativity toward someone in your shoes in this situation and if someone does anything beyond blowing off a bit of steam, I’d consider that a sign of that person’s character and not worry about it too much.
Q9: Grandparent spoiling one grandchild
I have three children. When my father gives gifts to the children, he blatantly gives the nicest gifts to my middle one and he spends way more time with him than with my other kids. They notice it and it bothers them, even the middle one (who is really a conscientious kid). What should I do about it?
You can certainly talk to your father about it, which is the first step I’d take. He may not even recognize the favortism.
Another issue might be that he hasn’t developed a good bond with your other children. Perhaps you could work with your father to have some one-on-one experiences with each of his grandchildren to try to build a relationship with each one.
No matter what, do not speak in derogatory terms about your father to the children. That doesn’t help anything and just builds a deeper family rift. I’d focus simply on the fact that Grandpa did remember everyone and perhaps he doesn’t notice the favortism.
Q10: Multiple checking accounts
When I started banking with ING Direct years ago, in order to get an account they required you to have an external account at a different bank. So I did and still do. I keep just enough money in the external bank account to keep it open.
The other bank recently informed its account holders that starting next year, accounts must have a minimum $500 balance. If not, they start charging fees. I will not keep a $500 balance, so I began to explore my options for a new bank.
I called Capital One 360 (the new owners of ING Direct). They told me I no longer have to have an open, external account linked to the 360 account. I can close the external account and the record of the old account with 360 will suffice.
The first question: Really? Did I understand them right and can close the external account with no effect on my 360 account?
The second question: Is there any benefit to keeping the external account open? The only reason I see would be to deposit cash, but I never do that.
Third and final question: I have no complaints about Capital One 360, but is it the best bang for the banking buck out there right now? Any recommendations?
I would assume that it’s okay to close the external account, and I don’t see why it would be a problem. Online-only banks just want you to have an external account when you start because it’s a reliable initial funding source.
If you don’t have a purpose for that other account, I would close it.
I have never had any problems with ING Direct/CapitalOne 360. I have used them for many years without any complaint. Their online banking is stellar and their customer service has been basically perfect. That being said, other online banks do usually beat them in terms of interest rate, but at this point, it’s a pretty tiny difference – a percentage at most. For me, that doesn’t trump the usefulness of the other services.
Got any questions? The best way to ask is to email me – trent at thesimpledollar dot com. Iíll 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.