Reader Mailbag: The Walk

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. Space heaters
2. Trader Joe’s
3. Too cheap around friends
4. Keeping funds separate
5. Parenting and work
6. Clark Howard thoughts
7. Dealing with partner’s debt
8. Lending Club as borrower
9. Parental guilt
10. Wills and trusts

I try to take a walk every day. My goal most days is two miles, though if I have time I’ll often walk for four or more miles. When I walk out my front door, I have access to a quarter mile loop (basically around the block), a mile-long loop, a three mile loop, and a four mile loop that I know the routes to by heart, so I choose a route based on the time that I have.

(I used to run, but if I run very much, I quickly get patellofemoral pain (pain below the knee in the front of the leg) on my left leg and, eventually, on my right, so I’ve moved to walking to drastically reduce impact on my knees.)

It’s not hard to just go outside and start walking. It’s a virtually free activity that drops calories and gets your heart and your muscles moving.

Q1: Space heaters
You are absolutely wrong about space heaters. They are terribly expensive to run.

– Sara

The purpose in running a space heater during the winter months isn’t to heat your whole home. They’re terribly inefficient.

The point is to run them in the room you’re in so that you can drop the overall temperature of your home significantly. If running a space heater in your room lets you drop the climate control from 68 F to 55 F, then you’re saving a lot of money.

My plan during the winter months is to dress in sweatshirts et. al. in the house, have blankets in lots of places, use space heaters if we’re in the family room together, and practically avoid using the furnace unless we have guests.

Q2: Trader Joe’s
How do you feel about Trader Joe’s? Are they a good value or not?

– Steve

I like Trader Joe’s. I think their low-cost wines are the best “bang for the buck” wines out there (for the most part) and they have good prices on some things.

Shopping for food is all about finding the best “bang for the buck” on the food items you need for the meals you’ve planned. In some cases, Trader Joe’s can fulfill that – I am usually impressed on their prices for nuts, for example.

If you have a Trader Joe’s in your area, take your grocery list there and price it out. See if their prices on items you buy regularly beat those of your normal grocery store (or if they have sensible substitutes for a good price).

Q3: Too cheap around friends
I feel like I am always the one rejecting ideas because they’re too expensive or always suggesting the “cheap” thing to do. My friends usually go along with it but I feel like I am becoming the “cheapskate” of the group and I don’t like it.

– Tim

Here’s the thing: some of your friends likely really appreciate it.

When you suggest something inexpensive to do and everyone enjoys it, it’s not just helping out your wallet. It’s helping out everyone’s wallet. It’s not just you saving $20 from doing something cheaper. Everyone saves $20.

As long as everyone is enjoying things, your friends are probably pretty happy to have a fun evening and still have that $20 in their wallet.

Don’t worry about it. You’ll know if your friends really want to do more expensive things. If they’re not clamoring for it and they’re jumping on board with your ideas, they’re probably glad to be saving a few bucks.

Q4: Keeping funds separate
Do you know any simple/semi-automatic ways to keep track of funds which are earmarked for separate purposes, but all kept in one account?

I have had a fixed mortgage for 5 years, and multiple savings and sub-accounts into which I put a portion of each paycheque for specific purposes. Eg, one for regular fortnightly expenses (petrol, groceries, entertainment), one for big and less frequent expenses (insurance, car registration, PO Box and so forth), one for my emergency fund, one for holiday expenses…

In a few months, I am rolling over to a split mortgage. Most of it will be fixed, but there will be a variable portion. I am keen to open an offset account and drop all the cash into that to offset interest. I would then pay for everything on credit card (my first!) and pay off the credit card monthly, in order to have the benefit of the cash in the offset account.

I am worried, however, about putting all my cash into one account. The multi-account approach worked really well for me psychologically – I enjoyed putting money in the accounts, and there was a mental block about taking money out for the ‘wrong’ purpose. Also, it was very easy: I didn’t have to track or monitor anything. It was all there on the statement.

Do you or your readers have any recommended systems for keeping track of multiple purposes in one account?
– Lisa

Given your needs, I’d try budgeting software.

My favorite ones are PearBudget and You Need a Budget. I think they both do the job really well.

PearBudget is the best free option I’ve found. I think YNAB exceeds it, but it costs money.

Q5: Parenting and work
I am extremely lucky. I started a business when I was 26 in my spare time and started doing it full time when I was 28. By the time I was 38, I had 15 employees and was feeling burnt out as I never wanted to be a manager, so I sold the whole business for enough money that I never have to work again. I am financially independent and debt free.

So what’s the problem? I have a ten year old and a six year old at home. I do not want them to get the idea that adulthood means not having to work. I worked my tail off to get where I am but they haven’t seen that. How can I enjoy my financial independence while still teaching the value of work?
– Jeremy

First, congratulations on your financial success. That’s an amazing story.

As for your children, my suggestion is to find something you really enjoy doing and devote yourself to it. Do you want to work for a charity? Do you want to write a book? Do you want to get into some form of art? What is it that you want to do with your time?

You sound far too self-motivated to just want to sit around. It might be fun for a while, but you’re going to want something to dig into. What are you going to dig into?

That should be your “job,” at least in the eyes of your kids.

Q6: Clark Howard thoughts
What are your thoughts on Clark Howard? Does his stuff make sense or is he just trying to sell books and programs?

– Charles

Clark Howard’s advice is perfectly fine. I find his ideas pretty well in line with my own.

Most well known “personal finance gurus” have to have some degree of “salesman” to them. After all, they’re sharing advice to encourage people to get their financial act together, which goes against spending money on products to help you fix your finances. That means the paths for making money are a lot more narrow than if you were touting technology goods, for example.

Most of Clark’s stuff can be found at the local library, though. Our library had two books by him the last time I checked. His radio show is free to listen to as well.

Overall, I don’t really have any issues with him. His advice is sensible and he keeps the salesmanship to a minimum compared to many other financial “gurus.”

Q7: Dealing with partner’s debt
I just found out my fiance has anywhere between 7,000 and 10,000 dollars of debt to NTTA, the toll tag company. I feel angry, betrayed and above all confused. We live together and split checkings and savings, we file taxes together etc but are just waiting for enough money to get married. We both worked so hard this past year (our first year on our own) and saved a third of our income, even though we had tuition, medical bills and car troubles.

A short background- my mother always spends more than she earns, so we were constantly in debt that I had do deal with from a very young age. As a result I need and stick to a pretty strict budget.

Anyway, we are working toward paying off the debt and I know everything will be fine. That being said, how do I deal with this debt emotionally? It’s been weeks since I found out and I am still furious whenever I see our bank statement. In addition, a lot of my trust is gone. I feel any financial security I had with him is gone. I have considered breaking up, but that seems too extreme. We’ve talked about it, he said he was sorry (cue the stereotypes) and that he’ll never do it again. I guess my real question is directed at anyone who accumulated debt out of convenience- when/how/why did you decide to really watch your finances? Could you see any changes in your attitudes, and did you ever start and then stop repeatedly? He seems sincere and of course I want to believe him, but I don’t want to live the rest of my life with debt surprises.
– Chloe

This may have just been a blind spot for him. Was he accumulating this debt before you got serious? Did he regularly receive bills for this and just ignore them? Or was it something where he thought it was being paid automatically? It’s hard for me to assess how serious this really is without more detail.

As for change, I found that it was difficult to be motivated to make real financial change until I decided for myself that it needed to happen. External motivators didn’t really do it for me. In your shoes, I’d look at how he behaves in financial situations besides the NTTA debt. Is he handling those well?

A final thought: I don’t live in north Texas, but I don’t understand how you can get THAT far in debt with a toll tag company. The toll roads must be absolutely vicious there or else you didn’t pay any bills for years and years.

Q8: Lending Club as borrower
My credit rating is not so good due to some bad choices a few years ago. Let’s just say I wasn’t making rational decisions.

Anyway, I am looking for ways to improve my credit and also get enough money to buy a used car. Is LendingTree a good option for that? You’ve mentioned using it as an investor in the past.
– Stephanie

Lending Tree provides installment loans (like a student loan), not revolving credit (like a credit card). For the most part, installment loans help your credit score much less than revolving credit, though they can help a little if you don’t have a credit history.

It sounds like you have at least some form of credit history at this point. If so, a loan from Lending Tree won’t help you improve your credit in a large way.

However, it can be a good option if you’re just looking for money with which to buy a car. If your credit is relatively bad but not disastrous, you can often get a better rate through peer-to-peer lending (like Lending Tree).

Q9: Parental guilt
My parents have done so much for me throughout my life that I feel really guilty when I think about it. I cannot possibly repay them for all they have done. Even now, they shrug off things like when I try to pay for their dinner and it just makes me feel more guilty.

– Shawn

Tell them exactly how you feel. Then, tell them that it’s important to you that you can help pay for little things sometimes like paying for their dinner.

There’s going to come a time in the future where you will be able to pay them back. When they’re ailing in their old age, they’re going to need help. That’s the time you can pay them back, when you help them get their things organized, help them move, visit them frequently in a retirement home, hold their hand when their mind and body are slipping away, and so on.

If you want to feel better, make a commitment to really stand by them when they will need you at that point in their lives.

Q10: Wills and trusts
I’m 28, married with 2 kids with no will or trust. I know we need one ASAP, but I don’t know where to start. We own a home, which we would want our kids to have. Our life insurance already has them as beneficiaries. We have some end-of-life issues that we would want honored. We don’t want all this held up in probate, so a trust is probably better, right? Is there one kind that would honor all of the above?

– Andrew

This article at LegalZoom spells out the differences between a will and a living trust very well.

From what I’ve seen, a will is better in states that have a simple form of probate for estates with a relatively low value – a few million or less, depending on the state. If that describes your situation, the additional challenges of a living trust don’t really provide a major benefit. Trusts work best when you have a significant net worth that could be tied up for a while if you rely on probate.

In other words, it really depends on the state you live in. Your best bet is to contact a family lawyer in your state who can point you in the right direction.

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.

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