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. Learning about investing
2. Twitter for careers
3. Charity auctions
4. Moving, marriage, and first priorities
5. To-do list management
6. International travel planning
7. Housing frustration
8. Ethics of returning cash
9. Money puzzle
10. Hot or cold laundry water?
Tomorrow is Election Day in the United States. Not only are we selecting our president for the next four years, we’re also electing everyone in the House of Representatives and a third of our Senators, let alone the multitudes of elections on the state and local level.
In other words, a large part of our government for the next few years will be decided tomorrow.
If you’re unsure about who to vote for for President, take a moment and try out I Side With, which will ask you a handful of questions and then tell you which candidate most closely matches your views.
You should also use My 2012 District to find out what congressional district you’re in. You’ll get a result back along the lines of “IA-03” or “MN-02.” Search Google with that term plus the words “congressional race” and find out more about the candidates running to represent you in Congress.
Don’t listen to what I say or what your friends say or what the political pundits say or what random comments on the internet say. Find out the information yourself, make up your own mind, and vote your conscience. Who you vote for in the voting booth is your own business.
Q1: Learning about investing
We have one daughter, who is a recent college graduate and is newly employed. She has enrolled in the company’s retirement plan, but does not know how or where to invest those funds. My knowledge is limited (and outdated) and I am looking for a place or resource where she could learn about investing. She needs to know what a stock is or a reit or a small cap bond fund, and how they are priced and sold, and so forth.
Do you have any suggestions where she could learn about this? I want to avoid an investment firm or company, where there would be sales pressure. It would be great to have a classroom atmosphere, which lends to learning from others’ questions as well.
Her workplace should have someone who is designated to answer thse questions for her – a plan representative for her 401(k). This should be the first person to ask with such questions.
That person is actually a pretty good person to ask, because they really have no ulterior motives when it comes to answering those questions. They succeed when the people involved are signed up and happy with their returns.
If she wants to start learning about investments on her own, the best overall book I’ve found is The Bogleheads’ Guide to Investing.
Q2: Twitter for careers
As a new work initiative, our boss is encouraging us to use Twitter to talk with other professionals in our field, as well as potential clients. He says not only will it promote our firm, but it will also help us individually. We have some guidelines for what to say, of course, but they’re pretty lax. There’s also a prize for having the most followers.
I’m trying to look at this as an opportunity for my career. How do I get started effectively using Twitter as a career helper?
Your best bet is to simply open up an account, find people who are saying interesting things relevant to your career path, and converse with them. It’s really as easy as that.
I’d suggest that 80%-90% (if not more) of your Twitter posts should be responses to others. Ask questions. Post useful links that back up what they’re saying. If you make a comment, try to make it useful or entertaining. At first, follow everyone that follows you, but you can filter later on when it gets overwhelming.
There’s really not too much else to it. Don’t look at it in terms of the numbers. Look at it in terms of the value you get out of it.
Q3: Charity auctions
On the Saturday after Thanksgiving, there’s going to be a charity auction in our town for a kid who is fighting cancer. While I don’t mind donating to the cause, I’m wondering what your thoughts are on the “premium” a person should pay at a charity auction for the items.
I usually go to charity auctions with a certain “donation” in mind that I’m willing to donate.
Then, I bid on items up to the maximum amount I’d pay for the item plus my “donation” amount.
So, let’s say I’ve decided that I’ll donate $25 at this charity auction. I see an item that I’d be willing to pay $20 for – say, a packet of tickets to the local zoo for my family. Then, I’d be willing to bid $20 plus $25 for that item, or $45 total.
If I don’t win anything, I usually still donate the amount I intended to donate.
Together, we will have an emergency savings balance of $15K (for a blended family of 5). Our 6 months savings based on our monthly expenses (only an estimate thus far) should be close to $27K so we are still not where we ought to be.
I do not own a car in the city so I take the bus/train and Metra to work. But, when I move to Missouri, I may need a car since it’s not an urban area but a college town whose public transportation system isn’t adequate for anyone to depend on.
I also want to start contributing towards a Roth IRA for us both which will be a max of $10,000/each and put money towards a car fund.
My question is should we put every free dime into first building up our e-fund to $27K? Or, should we take our time building the e-fund and start contributing toward the Roth IRA and car fund?
I work remote close to 100% of the time so a 2nd car isn’t an urgent need. Additional retirement savings is more important to me.
The importance of the six month emergency fund really depends on your situation. Do you have kids? Do you both have stable jobs? Can you survive on just one of your incomes for a while?
The more perilous the situation, the higher the priority I’d put on the emergency fund. If it’s not too perilous, I’d get to two or three months of emergency fund (if I had no children), then I’d start splitting it up, adding some to retirement and car savings while still slowly building the emergency fund.
Remember, though, a big part of an emergency fund is to bring about peace of mind. If you know that the significant crises you imagine are easily handled by this fund, your life will flow a lot easier.
It’s pretty easy, actually.
The only paper list I keep offline is my daily to-do list. It’s just a sheet of paper that lists somewhere between five and twelve items I need to take care of that day if possible. It’s usually a mix of personal and professional stuff.
A lot of the items on that list are just the “next step” in a given project. For example, the “next step” for The Simple Dollar is almost always writing the next article, so I’ll include that as something on my daily to-do list (usually, it’s for three articles). For other projects, the “next step” might involve simply clearing off a single shelf on a bookshelf or measuring the dimensions needed for a standing desk or outlining the plot of the next chapter on my novel or revising the rules of a game I’m designing or something else like that.
Online, I keep a checklist for each project I’m currently working on, as well as a checklist of miscellaneous items with particular due dates. When I make my to-do list for the day, I generally pull anything that’s due (or close to it) from the miscellaneous list and write it down. I also pull the “next item” from all of my high-priority projects along with the “next item” from a few of the lower-priority projects.
Together, these make up a nice to-do list for the day.
Q6: International travel planning
My wife and I have always wanted to travel to Sweden. We would like to visit our family’s ancestral villages and tour the country. We have been saving for this trip for a few years now and have reached the point where we can start actually planning it which is exciting but how do we start? How do we not get ripped off when planning our travel?
86% of people in Sweden speak English, which gives you an advantage right off the bat. You should be able to get around Sweden on your own just with your own English-speaking skills.
Given that, there’s not a huge barrier that will keep you from simply flying into Stockholm, renting a car, and driving wherever you want. Renting a car in Europe is pretty straightforward for Americans. Just get a guidebook to Sweden and drive to the places you find interesting.
Sarah and I are considering a trip to Norway in the next year or two, and we’re leaning toward just renting a car and driving around the country.
Q7: Housing frustration
My husband and I are so frustrated with the cost of housing. We live in an unfortunately expensive area of California, but we feel we are a bit stuck. Without getting into details, we need to keep our kids at their current school until both have entered junior high (4.5 more years). Due to childcare issues, not to mention the quality of the school, changing schools is not an option.
If our credit was decent and we had a down payment, we could purchase a modest townhouse or a fixer-upper, and our mortgage would be around $1800 a month or less (according to online mortgage calculators).
The problem is that rental properties around here are so expensive! We currently pay over $2000 a month, and we live in a low-end apartment with all kinds of problems. Our lease is up in December, and it seems every property we’ve seen is $2100 or more, unless we live in an area riddled with drugs, crime, and other unsavory problems.
We haven’t been able to pay down debt or save for a down payment because of these high costs. We are frustrated and tired. Is it too much to ask to live in a modest home in a safe area? Are our expectations too high? Are we doing something wrong?
Depending on where you live, it might actually be too much to ask to have a modest home at a low price in a safe area.
Every place in the world has advantages and drawbacks. One of the big drawbacks in your area might be the lack of affordable housing for some reason or another. Likely, your area makes up for this with cultural benefits, career opportunities, and other advantages.
My honest suggestion is to start a job search in another area of the country, one that has more affordable housing. Des Moines, for instance, has the highest median income in the nation relative to the cost of living. There are many areas with booming industries that still have a low cost of living.
Q8: Ethics of returning cash
The other day, I found a $5 bill in the parking lot of the grocery store. My son asked me if we should figure out whose $5 it was and try to return it and I basically said there was no need to. As a six year old will, he said, “Well, what if it were $500?”
He makes a pretty good point. What’s the difference and how can I explain it to my kids?
The difference is in the impact the money has on a life. That $5 bill might be helpful to someone, but it’s not going to be life-altering. To many people, $500 can easily be the difference between making the rent and homelessness. It can mean food on the table or not.
There’s also the retracing factor. Very few people are going to spend an afternoon retracing their steps to find a lost $5 bill, while people certainly will search quite hard for an envelope with 5 $100 bills in it. If you take the steps to find the envelope’s owner, you have some chance of returning it to the right person. With a five dollar bill, you have very little chance of doing so.
I explained this to my own six year old and he seemed to completely understand.
You saw a shirt for $97. You didn’t have the cash, so you borrowed $50 from your mom and $50 from your dad. $50 + $50 = $100. You bought the shirt and had $3 change.
You gave your dad $1 and your mom $1 and kept the other $1 for yourself. Now you owe your mom $49 and your dad $49. $49 + $49 = $98 + your $1 = $99.
Where is the missing $1?
There is no missing dollar. It’s a trick question.
When you buy the shirt, you are $100 in debt. You own a $97 shirt and $3. You pay $2 toward that debt. So, now you’re $98 in debt and have a $97 shirt and $1.
Here’s another way of thinking of it. The $49 you owe your mom and the $49 you owe your dad are debts, not assets. So, your debt total is $98. Your $1 is an asset, as is your $97 shirt, the total of which is $98. Perfect balance.
The question is mixing together debts and assets in a way that just makes things confusing. You have to keep them separate. When you do, it all stays in balance.
Q10: Hot or cold laundry water?
What is your take on using hot/cold water for laundry? I think cold water is just fine (especially since my wife and I hold white collar jobs), but my wife lives by the “hot water kills germs” mentality.
Would you know of any reputable resources that support my claim?
How about Philip Tierno, a professor of microbiology and pathology from the New York University School of Medicine? He reports that the hot water used in most home washing machines isn’t nearly hot enough to kill the germs.
The best method for getting germ-free clothing isn’t to use hot water in the wash – it makes little difference, in fact. The best method is to regularly run an empty load in your washing machine that’s heavy on the bleach. In addition, you should dry your clothes out on a line instead of in a dryer, since the UV rays will help kill the remaining bacteria.
The best prevention method to keep yourself healthy is to just wash your hands quite regularly. Give them a thorough washing a few times a day and you’ll prevent almost all the bugs that will find their way into your body.
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.