Site Changes

Reader Mailbag

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. Working during downtime
2. Choosing among retirement options
3. Charge card or credit card?
4. Baseball cards
5. Money left over in budget
6. Is being vegetarian expensive?
7. Alcoholism and money
8. Fuel efficiency not worth it?
9. 401(k) issue
10. Sticky keyboard
11. Food thrown out question
12. Money in accounts
13. Picky about television
14. Dealing with therapy expense
15. Gencon

Starting with today’s post, I am making some changes to the frequency and length of posts to The Simple Dollar.

Rather than having an article by me twice a day, I’m going to be posting one article per day Monday through Saturday. These articles will be somewhat longer and more in-depth than before, but the types of things that I write about won’t change. I’m still going to be writing about frugality and goal-oriented personal finance with quite a bit of detail about my own personal experiences and struggles.

As part of this change, the Reader Mailbag articles will be appearing only once a week, on Mondays. They will be a bit longer than before, numbering somewhere between 12 and 15 questions per week.

Also, the “link roundup” on Wednesday will be going away, as will the Pieces of Inspiration on Saturday mornings. I will still be using many of the items from the Pieces of Inspiration posts elsewhere on the site as I plan to integrate them into other articles because I find many of them to be powerful.

There will be other writers popping up on the site from time to time. They will be focusing on other personal finance matters.

I hope you enjoy the changes. I’m certainly looking forward to having more time to dig into specific topics!

Q1: Working during downtime

I’m trying to find a way to make money while at work. That sounds funny but I have a lot of downtime at my job. I work night shift and, as long as my patients sleep, I have nothing to do and I would like to use it more productively than watching TV or reading a book. A few years ago I was selling antiques on eBay for my uncle who is a collector/dealer. While I made a few dollars at that, it dried up as the economy changed and eBay changed their rules for listings. It also took up a significant amount of my time at home since that was when I had to take the photos and package the items for shipping. I was able to do all the computer work (write ads, communicate with customers and do the accounting) while at work.

I have access to a computer and Internet but I don’t have any real computer skills outside of the general Word, Excel and PowerPoint skills. I’m not certified in anything like accounting or billing. I just have a lot of downtime being wasted trying to stay awake. I’m not limited to just computer work. It just has to be something that 1) I can carry in a backpack, 2) doesn’t make a lot of noise (sleeping patients!) and 3) I can interrupt as my real job requires. For example, if a patient wakes up and needs changing, I would have to attend to that and, when done, can go back to the activity.

I’d really like to pay off some of my bills faster and feel like I am wasting time at work. Even though I am making a decent wage, I feel I could be making additional funds doing something productive. Any ideas are appreciated.
- Fred

Given those constraints, my suggestion is that you either start building websites, start a blog, or start writing ebooks.

Given that you can’t make much noise, things like podcasting or making videos really won’t work, nor will many forms of online learning (which require audio).

The paths above all offer many opportunities for making money. The key is to find a topic that you can write about consistently with passion. It’s much harder to write a lot of material – which is what you’ll need to do here – if you don’t care about the topic. If it’s drudgery, it’s easy to just stop doing it.

For websites and blogs, you mostly make money through ad placement (using Adsense at the start) or through referrals (like Amazon Associates). For ebooks, you’ll be writing books and selling them directly using the Kindle store (and probably other stores, like the Nook store through Barnes and Noble).

Q2: Choosing among retirement options

My husband (52 years old) and I (57 years old) are like a lot of people these days – no retirement savings to speak of. I got cancer seven years ago and am just now finishing paying off bills so we have no savings to speak of. I currently work for a university and they automatically deduct (it’s mandatory) for retirement through the Teacher’s Retirement Fund (I’ve contributed for the last five years). My husband works for a hospital and he also has a retirement fund (contributing for the last two years). My place of business also offers a retirement plan besides the Teachers Retirement Fund. We’re finally at a point where we’re pretty much debt-free (rent, utilities, insurance is all we pay on) and are now at the point where we need to start building up for retirement. We know it’s late, but we’re doing the best we can. My question is that I don’t know which retirement fund would work best for us. One is a UTSaver TSA-403(b) and the other is a UTSaver DCP – 457(b). I’m really confused as to what to choose to get every bit of savings we can get – we know how late it is to be saving!
- Carol

They’re probably both fine. The differences are pretty slight, as described in this pamphlet.

If you’re going to contribute a lot to your retirement in the coming years, the 457(b) is probably a better option because it has a higher contribution cap. As the brochure says, “You may defer up to an additional $15,500 under the special catch-up provision if you have unused deferrals in previous years when you were eligible for a 457(b) Plan. You may participate only in the three years before the taxable year in which you attain normal retirement age. Cannot be used with the Age 50+ Catch-up Provision.”

If your contributions will be $20,500 a year or less, the 403(b) is probably better, as it has this offer: “If you have 15 years of service with the U.T. System and previous deferrals have averaged less than $5,000 per year, you may defer up to an additional $3,000 above the annual maximum. The additional deferral may not exceed a lifetime maximum of $15,000. Can be used with the Age 50+ Catch-up Provision.” The 403(b) is slightly better because of the additional options for borrowing, too.

Since I don’t know how much you’re contributing, my recommendation is probably to use the 403(b) plan unless you’re very close to retirement and want to contribute a huge portion of your salary, in which case the 457(b) plan is better. If your contributions are always going to be below $15,500 a year, then the difference is minimal anyway.

Q3: Charge card or credit card?

I recently learned that there is a difference between a “charge card” and a “credit card.” Does a charge card help your credit at all? Any other factors I should know about?
- Terry

The biggest difference between a charge card and a credit card is that a charge card must be paid in full each month. With a credit card, you can carry a balance.

Generally, charge cards do not have a credit limit. Instead, if you don’t pay the full balance by the due date, they just freeze the card.

Also, charge cards tend to have an annual fee, but they tend to have very good rewards and other benefits.

In terms of your credit, both cards help. Charge cards generally do not affect the credit utilization portion of your credit score at all, whereas credit cards can have a positive effect (if your credit utilization is low) or a negative effect (if it’s high). In other words, if you reach the credit limit on your credit card (or get close), it’s probably dragging down your score, but if you are never close, it’s probably a help.

Q4: Baseball cards

So the thousand dollars my husband just spent on a 1985 – 2004 collection is worthless? What about the Beckett book values it is listing for those cards?
- Samantha

It’s probably not entirely worthless, but it’s almost assuredly not worth $1,000 unless he was very, very lucky and bought only specific cards.

The problem with baseball cards during those years, particularly the late eighties and early nineties, is that they were incredibly overproduced. During the early eighties, a lot of baby boomers wanted to buy the baseball cards of their youth as memorabilia, causing baseball cards from the 1950s to skyrocket in value. As a result, a lot of people started buying current baseball cards as an investment, believing that in thirty or forty years, the same effect would happen. So, in order to meet this demand, the companies started printing a lot of cards. New companies popped up – Score, Upper Deck, etc. – in that timeframe, too, because the market was booming.

The problem is that with so many cards out there, it’s easy for the people who want them for nostalgic reasons to get the cards they want. Since there are more sellers than buyers, it’s a buyer’s market. People holding the cards and hoping to sell them are holding a collectible for which there are a lot of copies out there and only a relatively small number of buyers.

There are a few cards that hold their value from that period, but it’s mostly the iconic cards, like the 1989 Upper Deck Ken Griffey Jr. card.

Q5: Money left over in budget

I have been keeping a budget for 4 years now. I track every penny and I am working hard to pay down all of my debts (Dave Ramsey’s debt snowball method). I have one full time job and two part time jobs, so I have funds coming in every week. My budget is month to month. Every month accordinng to my budget I break even. However, at the end of the month I still have some money in my checking account, as funds are always coming in and going out. Should I roll those leftover funds into my next months budget?

For example, I get paid on the April 30th and I have a large bill that is due the May 5th. I started my new budget on May 1st with only funds that I will be earning in May. Though, I already have leftover money in my checking account from April.
- Roger

Are you counting that May 5 bill as being part of your April budget or your May budget? If you’re putting aside cash for a particular bill, you should include that bill as part of the same month’s budget regardless of when you actually pay it.

If I were you, I would include both the bill and the payment in the budget for the month when it’s due. So, in this case, since the bill is due on May 5, I would include it in the May budget, both the bill and the payment.

Ideally, you’ll come in under budget each month so that there’s a little money left over. I generally let that build up for a while before doing anything with it so that, if I accidentally go over, it’s not a problem since I have the “buffer” from coming in under budget in previous months.

Q6: Is being vegetarian expensive?

You’ve mentioned that you’re a vegetarian many times. Is it expensive to eat a vegetarian diet? You seem to exclude yourself from a lot of cheap food.
- Sandy

I’m actually trying to think of cheap food that I’m excluding myself from. The only example I can really think of is most fast food offerings. Vegetarians take a pass on most of the stuff on the “dollar menu,” for example.

Most of the foods that make up the base of my diet are really cheap. Beans. Rice. Eggs. Whatever veggies and fruits are on sale in the produce section. Those kinds of things really aren’t expensive at all, but they make up the backbone of what I eat.

I don’t spend money on things like steaks, either, which are really expensive, even buying them for home consumption. You can buy many pounds of beans, rice, and vegetables for the price of a twelve ounce steak.

I find vegetarianism to be very cheap, actually.

Q7: Alcoholism and money

I come from a family with four other siblings, my father is a self-made millionaire and has always taught me and my brothers that if you want something you have to make it for yourself.

About a year ago I found out that my dad has paid off all of my siblings mortgages on their houses. This was not meant for me to find out. I have a really good relationship with my family and was told that the others needed this more than me due to all of them having families. Instead of feeling jealous I’m actually very happy that my parents were able to do this from my brothers.

Of all my siblings I am probably in the best shape financially. I am 30 years old, i’m in nursing administration for a large health system in a very low-cost area of the country, I currently make about 70,000 a year, all of my living expenses and spending our less than 60% of my income, contribute 15% of my salary to a 401(k), have an emergency fund of 50,000 dollars, save approximately $1000 above and beyond my 401(k) savings a month, I am single and own a home with a mortgage of $800 a month, I have zero debt outside of my mortgage.

My financial and the rest of my life was not always like this, five years ago I lost about everything and went to rehab for alcoholism. Since that time I’ve turned my life around in recovery. I have been sober for five years as of 21 April.

My question is- when I found out about them paying off my siblings mortgages my parents found out that I knew and after about a year have recently come to me and made an offer to pay off my mortgage. My dad has a pretty tremendous wealth. Most of his wealth that has come at the expense of personal relationships with the family. We have a great relationship now but growing up we never saw him, he missed most of our childhood. He loves us all dearly and I believe he shares love with what he has financially. He has taught me a lot in life a lot of good things. but I don’t want him to show love with money I want him to show love to his family by spending time with us. At this point I feel like we’re trading years for dollars. I have turned down his offer down not only because I don’t need it but to show him that some things don’t have a price tag. I feel very strongly about my decision, after several weeks of thinking about it I start thinking about having my $140,000 mortgage paid off and all the things I could create with freeing up that money. Plus everything I’ve been taught since I was a kid was build it on your own. Pull yourself up by your own bootstraps. He. is also stated that the offer still stands. Should I go against what I feel and what I have been taught my whole life?
- Andrew

I would accept the gift with no reservations.

Here’s the truth of it. What you choose to do with your money once that mortgage is up to you. It could be financially responsible or it could be a complete disaster. You could build a business or a set of investments and retire early or you could spend like it’s going out of style.

That’s the point where “you want something you have to make it for yourself.” It has nothing to do with a gift from your father that simply accelerates those decisions.

He could give you a million dollars and you’d still be left with choosing between making wise decisions with the money or making foolish decisions. Those decisions are up to you and are truly the core of “making it for yourself.”

Take the money. Do smart things with it.

Q8: Fuel efficiency not worth it?

I drive about 8000 miles per year. My current car gets about 23 miles per gallon and I like it. It needs replaced soon though as there are lots of little problems with it. I would like to just get a newer version of this car but I was worried about fuel efficiency. The newer version of the car gets 26 miles per gallon according to the web. How efficient does a car really need to be to be worth it?
- Kelly

I tend to rely on the “unofficial” estimates for fuel efficiency from for my numbers, so I looked up the stats on a 2013 Prius. It gets 46.4 mpg.

If you drive 8,000 miles a year, your current car burns through 347 gallons in a year. The newer version of your car goes through 307 gallons per year. The Prius eats through 172 gallons per year. Thus, your price for gas (assuming $4 per gallon) is $1,388 for your current car, $1,228 for the newer car, and $688 for the Prius. With a Prius, you’ll save $700 per year in fuel costs, in other words, but with the car upgrade you’re looking at, the fuel savings is only $160 per year.

Fuel efficiency has a huge impact only if you’re making a large jump in fuel efficiency by percentage and if you’re driving the car for a long time. Without both of those factors, it’s not a major deal.

Q9: 401(k) issue

When my husband retired 6 years ago (from his main career), he rolled his 401K into a 401K with Fidelity. It seems to have done very well, making average gains of 11-12% yearly.

I have two miniscule accounts, a traditonal IRA and a roth IRA (we are both still working at 63 and 61). They only have a total of about $2,200.00 total. On the Roth, I have to manually go into Fidelity each month or two and move the amount we transfer in each month from a cash account to their DVY account. Do you know if Vanguard has an easier way to do this, and if I may ask, why is Vanguard your favorite? We wouldn’t move husband’s Fidelity account, just my small ones
- Barbara

I like Vanguard because of their devotion to the idea of an index fund, which keeps their expenses really low. I mostly invest in Admiral shares of many of their funds and the expense ratios are below 0.1% on all of them, which means that for every $1,000 I invest, Vanguard only takes out $1. Given the returns, that’s beyond reasonable.

I’m also a fan of how Vanguard’s business is organized, with each fund essentially functioning as an independent business. That’s smart, in my opinion.

I’m not sure I fully understand your funding process that you go through. With our funds, it’s just automatically deducted from our checking account by Vanguard each month. We don’t lift a finger.

Barbara has a second question.

Q10: Sticky keyboard

How do you fix sticky keyboard keys? I have tried using the keyboard spray cleaner from Staples, but do I really have take each key off the board, clean, and replace? Or is there another way?
- Barbara

I usually use a soft-bristle brush – like an old toothbrush – along with some isopropyl alcohol. When I worked in an office environment, we would purchase a product called Goo Gone, which worked really well, but alcohol works well and is really cheap.

Whether you use alcohol or Goo Gone, the procedure is the same. Just pour some into a bowl or onto a saucer, rub your brush in the liquid, then brush the key. Keep repeating until the key is clean enough, then dry it with a towel.

You should disconnect your keyboard before doing this, obviously.

Q11: Food thrown out question

Let’s say I buy a container of strawberries and put them in the fridge. I pull them out a few days later and notice some mold on one of them. Should I still eat them?
- Rachel

I wouldn’t.

Mold on the surface of food is just a visual indicator of growth beneath the surface. If there is visual mold in a closed container, it’s very likely that there is sub-surface mold on other parts of the item.

Obviously, if you’re a microbiologist and can identify the mold, then this advice doesn’t apply and you should use your own judgment. If you’re not a microbiologist, toss it.

Q12: Money in accounts

I have been living frugally and saving and earning in above average proportions. I have also been following saving and investment blogs and doing accordingly. Consequently I have a fair amount of money as investments, retirement accounts full and a lot in savings account. I want to do something useful with the money rather than let it sit in various accounts. I have a home and all other expenses are taken care of by my office. I am fairly good in what i do and have a steady and great job. so much for the background, now my question:

What should I do with all this money lying in the accounts?
- Shannon

I’m not sure what you mean. If you have money invested and in retirement accounts, it’s already working for you. What else would you rather be doing with it?

Essentially, all of that money is already invested in some fashion. The goal of investments is to earn a return on that money so that someday you can achieve a large goal, whether it’s retirement or buying a home or starting a business. Just sitting on that invested money allows it to grow.

Money invested in a savings account is very secure, but the return is very low. Generally, I encourage people to keep enough in savings to amount to a healthy emergency fund, then move the rest into other investments that might have a better return, such as stocks, but also have a bit more risk.

It sounds like you want to use it for seed money for a side business of some kind, which is the only other way I can think of that you might want to put it to use. Are you thinking of buying homes to rent out to others? Is there some other business you’d like to launch? Launching a business has a lot more to do with your own personal interests than anything else.

Q13: Picky about television

My wife and I recently cut the cable and switched to just using a digital antenna for our television. We went from hundreds of channels that we never watched to about 13 or so. I’m glad we switched because we never watched most of those channels anyway. We still have all of the networks, local news, two different weather channels, a kid’s (PBS) channel, and a documentary (PBS) channel that provides us more than we can watch anyway. Plus we’re spending $100 a month less.
- Robert

Part of the challenge of cable – and of the internet – is that there is more content than you’ll ever have time to enjoy and with so many choices, we’ll often skip over good to try to find great, only to find that we spent a bunch of time wandering aimlessly and missing out on a lot of stuff.

There’s a really great book on this idea, called The Paradox of Choice. It turns out that this “abundance of choice” problem pops up all the time in life.

There is more stuff on over the air channels and Netflix than I’ll ever have time to watch. I hope to switch to that system soon.

Q14: Dealing with therapy expense

I graduated from school one year ago. For awhile I was diligently saving money each month (about 20-30% of each check to savings). This was allowing me to steadily build my savings. I rarely missed a month (other than Christmas time). However, last year I pulled my hamstring. I was being cheap and never saw a doctor, while continuing my extensive exercise routine, and it gradually got worse until I finally had to. Fast forward to now, I have been in physical therapy for 6 months, had multiple doctor visits, and am starting a new PT routine this week (which thankfully looks more appropriate). My condition got worse which required me to keep making these visits. As a result of this, my saving each month has dropped to either 0% or 5% to cover all these bills. This feels like a huge setback and has made me really upset. Is there any advice you can provide on coping with this?
- Andrew

First thing: what will your expenses look like now that you’re switching to the new routine (which will probably be less expensive)?

It sounds like this medical change is eating up 20% of your take-home pay. Is there anything that insurance might be covering here? Do you have health insurance?

If not, have you tried negotiating with the physical therapist or looked for alternative payment systems with them?

If this is a temporary change, I wouldn’t freak out about it too much, but if this is the start of permanent expenses, you should definitely walk through these steps.

Q15: Gencon

You attend Gencon in Indianapolis every year, right? Are you going this year? What events are you participating in?
- Steve

I go to Gencon every year (unless a personal crisis causes me to miss out) and 2014 is no exception. I usually load up my schedule with events, mostly teaming up with a small group of friends to tackle smaller events during the convention.

For those wondering, Gencon is a tabletop gaming convention held in Indianapolis each year. 2013′s attendance was just shy of 50,000 unique people, with most attendees going for multiple days. It’s my big splurge of the year, as I go with a group of friends.

My schedule is pretty stuffed, but the two big “open” events I’ll be at are the AEG Big Gaming Night on Friday night at 8 PM and the L5R Celebration on Saturday night at 8 PM. Those events are very big and well-attended. If you’re going to Gencon and see me there, feel free to say hello!

Got any questions? The best way to ask is to email me – trent at thesimpledollar dot com. IĆ­ll 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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