Questions About Coffee, Mobile Homes, Pillows, Roth IRAs and More!

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. Junk cars or financing?
2. Online freelance writing
3. Coffee bargain?
4. Value of a mobile home
5. Attitude shift with huge debt
6. Paying off credit card balances
7. Car buying conundrum
8. Roth IRA question
9. Caring about pennies
10. Researching pillows
11. Shipping large packages internationally
12. Why aren’t people frugal?

One of the biggest frustrations I have in my life is that I have a much longer list of things that I want to spend my time on than I have hours in the day.

I came to this realization over the weekend as I went through the process of transferring my to-do list to a new list manager while also doing something of a life review. As I looked at the enormous list of things that I want to be doing but simply do not have time to do, I was almost overwhelmed.

Thus, the challenge for me is whittling down that list and finding ways to have more time for all of these projects by doing things like involving my family with them and so on.

It’s harder than it sounds. Whenever I “cut” some project from my to-do list and accept that I realistically won’t be able to pull it off, it feels like a punch in the stomach. I’m letting go of something I really want to do, and that hurts.

One of my mentors in life once told me that there are three stages in life. When you are young, you have an abundance of time and energy but no money. In your middle years, you have an abundance of energy and money but no time. In your later years, you have an abundance of money and time but no energy.

I definitely feel like I’m in that “middle years” segment. I am constantly doing something – I’m almost never idle – but the list of things I want to be doing is much larger than I have the time to achieve.

Q1: Junk cars or financing?

My 21-year-old daughter is six months pregnant and does not have a car. What is her best option on finding a good reliable car for her and her baby to travel to doctors, drug stores, grocery stores, and beyond? She does not even have her driver’s license yet or a learners permit, but her husband has a license and she has bought him three cars already that were used cars and ended up being junk. The cars ended up being junked because they were not good reliable cars and she paid $500 for each used car. What should she do? Should she finance a car or buy another $500 car that will be junk in less than six months?
– Margaret

An unreliable car is essentially worthless, in my opinion. If you do not have a high level of confidence that your car will start when you go out into the driveway or parking lot or garage with your key in your hand, then you might as well not have a car and plan your life that way. That way you’ll be saving on registration, insurance, maintenance, fuel, parking, and so on.

If she is in a situation where she needs a car for transportation to and from work, then she needs to take out a loan in order to get a car that makes that commute secure. If she lives in a larger city, she may want to consider a public transportation pass instead.

I would encourage her, if she goes the car route, to get a late model used car that’s known for reliability. Hondas and Toyotas get consistently good long-term reliability numbers from Consumer Reports, which I trust for such things.

Yes, that will put her in a bit more debt and that’s never a fun place to be, but having a reliable car means that there will be a lot fewer repair bills for quite a while and it also means that she won’t be late for things because of unexpected car troubles, which seems to be a consistent problem.

Q2: Online freelance writing

I wish to try out at [a specific online writing site] and with social media jobs (writing ), but I am worried for the truthfulness, trustworthiness and how genuine these websites are! I’ve had an experience of such a job offer but I think they were spammers. Just wishing to know how true, trusted and genuine these job offers are. I wish to give it a try for sure if it just all will be well.
– Nadine

I chose not to link to Nadine’s chosen online writing site because it is a known site for scams.

The truth is that most online sites that offer you opportunities to work from home with zero experience are largely scams. If you aren’t clear on exactly what you will be doing – and I mean exactly – and what you will receive for it, don’t sign up.

The truth is that there are no services like that that will earn you a livable wage from home. There are a few where you can earn a bit of pocket money, like Fiverr and Mechanical Turk, but the reality is that you won’t be paid a lot for your efforts unless the person paying you has thoroughly vetted you. Any service where you can just sign up and start doing stuff to earn money isn’t going to be paying you a whole lot.

The only real route to earning money from home is building up your own content that you maintain control over and can sell or give away with ad support or building a service that people will pay for. Those things are both hard and require a ton of time and effort to turn into a profitable venture.

Q3: Coffee bargain?

What’s the better $ value: buying beans and grinding them at home to make coffee OR buy pre-ground coffee?
– Luke

Whole bean coffee is definitely more expensive than ground coffee per ounce. However, having said that, if you buy coffee that’s already ground from the store, it’s already lost a lot of the aromatics and other characteristics that make for great coffee. Also, it’s much easier to hide defective coffee beans in ground coffee, whereas in whole bean coffee bad beans would not pass visual inspection.

I’m not much of a coffee drinker, but my wife is an avid coffee drinker. I talked to her about this and she basically said that there are really two purposes for which she drinks coffee. She drinks it often first thing in the morning as a “wake-up” call, and she drinks it at other times in the day for the flavor and aroma. For her, pretty much any kind of caffeinated coffee works in the morning, but she prefers freshly-ground whole bean coffee when she’s drinking for flavor.

If you’re looking purely at cost and are comparing ground coffee to whole bean coffee, ground coffee will be a cheaper purchase per cup of coffee that you brew at home.

Q4: Value of a mobile home

Can you tell me anything about the monetary value of purchasing a mobile home in a trailer park versus renting an apartment? I’m needing to move and am having a hard time understanding why, for the same amount of money, I shouldn’t purchase a double wide as opposed to renting a three-bedroom apartment. Is there a financial disadvantage? Why wouldn’t more people do this? Is it the perceived stigma of living ‘in a trailer’ that is bugging me?
– Claire

The biggest reason is that mobile homes themselves decrease in value over time. They depreciate, much like cars do, because they’re not built to be permanent dwellings. If those trailers are not also tied to land, they’re going to decrease in value over time and you’re going to lose money both on the loan to buy it and on the value of the mobile home and on the rental fees for the lot. Each of those things individually might not be all that much, but they add up to a pretty significant loss each month that’s usually as much as or more than apartment rent.

I think that there is a stigma of living in a trailer park for some people and that helps many people not even consider mobile homes, which contributes to the much weaker market for used mobile homes.

I think that many people perceive them as being a value because the month-to-month cost can be pretty low. However, while you’re living in a trailer, particularly one in a trailer park where you don’t own the land, the trailer is devaluing while you live there, which means you’re losing money that you don’t immediately see.

Q5: Attitude shift with huge debt

I’d love to hear your opinion on the Manulife One account. A couple years ago, my spouse and I moved our mortgage to M1. The idea is to combine everything and pay your debt down quick. We had a necessary home reno that was unplanned for (definitely not financially planned for) that cost 30k – a lot for us. After this we moved everything to an M1 account, and really thought we were being responsible. But I find our spending habits have actually changed from this move. We are less careful of purchases because our balance is so far from zero. In about three years we have gotten almost nowhere on paying down our mortgage (they take out interest fees, but that’s about it.). We have good intentions but it seems if the danger isn’t close to us (aka nothing in the bank), we’re not responsible enough. Should we get out and move to a conventional mortgage? I have a feeling it’s more of an attitude shift, but what can I do to fix this?? I’d love to make this work, as mathematically it makes so much sense!
– Patricia

I think you’ve discovered exactly why banks offer accounts like Manulife One. The bank is going to make a ton of money on those accounts from people who aren’t vigilant with their spending.

First, let’s back up. The account that Patricia is referring to is in the vein of what is often called a “money merge account.” Basically, the bank takes over all of your debts and gives you what amounts to a credit account. Think of this “credit account” as kind of like a fairly low interest credit card with all of your debts rolled into it, except that your house is a collateral against this account (so if you end up no longer putting money in there, they can repossess your house). Then, you sign up to have your paychecks automatically transferred to this account. When your checks arrive, it’s like a giant payment against your debt. However, whenever you need to spend money, it actually adds back to your debt level.

It sounds great, but it ends up being kind of like a bottomless credit card that you never receive a bill for. It takes personal discipline to make this kind of account work. If you don’t have discipline, you can easily buy into a sense that you can just spend whatever you want because you never really see a bill for it.

I’m not a fan of these kinds of accounts for that reason. They’re great for people with a great deal of personal discipline when it comes to spending, but if you have that, you probably don’t need an account like this to begin with.

There’s nothing you can magically do to give yourself a greater level of personal discipline. You can talk to another bank about refinancing and get back into a more typical situation with a traditional mortgage, which might force you into better habits. Still, the key is inside of you – you have to have the strength to cut back on your personal spending.

Q6: Paying off credit card balances

My question is about paying off credit card balances. My husband and I have lived on mostly one income. He’s been a stay-at-home parent for our two kids since our first was born six years ago. He finished school and then we relocated to a new state for a great opportunity in my career. We’ve lived frugally but have amassed some credit debt. We are going to be coming into some money from a settlement; about $50,000. Our first priority is paying the balances. I want to make sure we go about this right. I just read your column about closing a credit card account. Seems like there are often unknown consequences or things to be aware of.
– Irene

Paying off credit cards is a wonderful thing to do with a windfall like this. The only pitfalls I would worry about are taxes and making sure you’re paying off cards in the right order.

First, make absolutely sure that any taxes you might owe for this settlement are covered. If you’re not sure, talk to a tax advisor about it and make sure that you’re not suddenly hit with a tax bill next year.

Second, you should take the remaning money and just plow through your credit card debts, starting with the one with the highest interest rate. You’re probably better off cutting down your cards to just a couple, because for most families, the best situation for credit cards in terms of your credit history is to have a relatively small number of cards without a huge outstanding balance on them. Figure out which cards you use the most (whether due to rewards or other factors) and stick with those. Get rid of the rest.

The only bad consequences from closing credit cards is that it can sometimes have a short-term negative impact on your credit score. That impact will be gone pretty shortly, so as long as you’re not taking out any major loans in the next several months, I wouldn’t sweat it a bit.

Q7: Car buying conundrum

I’m looking to buy a car and I’m wondering how much you would suggest I spend on it.

Some backstory: I’m a 26-year-old single woman working as a teacher, so while I don’t have a high salary, my job is very steady. I don’t have any student loans or other debt and I just finished my master’s degree, so I’ll be getting a raise in August.

I have about $2,700 in my retirement account and $25,000 in savings. A car salesman friend tried to convince me to lease, but I’d rather buy a newer used car outright. How much would you suggest I spend on a car?

I am in a serious relationship with someone who owns a house and I suspect we’ll get married in the next few years, so home ownership isn’t a concern (I currently rent).
– Lily

I agree completely that you should buy a late model used car in your current situation. I would echo much of what I said in my answer to question #1 – choose a car from a reliable manufacturer like Honda or Toyota. Stick to the relative low end of the different models that they offer – for example, if you’re looking at a Toyota, don’t start looking at high end Lexuses.

It’s really hard for me to target you toward a specific dollar amount without knowing your needs more specifically. My opinion is that if you’re buying a late model used car from a reliable manufacturer but not choosing one of their high-end models, you should be well within what you should be spending.

Your best bet, honestly, is to take your time here and shop around. There are going to be lots of dealers near you that are selling late model used Camrys and Corollas and Civics, for example. Look at lots of different models, test drive a few, and see what the comparative prices are like.

Q8: Roth IRA question

I want to make sure that I understand how a Roth IRA works. I am 26 and my wife is 23. Let’s say that I contribute to a Roth IRA and retire when I am 60 and my wife is 57. She continues working while I am retired. I start taking money out of the Roth IRA. How does that work for taxes? Do we just not even count the Roth IRA money toward our taxable income?
– Jeff

Exactly. Your Roth IRA withdrawals won’t count toward your family’s taxable income.

That’s why many people like Roth IRAs, especially people who are currently making a pretty low income anyway. If you’re making a low income right now but still finding ways to contribute to a Roth, it’s likely that you’ll end up in a situation with higher taxes in retirement and tax-free “income” from your Roth will be a big benefit.

This is also true for people who have a lot of tax deductions and tax credits right now – people with children, for example, where their taxable income is artificially low due to those benefits. Thus, they’re paying a pretty low tax rate now and can get money into their Roth quite cheaply, but they’ll probably have a much higher taxable income later, which means that Roth money is going to be a big help.

Q9: Caring about pennies

When you write articles about how you saved 10 cents on something, I just do not care. I’m facing almost half a million dollars in debt. Saving 10 cents is a waste of my time. Tell me how I can earn a lot more or maybe save a large amount.
– Dennis

The thing to focus on isn’t the one-time savings of a dime. It’s the fact that it’s usually repeated over and over and over without additional effort, which adds up to a lot of money.

Let’s say I replace a light bulb in my home with an LED bulb that will save me about 60 watts of energy for every hour it’s on. A kilowatt hour costs about $0.12, so that bulb is really saving me only about 3/4 of a cent for every hour the bulb is on. Who cares, right?

Well, let’s say that bulb is on for 12 hours a day, every day. After a year, that’s $31.54. At that usage rate, your bulb should last about five years, so by the time you switch out the bulb, you’ll have saved about $150 after the cost of replacing the bulb. Multiply that by every light that you use very often at all in your home and you’re talking thousands of dollars.

The little frugal tips where you save a dime would be kind of pointless if they were one-shot things. However, they’re usually things where you get that dime again and again and again with no additional effort — and those dimes add up and add up and add up.

Many people forget about these kinds of savings because they flow so quietly into their monthly budget. You don’t “see” the fact that your energy bill is now $3 lower every month because of your single light bulb switch, but it is. And it’s lower month after month after month after month.

Those kinds of changes slowly make it easier to live, to set goals, to build for the future. If your energy bill is lower, it gets easier to think about bumping up your 401(k) contributions by a percent or two, for example, and that ends up creating major change in your life down the road.

That’s why frugality is so powerful.

Q10: Researching pillows

How do you research and purchase more irregular and personal items like pillows? It’s not like buying a hair dryer, which you can research and find the best one in your budget, and it’s not like buying store-brand coffee, where you can try once and decide it’s not for you.
– Kim

It really depends on what kinds of “irregular and personal” items you’re talking about. Pillow preference is very much a matter of personal taste. You can find comparisons of pillow brands in terms of things like manufacturing quality, but identifying which pillow is right for your head is pretty personal.

Similar things occur with items like running shoes. Different shoes work better for different feet. You can compare shoe brands for overall manufacturing quality, but different shoes still work better for different foot shapes, activity level, and so on.

What I do for things like this is start with a brand with a good reputation and then go to stores and carefully examine the items, whether I buy there or not. Once I find a very specific model that works for me, I stay loyal to that model. If I hear that the model might be discontinued, I’ll even order a few backups and keep them on hand (especially if they’re on clearance or on sale).

Q11: Shipping large packages internationally

Do you know what is the best way to ship a large package, say 47kg, dimensions 142 cm by 32 cm by 44 cm, from The Netherlands to Singapore? I have been searching for an economical way but so far the prices I get are many times more expensive than the package itself.
– David

I’m not sure how exactly to advise you in terms of specifics, as I’m not familiar with all of the international shipping options available to you in The Netherlands. However, I can give you some good pointers that will always help with international shipping.

First, shop around. This sounds like you’ve already done so, but you need to go through every package carrier available to you and ask for rates on the packages that you want to send.

Second, pack the thing securely. This might involve a slightly larger package, but secure packaging is going to greatly increase the odds that the package arrives unharmed at the destination. Otherwise, what’s the point of shipping it?

Third, request the slowest and least expensive shipping option from each carrier when comparing prices. Many carriers will offer a lower rate if you don’t mind waiting a bit for your item to ship until they have extra space on a boat.

If you follow through on those tips, you’ll get a good rate for shipping almost anything almost anywhere. It’s still going to be expensive to ship a package halfway across the world, especially a single package of that size, but you won’t have to spend nearly as much.

Q12: Why aren’t people frugal?

Why do you think more people aren’t frugal? People in generations past were much more frugal than today. Look at people in the 1930s – they were careful with their money and economized and that extended into World War II in the 1940s. Today everyone just wants to spend everything and expects to be picked up and taken care of when they’ve spent everything.
– Daniel

In those times, there was a pressing day-to-day need to spend less. In the 1930s, many people didn’t have jobs. You didn’t have to look very far to see people in a soup line. During World War II, the government endlessly promoted frugality and rationing as part of the war effort, tying frugality into patriotic feelings and nationalism.

Neither of those things are remotely true today. If anything, our national identity is tied to spending more and more than to any sense of frugality.

On top of that, popular culture seems to revolve around consumer goods, most of which people don’t really need. We have an amazing abundance of staples and food – the idea of food rationing seems crazy to almost everyone today.

What would it take to bring back frugality as a major virtue? I think it would take an exceptional – if not impossible – shift in national values, one that would be opposed all the way by corporate America. I don’t see it happening unless things change a lot from where we’re at.

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. 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.

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.