Questions About Mortgages, State Retirement Plans, Food Jars, and More!

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. State retirement question
2. How to avoid looking “cheap”
3. Friend who invested badly
4. Mortgage payoff versus investing
5. Can we afford a child?
6. Digital assets upon death
7. Food jars and illness
8. Finding a bargain piano
9. Grocery store scam?
10. Taste buds and frugality
11. Monthly budget question
12. Update on principles

A friend of mine offered a really good suggestion recently about reading the news. He simply suggested that, if I find an article that might be interesting, I save it for later in a bookmark folder and then go through that folder once a week or so. Just delete anything that doesn’t seem interesting any more and then the ones that are interesting, dig in.

This is almost exactly like my “thirty day rule” for frugal spending, which basically says that if you’re tempted to buy something, write it down and wait thirty days, then ask myself if I still really want that item, and usually I don’t.

I’ve started doing this with articles for the last few weeks and I’ve found that it works really well. I find that almost all “breaking news” just gets deleted and the only stuff that really sticks around is stuff in line with my interests or stuff that makes me think because it takes a different angle on an idea than my default thinking.

On with the questions.

Q1: State retirement question

I am 38 years old. I have been a state employee since I was 23 and anticipate staying here until retirement as I am happy and my reviews are good. My PERS statement says that when I retire at 65 I will make $7K a month in benefits because I’m contributing a lot. Now is that enough to retire on? I don’t know how to figure that out.
– Mindy

You’re right to be concerned about that number because inflation is a real thing.

If you’re 38 now and anticipate retiring at 65, that means you have 27 years until retirement. If we assume inflation at a 3% rate, that means that there will be a cumulative price change of 122.13% over that timeframe.

So to put that in perspective, $7,000 at that future date will have as much buying power as roughly $3,200 does today.

I don’t know how your retirement handles inflation after that point. Do benefits keep going up to match inflation at that point? If so, it’ll stick around $3,200 a month (in today’s dollars) or it’ll slowly decline (in today’s dollars).

Now, remember, that $3,200 a month (in today’s dollars) is in addition to whatever Social Security benefits you have and whatever money you have socked away in a Roth IRA and/or 403(b) and/or traditional IRA.

I don’t have a full picture of your retirement, but I certainly don’t think you’ll be starving.

Q2: How to avoid looking “cheap”

I’m 41, my husband is 38, we are saving about 30% of our income for retirement. We live in a paid off house with two paid off cars and have enough cash in savings to replace a car so we’re debt free for the long haul. I have been told recently that my husband and I don’t get invited to things because everyone thinks we’re “cheap.” I don’t know why this is happening. Our house is decorated similar to most of our friends and coworkers – it’s smaller than average but not the smallest. We travel a lot. Our cars aren’t new but they aren’t ancient or rusty. What am I missing that makes us appear to be “cheap” and how can we fix it?
– Amy

Usually, a reputation of “cheap” comes from things that actually affect your interactions with others.

Have you guys been invited to go “out on the town” and turned it down because it was expensive? Ever turned down a meal at a restaurant? Ever skipped going out to a movie, or out for drinks, primarily because of price?

Do you say “no” to fundraisers at work, or buy less than everyone else? If someone’s kid is selling Girl Scout cookies, do you buy less than everyone else or just say “no”?

When you’ve been invited to things like dinner parties in the past, have you shown up emptyhanded or with less than other people?

When people are talking about things they might buy, do your comments often come back to the “value” of it and the price tag?

To similarly-minded folks – people like Sarah and myself – these things might feel completely normal, but you have to remember that the average American spends virtually every dime they make and many rack up credit card debt. For many Americans, an intense focus on price and value seems like someone is being a cheapskate, even if it’s merely practical thinking.

The best approach I’ve found in these kinds of situations is to be a little more generous and free with my money within my social circle than I would be when I was by myself, and also to minimize my critiques of things based on price even when the thought is running through my head.

If I don’t strongly know people and their values, I’ll bring an expensive (for me) bottle of wine to a dinner party. If a friend’s child asks me to buy Girl Scout cookies, I’ll buy a couple of boxes. I don’t tell people to always buy the bargain thing – usually, unless I’m specifically asked, I don’t talk about prices or value at all. I do delve into financial topics when others bring them up; otherwise, I don’t mention it at all unless I’m around friends of similar mindset.

Three of my closest friends are probably more frugal than I am, so it’s great when I’m with them because I can talk about such things, but I find other topics to focus on in mixed company.

The thing to keep in mind is that, in terms of finances, most people in America simply don’t match your values. So, just avoid conversations (or minimize your participation) when topics related to spending and product choice come up unless you’re specifically asked for input, and when you’re called upon to spend socially, do it in a way that’s similar to what everyone else does and chalk it up to social expense. At the same time, try to seek out friends who share your values in terms of frugality – I’ve found that community organizations are a good place to find them.

Q3: Friend who invested badly

I have a good friend that has been pushing me for the last 2-3 years to invest in cryptocurrency. He keeps talking about how much money he’s making and so on. My view is that it has been a bubble and I told him so. Well, the bubble seems to have popped and he is not doing well. He won’t talk about it but I think he over invested when it was really high and the value of whatever he bought has fallen through the floor. He now won’t talk about it and seems to almost be shell-shocked. Not sure what I should do. I feel like if I bring it up I am “rubbing his nose in it.”
– Brian

Try to keep your normal social interaction cycles in place as much as possible, but avoid the topic of crypto investing – and investing in general. Just don’t talk about it. Talk about other things.

If you go out for social things sometimes, try to avoid anything expensive, but don’t explain why you’re doing it.

If your friend brings the talk around to financial issues, just listen and don’t say anything much other than supportive things. Don’t talk about how good your own situation is. Don’t go anywhere close to a “I told you so” perspective. Just listen and ask active listening questions.

I had a friend who was really struggling with some financial issues a few years back – it wasn’t bad investments, just some other life/money issues. That’s basically how I handled it.

Q4: Mortgage payoff versus investing

Why would you ever pay down a mortgage at 4% interest when you could invest long term and get a 7% average annual rate of return? It doesn’t make sense to me.
– Charlie

First of all, an extra mortgage payment has a guaranteed rate of return. If you make an extra mortgage payment on a mortgage with a 4% interest rate, you know that money is “returning” 4% per year to you until the mortgage is paid off. You can tap that money by selling your house early, or it’ll be “paid out” in the form of not making mortgage payments when your house is paid in full.

Second of all, extra debt payments don’t incur income taxes. It is true that mortgage interest is deductible on your taxes and that might make a difference if you have a very large mortgage, but for average sized mortgages, you’re probably not saving a whole lot compared to the standard deduction. On the other hand, investment income is taxable unless you’re putting it in some tax-advantaged account, and even then, you’ll probably owe some taxes on those gains (unless it’s a Roth IRA).

Third of all, paying off a mortgage early will help with your monthly cash flow, which gives you more lifestyle breathing room. If your home is paid off, the gap between your income and your required monthly bills is going to be pretty large, which gives you a lot of options. You can start saving rapidly for retirement or consider a new career or whatever it is you wish to do.

That isn’t to say that paying down your mortgage is strictly better, just that there’s a real case for paying down your mortgage first. I usually encourage people to get every dime of retirement matching at work and then saving up to their Roth IRA cap, then pay down their mortgage.

Q5: Can we afford a child?

I am 28, my husband is 27. We have a combined income of $90K. We live in a small Midwestern city, low cost of living area. We have no debts besides my $19K remaining student loan and our cars have several years of life in them. We are saving for a house and have almost enough for a 20% down payment and we are buying a smaller home where the total monthly cost (mortgage + insurance + property taxes) won’t be much higher than our current rent. We both contribute to our 403(b)s up to the maximum match. We are considering having a few children in quick succession. Do you think we can afford this?
– Stacey

You are in a far better financial situation to have children than many American families. You have above average income in a below average cost of living area. You have very little debt and are on the verge of becoming homeowners. You’re saving for retirement. You’re probably as ready as you could possibly be.

That doesn’t mean it will be easy. Children are expensive, no matter how you do it. I’m simply saying that you are in a position where you can make that leap financially if you’re ready in other aspects of your life.

Good luck. Parenting is quite the ride.

Q6: Digital assets upon death

What happens to things like Kindle books when you die? You can’t give them to other people. Do they just go away?
– Eric

With Kindle books specifically, they remain associated with the account that purchased them forever. So, in effect, that account could be given to someone upon your death and they could enjoy your Kindle library. You could state that in your will, your Kindle and an envelope with your Amazon account details be given to someone and then they could enjoy your collection of Kindle books to their heart’s content.

This is more or less how most digital accounts work upon your death. They remain active until either (a) the company goes out of business or (b) you stop paying for the account if it’s not a free account. This means that the best way to hand off what’s in that account is to literally bequeath that account to someone in your will or before your passing.

As I mentioned earlier, the best route for this is probably to simply have an envelope with your account information on it and bequeath that envelope to someone in your will or give it to them when you’re close to passing.

Q7: Food jars and illness

Saw you recommended a Thermos for soup. Bad idea. You can get real sick from eating soup that’s been sitting around hot for hours.
– David

You can get sick eating soup that has been sitting at 140 F or lower for three or more hours. However, if you use a food jar properly, you’re putting the soup in at a hotter temperature and it’s already been preheated. The insulation in a food jar is usually impressive and soup will almost always still be well above 140 F even several hours later. It’s just too hot for bacteria to grow, at least the type of bacteria found on the surface of Earth in sufficient quantities to cause a problem.

If you just toss some lukewarm soup in there, yeah, it probably will go bad. Soup shouldn’t stay between 40 F and 140 F for more than a few hours. If it does, you should toss it.

If you put boiling liquid in a preheated food jar (see the instructions), it should be fine all day long. The way to check is to open it and see how hot the soup is at lunch time. If it’s just on the verge of too hot to eat, it’s too hot for bacterial growth. If you can eat it easily but it’s really hot, it’s probably somewhere around 140 F – on the high end of the range – and so it’s fine, especially if you put it in there hot. If it’s a lot cooler than that, I suspect your food jar isn’t properly insulated.

My recommended food jar is this one, made by Stanley. I have personally witnessed boiling soup put in this and witnessed that it is actually too hot to eat six hours later. Bacteria isn’t growing at that temperature.

Q8: Finding a bargain piano

My daughter is taking piano lessons and we have nothing at home for her to practice on. I have been taking her over to a local church for practice but it is a hassle and I am just sitting there while she practices. I want to find a cheap one at home. Looked on Craigslist and the electric pianos on there are all $300+. Can’t afford that. Ideas?
– Marit

My first suggestion is to ask your social circle. Put out a post on social media saying that you’re looking for a used keyboard or electric piano for your daughter to practice on and see what pops up. You may have a friend that has one or has access to one that will sell it to you cheaply or even loan or give it to you.

If that doesn’t work, seek out a local buy/sell/trade group on social media and put up a request for an inexpensive keyboard or electric piano for your daughter to practice on. State your budget and see what comes up. Again, you may find that someone has one stowed away in a closet and would like to see it in the hands of a child learning to play.

If that doesn’t work, I would stop by a local music store and explain your situation. Explain that you do not have much money and that your daughter practices at a church and that you’d like to find anything at low cost that she could practice on at home. They may have something, or have a customer who has something that could work. Remember, if they do have something that fits, it’s a good idea long term for them to sell something to you because you’re somewhat likely to become a customer for things like sheet music and perhaps to eventually replace the piano/keyboard. This isn’t a guarantee, however.

You can also check out a used music store, like Music Go Round, if there are any in your area, but the prices may be higher than you’re able to pay.

Good luck in your hunt.

Q9: Grocery store scam?

I think my local grocery store is running some kind of scam and I don’t know what to do about it.

I’ve used this same grocery store for years and I have found that about half the time over the last year, one or two items are missing from my bag when I get home. The item is on the receipt but not in my bag. It’s usually a small item so I don’t complain about it as it is not worth the trip back to the store.

It has started happening most of the time when I go there. I have been watching the checkout people but I can’t see that they’re doing anything wrong. They put the items up on the belt and they get bagged and the bags get put in my cart.

I am not sure what to do. I thought about talking to the manager but I don’t want to seem crazy. I think that unless I figure out something the manager will just blow me off.
– Marcy

There are a lot of potential explanations for what is happening here. Yes, one of the explanations is a checkout person grabbing and pocketing a small item from your groceries when you check out, but there are many others. Perhaps small items are missed in your cart. Maybe they’re falling out of your bag. Maybe you just missed an item that you already put away off of your receipt. It might be that you have had a long run of such incidents of various causes over the last several months.

If I were you, one thing I would do is verify my receipt as soon as I paid and had the bagged groceries. Do this a few times when you’re just getting a small number of groceries and see if there’s anything missing that’s on your receipt, right in the store.

If you consistently find a mismatch between your receipt and what’s in your bags at that point, then you have a complaint against the store. If this matches up several times in a row, then there’s another issue that has nothing to do with the store.

Q10: Taste buds and frugality

Your post made me think of this New Yorker article I clipped last fall and shared with my family (we have a wide variety of taste & smell issues):…pretending-to-love-wine

I generally don’t mind bitter flavors at all (except I agree with her on radishes), but things like fruit-flavored LifeSavers are pretty much all the same to me. Most of my food dislikes have more to do with texture (pasty/gummy) than flavor. Definitely not a supertaster…
– Alicia

Everybody has different taste buds and different sensitivities, I think. Most wines taste barely any different to me, and I love things with a vinegar-y taste and with mild sour tones, like sauerkraut.

I think that if someone is ranting and raving about the big difference between two different bottles of wine and you can’t taste much of a difference, it’s not because you’re unsophisticated. It’s likely that you just have different taste sensitivity.

If you can’t taste the difference between “three buck Chuck” and a $100 bottle of wine, why buy the $100 bottle of wine? If you’re trying to “impress” a guest, just get an inexpensive but well-regarded wine – ask at a liquor store. If it’s just for you and you find wine pleasant but can’t tell the difference in wines of the same variety, get the least expensive one you like. That’s what I do.

Q11: Monthly budget question

What does your monthly budget look like?
– Carrie

Sarah and I made a decision long ago that we would not share some specifics of our life in order to protect the privacy of our children and, to a lesser extent, Sarah. This is because they did not choose for their father (or husband) to be writing about finances in such a public fashion. In order to share our full true family budget, we would have to cross a privacy line for them that we long ago agreed not to cross. I have a number of personal boundaries regarding what I share in my public writing, ones that we’ve established through careful consideration and conversation over the years.

I can share this much: in an average month, Sarah and I spend about 60% of what we earn. The rest is put aside for the future in some way – retirement savings (Roth IRAs and a 403(b)), college savings, and upcoming big irregular expenses. Our income is well within the limits of a Roth IRA, so we’re not making money hand over fist by any means.

Compared percentage-wise to the average American budget, we definitely save more. We spend quite a bit less on food and utilities and transportation and somewhat less on entertainment and travel. In other categories, our spending is at or above the American average, but not incredibly so.

Our most effective ways for keeping our spending below our income is to cut back on nonessential spending on things like household supplies and food, to buy budget-conscious cars and appliances, to avoid debt as much as possible, and to have much of our retirement savings be completely automated (the only thing that isn’t is our Roth IRA contributions, which I usually do manually for the whole year at the start of the year).

Q12: Update on principles

I’ve been looking forward to the post on your principles that was mentioned a few weeks ago. Is it still coming?
– Aiden

Yes, it’s still coming. I ended up making a big list of my principles and I’m trying to figure out how to turn that list into a single useful post.

If I just make it a list with no comments, it’s a fairly short article, but I don’t think it makes a whole lot of sense.

If I use a lot of the comments I’ve added, it’s a very long article, maybe too long.

I’m also still editing the list, trying to figure out which principles are just rewrites of other ones and really condensing the list down to maximum meaning.

I’m still tinkering with it and trying to figure it out. Rest assured, I’m working on it.

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.