Questions About 529 Plans, SUVs, Emergency Funds, Washing Machines, 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. 529 plan thoughts
2. Feeling stuck at Staples
3. Underwear that doesn’t disintegrate?
4. 770 plans?
5. Traveling with just a carry-on
6. Studying philosophy
7. Reliable SUV suggestion?
8. Advisor conflict of interest
9. Planning for second career
10. Emergency without emergency fund
11. Reducing humidity on the cheap
12. High efficiency washer questions

Later this summer, our family is going on our big vacation of the year. What’s our big vacation? Camping!

That’s right, our family’s big vacation is to simply head northeast from our house into northern Wisconsin and simply camp for a few days. The location we’ve picked is fairly close to where my wife’s sisters live, so they will be joining us for some of the camping.

This is going to be a very low cost vacation – and that’s a good thing. Last year’s vacation, which involved a bunch of stops in the southeast United States – was quite expensive, so we’re alternating it with an inexpensive trip this year and a fairly inexpensive one next year (we’re probably camping again, but this time in Canada).

Here’s the funny part: our children are basically as excited for this trip as they were for the one last year, even though the bill is about 80% less. Honestly, I’m about equally excited, too.

This leaves me wondering whether the cost of last summer’s vacation was really worth it at all. I’m hoping that posterity gives us a real clue in that regard.

Q1: 529 plan thoughts

What is your opinion of 529 plans? I’m thinking of opening an account for my 2-year-old daughter. I’m confused about how much money to put in her account? Do you have any suggestions?
– Stella

I think that 529 educational accounts are a really good idea for parents. The only (slight) caveat I have with such accounts is that the money is earmarked for strictly educational purposes, so if that child’s life goes in a direction that does not require educational funding, that account will either just sit there or else it will be hit with extra taxes when you make withdrawals.

To me, that small drawback is worth it. 529 accounts allow you to save money for educational purposes without having to pay taxes on the earnings provided that the money is used for education. In other words, if your child ever has educational expenses down the road – and that absolutely includes college tuition and textbooks and supplies – the money in that account can help them with no tax worries.

There is no “right” amount to put into the account, so don’t worry about that. Every dollar helps. Just come up with an amount that works for you. If your child is young and you’re planning on paying for about a third of their college expense at a public university, for example, you’ll probably get there with $250 a month. If that’s too much, don’t sweat it – every single dollar will help.

Q2: Feeling stuck

For the last four years, I have worked as an assistant manager at Staples. I’m paid adequately and don’t have any debt other than my student loans.

The problem is I feel like I am stuck. I would like to do something more than assigning duties and taking care of keeping an office supply store running. I don’t want to be doing this in five years.

I have tried to find new work related to my degree (computer science) but the jobs in this area are really limited. I am hesitant to move because all of my family and friends are within about a 40-mile radius so I would be all alone.

What can I do? Any advice would help.
– Emery

staples store

Photo: Jeepers Media

I think the first thing you need to think about is what specific kind of change you’d like to see. Rather than simply saying that you want “change,” think about some of the specific things you’d like to see differently. Think of what your life would be like in five years if things went well and then think about what’s specifically different about your life now and in that picture. Those are the changes you should be considering.

Once you’ve figured out some options, go through each one of them and ask yourself whether or not that change would be a positive thing for you. Will it impact your work life? How? What about your social life? Your family life? Your personal time? Your environment? Are those changes good or bad?

The thing is, you don’t know the outcomes of many of these questions because they fall outside of what you can control. So, don’t worry about the things you can’t control. Focus on what you can control. For example, you’re the one who chooses where you work. You’re the one who chooses who you interact with and what you spend your time on. You choose where to place every ounce of your time and energy.

Talk to positive successful people you know. Who do you know that’s consistently positive about life? Who do you know that has pulled off something challenging and difficult in their life? Talk to those people. Tell them about the changes you’d like to make and ask for specific pointers.

Once you go through all of that, you’ll be ready… or far, far closer to it than you are right now.

Q3: Underwear that doesn’t disintegrate?

I usually buy underwear at the local department store in a multi-pack, whatever is at a reasonable price. The problem is that after about 30 washings, they start to fall apart. The elastic starts to fail and some of them rip and I have to trash them. Do you have any suggestions for underwear that will last for longer than that? Preferably a lot longer?
– Dave

I went and looked at the men’s underwear offerings at my local Target after receiving Dave’s email and, after examining the multi-packs, I concluded that they averaged about $3 each for the offerings there.

Now, the single best men’s underwear I’ve ever tried in terms of combining comfort and lasting a long time is Ex Officio. Here’s an example of their boxers at Amazon. I have several pairs of these that are still in very wearable shape and, by my back of the envelope math, I’ve washed them each about eighty times or so. I anticipate that they’ll last for at least twenty more (and probably more than that).

The catch is that they’re expensive. These things cost $15 per pair. Now, $15 for, say, 100 wearings adds up to about $0.15 per wearing. However, the $3 multipack underwear from Target last for 30 wearings, which means they cost you about $0.10 per wearing.

Even though these underwear have lasted for a very long time, the Target cheap underwear are still cheaper.

So, how/why did I acquire mine? They were a gift from my wife, and I think that’s the perfect route to go with something like this. They’re probably not a purely cost-effective purchase, but they will last a very, very long time and they’re quite comfortable, so they might make a very nice personal gift from the person in your life that you love.

If you’re buying them yourself, stick with the cheaper ones from the store. If you’re getting one or two pairs as a gift, go with Ex Officio, as they’re very long lasting and comfortable. Spouses, consider this as a good “frugal but still special” gift for your husbands.

Q4: 770 plans?

What is the scoop on a 770 plan? A friend’s mom raved about it, but I smelled a scam.
– Darrell

A 770 plan is just a specific flavor of life insurance. Like other such policies, you buy it from an insurance company and as long as you keep making payments, the “cash value” of the account will grow at some specified rate and, in the future, you can borrow against that cash value tax free.

There are a bunch of catches that are easy to overlook. First of all, you have to repay that money you borrow, and it comes with an interest rate. Another problem is that the guaranteed return on your money is pretty poor – it’s usually better than a savings account, but not much. Another problem is that there’s going to be a commission attached to it which is going to devour your money for the first year or two. Yet another problem is that if you ever decide to stop paying in and want your money out, the surrender charges are usually quite high (they want to keep that money, after all).

It’s great, I suppose, if you never look at any other investments in comparison to this. It’s probably not bad once you’ve been in it for a decade or so and have finally built a balance. Starting out, though? I wouldn’t touch one with a 10-foot pole.

Q5: Traveling with just a carry-on

I just heard you on the radio! You made a mention of traveling for work by just using a carry-on for four or five days. How did you do that? Can you give me some details? I can’t imagine traveling for work for more than a day trip with just a carry-on.
– Anderson

Glad you heard me! I pop up occasionally on local radio programs here and there. Honestly, I don’t specifically remember this conversation (I really hope it actually was me and not another personal finance writer), but I did travel for work using just a carry-on many times in the 2004 to 2006 time frame.

My primary tactic was shown to me by my boss during those years. Rather than folding his clothes, he rolled up everything to maximize space in his pack. He would use his clothes as padding for any harder objects he might be carrying, essentially keeping all of the clothing on the outer edges and forming something of a “pocket” in the middle for carrying other things.

Once he arrived at the hotel, he would immediately unpack everything and, in the first evening on site, iron everything as needed.

He would not take a sports jacket with him. If he needed one on site – which was rare for either myself or him – he would buy one on site, then fold it up and ship it back before his return trip.

This practice has worked well for me on both business and personal trips ever since.

Q6: Studying philosophy

I’m really interested in how you’re studying philosophy on your own. How are you doing it? Can you give me some advice on how to get started, as this is something I’ve also dreamed of doing before.
– Daniel

I got started by looking at the online notes and materials for a bunch of college classes on philosophy, particularly those that served as a broad overview of the subject. I then emailed a few different professors on the subject and made it clear that I was not a student, but that I wanted to start my own self-directed study of philosophy and wished to know their suggestions.

Some sent reading lists, but most suggested that I pick a single volume overview of philosophy, read it very carefully, look up things I didn’t immediately understand, and also keep a running list of any topics (and books) I was curious about for further reading and then follow each of those branches in turn.

Their most common suggestion was Bertrand Russell’s The History of Western Philosophy, which is where I started. This does a great job of covering everything up until the early 20th century. From that book, I wound up with a giant reading list. For 20th century philosophy, I actually started with the Wikipedia page on 20th century philosophy, looking for general overviews of topics but more importantly looking for source books and documents to read (that’s actually one of Wikipedia’s strengths on the better-written pages – they usually serve as a great source for a reading list).

So, right now, I have this giant list of philosophy books to read and I’m knocking them off one at a time. I’m glad that I read a general background on philosophy first to put them in a bit of context.

As I read, I have a notebook open in front of me. The purpose for it is for me to take an idea I just read and re-express it in my own words. I’ve found that this has done wonders for my ability to pick up and understand what I’m reading, though it does make the reading much slower.

Q7: Reliable SUV suggestion?

I’m considering buying a late model used SUV, simply because I need something that can simultaneously haul two adults, two kids, and gear in various amounts consistently in the local area. I am completely unfamiliar with SUVs as I have exclusively bought and driven compact cars in the past. Do you have any recommendations for SUVs with a reputation for reliability and no other hidden problems?
– Stephen

Based entirely on my own experience, I cannot speak highly enough about our 2004 Honda Pilot. We purchased it off of Craigslist several years ago and have not had a single issue with it of any kind beyond normal maintenance issues. It has never broken down on us. It has never had a problem doing anything I’ve asked of it, including hauling five children regularly to martial arts practices, towing a pop-up camper, and taking seven people on a multi-state trip with all luggage on board. I’ve been thrilled with it.

Looking at the statistics from recent Consumer Reports surveys on customer satisfaction with their car purchases, I’d say that the usual “bang for the buck” recommendations still apply. Year in and year out, Honda and Toyota do well on these surveys.

So, if you’re looking, I can personally speak quite highly of the Honda Pilot, and I wouldn’t really hesitate to give a nod to a Toyota Highlander either. That’s where I’d start my search.

Q8: Advisor conflict of interest

My wife and I have been looking for a financial advisor. We have several questions related to an inheritance that feel like they are “above our pay grade.”

The biggest concern we have is conflicts of interest. How can we ever be sure that a financial advisor is giving us honest advice or is just trying to convince us to pick up a product that makes more money for them?
– Daniel

Here’s what I would do. I would go to a fee-only financial advisor. I would ask that advisor all of the questions you have, gather his conclusions, and pay his fees. I would not have that advisor directly manage my money in any way.

Then, I would take that person’s specific investment recommendations and do my own research. I would look at the specific investments they recommended, then compare those to similar offerings from other companies. I am a big fan of Vanguard’s offerings and would always include them in a comparison, but you may find that other ones come out on top. Sites like Morningstar make this type of comparison pretty easy.

That way, you can take the advice the advisor gave you without buying into the specific products that the advisor recommends.

Q9: Planning for second career

For the last 15 years or so, I have been making corporate training videos of all kinds while my husband is a graphic designer that used to work for a marketing company but is now a consultant/freelancer. We have been developing an idea for a YouTube channel that uses both of our skills (still in the planning stages) that has made us both more excited about our work than ever before.

We would like to plan ahead for the possibility that this is successful and that it can eventually employ us both full time. What steps should we take now before we’ve invested any money in this project?
– Karen

Honestly, I would consult a business lawyer. There’s not enough information here for me to even wager a guess as to what you should do, as I don’t know your financial state, the type of videos you’re thinking of producing, the risks involved, or anything else.

A good business lawyer will walk you through all of this, assess the liabilities you may have, and find the right kind of business structure for you.

For example, it is likely that your potential liabilities are pretty small, especially if you’re not just making marketing videos to sell products but just making content for entertainment purposes. On the other hand, if your business is centered around a multi-level marketing hook, you may wind up in FTC trouble, which can be a big problem.

Contact a good business lawyer in your area. He or she will get you on the right path with this project, far better than I ever could.

Q10: Emergency without emergency fund

So, I took your advice and started building an emergency fund. My bank started transferring $100 a month into my savings account for that which is good. I watch my checking account balance like a hawk so this isn’t going to cause me to overdraft or anything.

Anyway, that was two months ago and then a week ago the brakes gave out on my Honda so I took it to a repair place and the bill was $700. I had no choice but to put it on the credit card and thankfully I had enough available credit to cover it.

Should I empty out that emergency fund to pay down $200 on this credit card bill or leave the money alone?
– Claire

That’s a really good question. If I were in your shoes and I were pushing up against my credit limit that tightly, I’d probably take the $200 and pay off some of the credit card so that you have a bit of breathing room on there. I’d still keep building the emergency fund, though.

The best thing you can do is find ways in your life to make room for bigger credit card payments. I don’t know what the specifics of your spending look like, but there are almost always ways to cut back more without increasing misery, and you can channel that money toward getting rid of that credit card debt.

Another approach is to just go through your closets and sell off the stuff you have that you’re not using on Craigslist or through a yard sale, then use that money as a “burst” payment toward your credit card debt.

Regardless, you need to start hacking away at that credit card debt. A situation where you’re near your limit and don’t have an emergency fund is a very fragile one.

Q11: Reducing humidity on the cheap

We live in a small apartment that gets incredibly humid in the summer — like “the walls are damp” kind of humid. I’ve looked at dehumidifiers but they run like $200. Any ideas for reducing the humidity for less than that (say $50 or less)? 
– Alice

Honestly, a dehumidifying unit is going to be your best bet. Nothing else you do will come close to what it can pull off.

However, if you’re looking for some cheap options, your best bet would be to go to your local hardware store and buy some DampRid, which will dehumidify the air to a certain extent. It works well for a while, but as damp as your home is, it will gradually stop working within a few weeks (if it even lasts that long). You can get big tubs of it for $20 or so which should last you for a while, though.

If it’s less humid outside, keep your windows open as much as possible. The humidity inside and outside will balance out.

Q12: High efficiency washer questions

I am about to replace my washing machine. We have been using an old Maytag model that has lasted about 20 years. I am interested in buying a high efficiency washer because it will save energy and water but the cost is higher up front. Are there any other “tradeoffs” that I should consider?
– Kelly

The biggest thing I’ve noticed with a high efficiency washer is that the loads take longer than they do in a “normal” washing machine. In our normal washer, a load finishes in about 25 minutes – even a giant load finishes in about 35 or so. In a high efficiency washer, this can take an hour or more.

Another problem is that you simply can’t do giant loads in a high efficiency washer. The machine is designed for smaller loads, so you simply can’t do as much laundry per load. That’s not a big deal for a single person and it’s still far more efficient to do three high efficiency loads than two big regular ones, but it’s worth noting.

I probably wouldn’t recommend one for a large family unless they’re very patient and very diligent with doing lots of smaller loads. For a single person or a couple without kids, they are a reasonably good idea.

I actually wrote an article for the Christian Science Monitor a few years ago about the break-even point on a high efficiency washer as compared to a normal washer and concluded that it takes about seven years of normal household use to break even on a typical high efficiency washer. Take that for what you will.

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.

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