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. Excessive unpaid overtime
2. Buy it for life: blender
3. Ashamed of cheapness
4. Basics of income taxes
5. Trade school questions
6. Getting mortgage with other debt
7. Are extra mortgage payments savings?
8. Slicing cold cuts at home
9. Really thoughtless spending
10. How little do you need?
11. Debt consolidation question
12. Learning computer animation
13. Best books of 2014?
14. Warehouse club tip
15. Limiting allowance use
Living in Iowa, it’s pretty hard to avoid presidential politics in the year before a presidential election, and 2015 is one of those years.
All throughout these “pre-election” years, Iowa is constantly visited by prospective presidential candidates. We get flyers in the mail, ads on television, and constant phone calls in the run up to the caucus. Given the rumors of more than a billion dollars to be spent on the upcoming election and both parties without an incumbent, I expect it to be very noisy, indeed.
In fact, it’s already started. Two different people in the last week have talked to me about volunteering for specific presidential candidates and at least one friend apparently has a job working for a campaign.
I already wish it were over with and it hasn’t even begun.
About a year ago, I started a job that was advertised as an hourly position. The hourly rate is pretty good for an entry level job in my field. I make about $16 an hour. I’m happy with that.
The problem is that the work involves a lot of unpaid overtime. I am constantly staying late for extra work and sometimes have to go in in the middle of the night and on weekends. Sometimes I take documentation home to read and sometimes write reports or deal with work emails. None of this is paid.
On paper, my hours are strictly 8 AM to 4:30 PM Monday through Friday. I don’t even fill out a time sheet. But that’s not really how it goes.
I feel like I’m getting ripped off here, but I’m also kind of stuck because if I complain I am afraid that they’ll fire me. A lot of people would like to have this job.
What do you suggest that I do?
In terms of getting paid what you owe, the best route is to start documenting all of your work along with your compensation, then after you have a bunch of documentation of this effort, turn it over to the labor board in your state along with a copy of your employment contract. You will get paid for that missing time if you do that.
However, there are a few problems with that route. For one, unless you are an amazing employee, you won’t stick around there for very long, and you’ll probably not get much out of a reference letter, either. It also means that you might potentially be moving on to another job that you might not enjoy as much (it sounds like you enjoy the work but that there’s too much of it). Are these kinds of things strictly legal? Not really, but they happen and they’re pretty hard to directly prove.
So, you have to decide whether this is what you want. In either case, I’d start documenting your time because if you do decide to stick around, this time evidence will be incredibly valuable during your workplace reviews. You can use them to demonstrate your extra effort and seek out a raise.
I use our blender probably every day on average. I use it to make a smoothie when I get home from work each day and I usually use it in one or two recipes a week. I have purchased several blenders from the store over the last twenty years or so and they have all failed for various reasons like a cracked jar and a burnt out motor. Do you have any recommendations for a blender that will last for a long time with daily use?
I would recommend either a Vitamix or a Blendtec blender. Both of them are very highly regarded and have outstanding warranties – I don’t think you can go wrong with the offerings of either company.
We own a Blendtec that we got at a surprisingly cheap rate a few years ago. It works like an absolute champ. The only time I’ve ever had a difficult time blending anything in it was when I had too high of a proportion of solids to liquids in there, meaning that the materials didn’t shift enough for the solids to blend. This was my own mistake more than anything else and things blend perfectly when we have a reasonable amount of liquid in there. Here’s the exact blender we own.
I have two different friends who own Vitamix blenders and speak very highly of them. I’ve seen them in operation and they work very well.
The Vitamix blender is a bit more expensive, but the warranty on it is longer than the Blendtec. Still, I have heard nothing but positive stories about both blenders and I’ve seen nothing but excellent performance from both.
When I first moved out of my parents house, I wasn’t making much money and I set up my apartment as cheaply as possible with like mismatched plates and an old couch from Goodwill. I am now a manager at work and make better money but I have started spending time with other managers socially. Sometimes they invite me over to their houses or apartments but mostly we just go out.
I feel like it is “my turn” to have them over for dinner but I am really ashamed of having them in my apartment. Everything is so beaten up and mismatched. While I actually kind of like it because I’m getting all of the use out of this stuff I am pretty convinced they would all think I am a weirdo based on how they keep their own homes.
I feel like I shouldn’t spend a bunch of money fixing up my apartment but I also feel like I am burning money going out on the town every time. I think if I was more open to having people over, we would do more dinner parties and stuff at our homes and that would be cheaper for all of us. I feel stuck.
This mostly sounds like mismatched priorities. For one, most of your friends are not going to care if your plates are mismatched. I’m willing to bet that some of them have mismatched plates, too. They’re going to care if the plates are clean and if there’s something to eat on them.
For another, the cost of just one evening out on the town will add up to enough to fix some of the rough spots in your apartment. Just look for some of the most outstanding things that really bug you and fix those, then don’t worry about the rest of it.
What would it really cost to fix the, say, three most pressing things you should fix in your apartment? Invest the money to fix those things, then don’t worry about the rest. It is very likely that you’re noticing details about your own place that others won’t notice, and it’s likely that you missed details about your friends’ homes as well.
Do you know of any good resources (preferably videos) for spelling out the basics of income taxes? I spend one day a week in my civics class teaching about adult life skills and personal finance and this is a topic I want to cover.
The best video series I’ve found on income taxes is the income tax series from Khan Academy. I think the Khan Academy videos do a good job of explaining lots of different kinds of topics and these videos are no different.
One thing I would really encourage you to cover in your teaching is what the tax money people pay goes for. One thing I have really noticed over the years is a huge disconnect between people paying taxes and the multitude of services and benefits they get from those tax dollars. I don’t mind paying my taxes because I see how many benefits I get from the money I give to the government.
Also, I commend you on using a classroom opportunity to teach these kinds of life skills and knowledge that everyone needs to have as they enter adult life. These topics are often not taught in classrooms.
I have four sons aged 26, 22, 19, and 16. The oldest three all went to college. The fourth one has very little interest in studying or classwork. He can focus on things if he sees a goal at the end but he just doesn’t focus at all in school.
We have started wondering whether trade school is a good option for him. A career path like plumbing or carpentry or electrical work where you work on clear physical projects seems like it would match up with his abilities very well.
I am very unfamiliar with trade schools aside from what I have read online about them. Do you have any recommendations for a good “trade school 101” guide?
Another question: we have been saving for his college education in a 529 college savings account. Can this money be used for a trade school?
Vocational school is a good idea for many high-school graduates. College is not the answer for everyone, particularly not for those who learn better in a hands-on project-oriented environment and not in a classroom environment.
I would start by visiting your local library and checking out a copy of this two-part guide on trade schools which should answer all of your questions.
529 savings generally can be used for any accredited vocational school. You’d want to check with the financial department at the school to make sure that their institution qualifies, but the answer is usually yes if you’re looking at an institution of any repute.
I am 26 years old with a very steady government job making $43K per year. I have student loans with interest rates between 4% and 6% and a total balance of $32,000. I have $6,000 in credit card debt, down from $20,000 right after I graduated three years ago.
I would like to buy a fixer-upper house. I have always enjoyed home improvement projects and this just seems like an amazing way to spend my time. I am wondering how long I should wait to make this leap. What is your advice?
It really depends on how much a “fixer-upper” costs in your area and whether you’re planning on living there while the home is in disrepair.
For instance, in the area where I grew up, you could purchase a fixer-upper for $40,000 or $50,000. The house my parents live in would probably sell for somewhere in that area and parts of it would definitely be a fixer-upper. In expensive areas, a fixer-upper (if they even exist) would be hundreds of thousands of dollars.
What you’re really looking for is whether or not the monthly costs of living in that fixer-upper – mortgage plus taxes plus insurance plus maintenance – is less than or equal to your current rent. In a cheap area, this might be the case. In an expensive area, probably not.
So, I have a mortgage with a $200,000 balance and a 5% interest rate. I decide to include $100 a month in addition to my normal monthly mortgage payment. Is that considered savings? I realize it’s just words and that it helps my net worth either way but my parents have always argued that the most important thing you need to do is to save for the future. Is it saving?
I’d say yes, and here’s why.
For one, every dollar that you put aside as an extra mortgage payment essentially earns a return equal to your mortgage interest rate. If you put aside $100, it trims your mortgage balance by $100, which means that there’s $100 less for your lender to charge you interest on. If that’s at a 5% rate, then that’s $5 less for your lender to charge you over the course of a year and thus $5 more of your mortgage payment that goes toward your balance. It’s the same power of compound interest that makes savings build on themselves.
For another, you still have the ability to tap those savings through selling your home or getting a home equity line of credit. Of course, it’s not as immediately available as money in a savings account, but it’s still accessible.
Finally, I tend to think of “savings” as most people use it as simply being a substitute for “spending less than you earn and reserving money in some fashion.” That’s exactly what you’re doing here.
Just wanted to drop a tip your way. I take cold cut sandwiches to work almost every single day. I love them but I am always grumbling to my wife about how expensive cold cut meat is. So for Christmas my wife bought me a Continental deli meat slicing machine. This way instead of buying sliced ham at the store for like $8 a pound I can just buy a whole boneless ham from the butcher at a price of about $2 a pound. The same goes for other types of meat, too. I bought a ham in early January and cut it into several large piece weighing about 2 pounds each or so. Once a week I pull out a piece and slice it on Sunday and it provides sandwiches all week long. The machine works like a charm and is already saving us money. We can see the difference in our grocery bill.
I think that if you’re going to consistently take cold cut sandwiches to work for lunch and eat them at home regularly, this has the potential to save a lot of money.
However, if this isn’t already your routine, it will take a long time to save money and probably won’t be worth it.
This is a perfect example of the kind of savings strategy that works great for some people and just doesn’t match up well with others. My feeling is that if you’re a heavy cold cut sandwich eater, this could save you some real cash, but if it’s not part of your routine, it’s not worth switching to it.
I understand what I need to do in the big picture but I always mess it up in the moment. It is like when I go to the store I kind of forget about that big picture and go into kind of a haze where I just think about buying stuff and then I buy it and walk out and then a day or two later I’m hitting myself because I’m so stupid. And then I will just go do it again. I don’t know how to break this stupid cycle.
First of all, don’t beat yourself up over this. This is something that a lot of people do, myself included at times. We all make spending mistakes.
For me, the best way I’ve found to avoid such mistakes is to keep my credit card number out of websites and to not carry cash or credit cards most of the time. I often go out cashless or with just the minimum needed to cover what I am intending to do.
It goes a long way toward keeping me from making little dumb mental mistakes. It’s still not perfect and sometimes I’m frustrated by the lack of flexibility, but it does keep my money in my pocket.
What’s the minimum amount a single person needs to live on if they don’t have any debts?
Very, very little. It all depends on how you’re using your time and what you’re willing to do without.
In the end, your question has more to do with what you see as a bare minimum existence than what a true bare minimum existence actually costs. If I were single again, I’m pretty sure I could live for years on almost no income at all, and this would especially be true if it were not for my daily Synthroid medication.
What is the minimum for you? Is couchsurfing acceptable? What about sharing an apartment with several other people? Are you okay with eating at soup kitchens and using food pantries? How long are you willing to hold onto clothes? All of those things impact your idea of “minimum.”
I currently have four student loans:
Loan #1 – $12,000, 7.25%
Loan #2 – $20,000, 7%
Loan #3 – $14,000, 5%
Loan #4 – $20,000, 4.75%
[The holder of Loan #4] has been contacting me about consolidation and wants to consolidate these debts into one loan at 4.75%. Is there any drawback to doing this? My monthly student loan payment would go down by about 40%.
Without seeing the exact terms I can’t guarantee that it’s a good offer, but it’s one that’s within the realm of reality and from what you’ve said it probably makes sense.
There is no real drawback to doing it. The only possible drawback is that it might extend the term of the loans. For example, let’s say you were due to have all of these paid off in 2019, but this new loan is a ten year loan, so now this new loan won’t be paid off until 2025. Even with a lower interest rate, you might not necessarily be money ahead doing things this way (though inflation works in your favor).
Again, I can’t give a full thumbs up without the full paperwork, but the core idea here is a good one.
What’s a good inexpensive way to learn computer animation? I would like to learn how to make animation but I don’t even know where to start.
The question I’d have is whether you’re just learning this to humor yourself or you’re actually thinking about digging into this to eventually produce professional-level products.
If you want to dig into what the pros use… the software gets really, really expensive and fast. Packages like 3ds Max and After Effects will break the bank quickly. If you’re going that route, you’re probably not looking for “free” learning solutions anyway.
I guess my suggestion is to start with Blender and the free tutorials it gives, then see whether you want to keep digging in.
What were your favorite books that you read in 2014? Looking for some new picks from the library…
My favorite “fun read” of 2014 was The Martian by Andy Weir, which tells the story of how a guy abandoned on Mars at the end of an aborted mission there manages to survive on his own for more than a year. It is a quick page turner with enough technical details to spur the imagination but enough storytelling force to make you want to read it all in one sitting.
The book that made me think the most was The Divide by Matt Taibbi, which focused on how society’s systems work completely differently if you have wealth or if you do not have wealth. Two people can have the same exact issue and it will be resolved in very different ways if the person is wealthy (or has wealthy connections) or not. If you’re poor, the deck is stacked against you in more ways than you even think.
I also fell absolutely in love with a “space opera” series, too – the Expanse series by James S. A. Corey. It’s a purely fun series in the far-off future where we’re exploring the entire solar system. The Martian is pretty plausible in today’s world or the very near-term future and is very much a human drama; this series is much more futuristic with lots of characters, but both are page turners and very fun.
This is a trick that both Costco and Sam’s Club use (and maybe BJs uses it too but I have never used it). If you go there after your membership runs out and you renew, they count the renewal as starting from the day your membership expired. So, let’s say your membership ran out on December 31 but you didn’t go there again until mid-January and you pay for your renewal at the checkout. They set the start date as January 1. Instead go over to customer service to renew and specifically ask them to set your starting date for today. They can do that for you there.
Warehouse clubs used to do this, but Costco got sued for this very practice and they lost. I think that warehouse clubs are a bit more careful now about such shenanigans.
It’s still not a bad idea to renew at customer service and make sure the start of the year of membership is the day you renew, but I wouldn’t necessarily assume they’re scamming you at the checkout counter.
If you’re a frequent shopper (as we are), this won’t make a big difference either way. I stop there weekly for gas if for nothing else.
Do you think it’s a good idea to limit what children use their allowance on? We give our children a weekly allowance based on completion of basic household tasks and our oldest child spends all of his on video games. We do require them to save some of it, but I would sure like him to use at least some of it on other stuff.
It is your allowance. You can put whatever restrictions on it that you like.
If I were you, I wouldn’t restrict his use of at least some portion of his allowance. Let him make his own spending choices. However, you might consider some additional ways of using that money. For instance, you might suggest that they use some fraction of it – $1 or $2 a week – to save up for an annual holiday donation to a charity. I don’t think there’s anything wrong with doing something like that.
Still, I think there is value in giving them freedom to do what they want with at least some of their allowance. I think there are some very good lessons learned in that process.
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.