Questions About Energy Drinks, Balance Transfers, I-Bonds, 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. Squeezing Generation X
2. Replacing energy drinks
3. Balance transfer catch
4. Help breaking down a goal
5. I-bonds for emergency fund?
6. Sharing financial specifics with kids
7. Warm blanket recommendations
8. Paper planner usage
9. Old personal finance books
10. Used small kitchen appliance safety
11. 401(k) paperwork and identity theft
12. Should we have kids?

When I was younger, the idea of paying for a service to do an ordinary household task for you seemed silly. Why would I ever pay for someone to wash my laundry or do the dishes? I can do those things myself for free.

As I’ve gotten older, I have begun to realize that an hour or two of free time without undone things hanging over my head has a lot of value. How much value? How much would I pay to have an hour of additional free time to do something I cared about deeply? $5? $10? $20?

I know that I’d rather have an hour of free time at this point than most things I could buy for $10.

It’s become an interesting question. The reason this has come up is that we had an offer in the mail to do laundry by the square foot in our town. They give you a box of a certain size upon your request and you fill it with laundry with a lid that you have to be able to lock into place, so they assume you’ll jam it full. They wash it and fold it and return it to you and you pay by the cubic foot based on the initial container size. A friend did this and was really happy with the results.

I’ve been doing a lot of “back of the envelope” math to determine if it’s worth it, which involves me estimating how much actual time doing laundry and folding it takes me. The sorting, the washing, the drying, and the folding per load – how much time does it add up to, and how much is that time worth? Then how does that compare to a cost per cubic foot?

That’s what’s been on my mind lately. Here’s what’s been on the mind of some readers lately.

Q1: Squeezing Generation X

Here is a good blog article subject for you: “How Gen X is getting squeezed”:

1. Baby boomers are holding for dear life to the good paying jobs.
2. Squeezed between the 2008 recession and having kids and affording a home all at the same time.
3. Social Security is being exsanguinate by the politicians all these years and they do not show much interest in restoring it.
4. This kind of relates to #1 but 70% of the jobs created since 2008 are fairly low paying with no benefits.
5. Studies and statistics have proven age discrimination in the job market starts around age 35 though much worse for women.

I am just in a melancholy state the last few years. Just venting I guess. Been following Suze Orman and Dave Ramsey’s advice for the last 10 years and made a LOT of progress, just still not enough to [walk away from] my job. I am 46, no kids. I considered quitting and going on Medicaid just long enough to get my toe fixed surgically (if I got it fixed now I would pay 12K out of pocket), then find a part time job that would get me by monthly but without the ability to save anymore, but pay less enough to be on the subsidized Obamacare plan. To tell you the truth I am really burned out in the same job for 26 years and would just like a break as I have really worked hard, a lot of OT, and a lot of stress and physical toll on my body. Through extreme discipline and hard work I paid cash for my house last year but the yearly taxes, utilities, and insurance run about $6K. I eat very frugally like you do. Started shopping at Aldi.
– Laura

What you’re describing is the reality of what I (and others) call the “sandwich generation,” which I’ve written about before. The “sandwich generation” is people in the exact situation you described – they’re the people who often have children and younger competition in the job market while their parents are aging and often still taking up jobs, too. This happens at a time where there are a lot of life expenses hitting home – saving for retirement, buying a home, and so on. Sarah and I are definitely in this group, with three kids at home and parents who are either still working or pretty freshly retired.

It’s a challenge and the responsibility of it can be overwhelming, especially when it can feel kind of endless and a bit hopeless.

For me, the best approach has always been to ask myself how I can best play the hand I’m dealt. I can’t change societal things or major political things. However, I can control my own behavior and I can control my own thoughts. I can choose to think of the best way out of my situation. I can choose to see the positives in my life.

Some days, it’s easier than others. Some days, it’s really hard. I just focus on what I need to do today and keep moving along. It’s all you can do, really.

Q2: Replacing energy drinks

Trying to cut back on spending but I have a bad energy drink addiction. I drink Nos. When I stop for even a day I feel like crap and have a pounding headache. Cheap alternative?
– Alex

I assume you’re buying them in bulk at a warehouse club or something. If not, that’s the first step – don’t buy them one at a time.

My suggestion is to slowly dial back the energy drink you normally consume. If you drink, say, three a day, each time you’d drink one, drink only 3/4 of that drink for a while.

One good way to approach this is to get some resealable bottles and pour the energy drink into the bottles so that rather than grabbing a 16-ounce can (or whatever), you instead grab a 12-ounce bottle. 3 cans can fill 4 bottles, so drinking a 12-ounce bottle you filled yourself instead of a can is a way to dial it down.

Over time, slowly dial down the amount in each bottle. If you find you’re getting headaches, roll it back up a little bit and then keep going down slowly. Try to break the reliance on energy drinks. That way, you won’t have the expense in your life at all.

Q3: Balance transfer catch

What’s the catch of a balance transfer to a new credit card? I am considering moving my Amazon card balance to a new card because they have a 0% APR balance transfer for 18 months. Feels like there should be a catch in watching a 29.9% APR become a 0% APR.
– Alice

There are a few catches, but they’re minor.

Many credit card balance transfers add a small additional amount to the transferred balance, somewhere around 3%. So, if you’re transferring $1,000, it may appear on the new card as $1,030.

As you note, the balance transfer APR expires after a while, meaning that if you haven’t paid off the transferred balance at that time, it switches to a higher APR.

Also, the credit card companies consider the money “lost” by offering a balance transfer to be a small marketing cost to convince you to switch to their card. They generally believe that you’ll end up using your new card and they’ll make money on interest on that new card.

So, let’s say you’re transferring $3,000 to that new card. It’ll appear on that new card as $3,090, meaning they made $90 already (assuming you do eventually pay it off). You’ll have 18 months to pay it off and if you don’t then they’ll start charging interest on whatever’s left of that $3,090. Plus, they’ve earned a new customer on one of their cards. Sure, you get to avoid paying interest for 18 months, so you both “win” out of the deal. (The best approach with a balance transfer is to stop using credit cards and just pay the balance off in full before the 18 months is up.)

Q4: Help breaking down a goal

Loved your recent post about breaking down goals. It seems to work well for some goals but not for others though. I want to pay off debt this coming year but that doesn’t break down into daily goals or behaviors very well.
– Amanda

Oh, but it does, my friend!

Start by asking yourself this: what can I do today to pay off my debts early? Focus on just that question.

Well, you can avoid unnecessary spending. If you’re going to spend on a “want,” plan ahead for it and just say no to any situations where you would spend on wants without having planned ahead. Get into a process of reminding yourself of this intent each morning and then a time or two throughout the day. I find that smartphone reminders really help with this, and I encourage you to look at this earlier post about establishing a good habit in your life, which is a process that works well for me.

You can take on a frugal task, like making meals in advance or making a big pot of soup that you can eat for leftovers for a while or putting caulk on your windows where there’s a draft or installing a weatherstrip or installing more efficient light bulbs or go to the library or something like that. This is something you can consciously add to your to do list each day (or at least fairly regularly).

It’s these little things that, done with extreme consistency, add up to much more. They add up to new patterns of living and those naturally lead to the goal that you want to achieve (and much more). The whole point is to get your life out of the rut it’s in and into a new rut that goes in a new direction.

Q5: I-bonds for emergency fund?

What do you think about using i-bonds instead of a savings account for an emergency fund?
– David

So, let’s start by talking about what an i-bond is. An i-bond is a shorthand term for a Series I savings bond issued by the U.S. government. A Series I savings bond works much like other savings bonds in that you buy it, it earns a fairly small interest rate that’s added to the balance of the bond regularly (in this case, every six months), and stops earning interest after 30 years. You can’t cash them in during the first year of ownership. Between year one and year five, you can cash them in, but you lose the last three months of interest. After that, you get all the earned interest.

The nice part about an i-bond is that the interest rate earned is tied to inflation. The interest rate matches the CPI-U, which is a statistic that estimates overall inflation for urban consumers, plus a small additional fixed rate. As I write this, the current overall rate is 2.83%, of which the small fixed rate is 0.50% and the rest comes from the inflation matching.

So, should you use these bonds for an emergency fund? If you’re in a situation where you can match your emergency fund with an annual purchase of these bonds, then you can switch to them after a year.

Let’s say, for example, that you had an emergency fund that equaled three months of living expenses – let’s call that amount $10,000. If you spent that entire amount on i-bonds, you wouldn’t be able to cash them out for a year, so during that year, you’d have no emergency fund. Bad idea.

So, what you’d want to be able to do is buy $10,000 in i-bonds without touching your emergency fund in your savings account, wait a year, then cash out your emergency fund and invest it elsewhere. If you have to tap your i-bond “emergency fund,” then you should save that much in cash in the following months, then buy that much in i-bonds after that, then wait a year, then you can invest that cash as needed.

You can do this over time, of course. Let’s say you bought one $250 i-bond a month out of pocket. After a year, you’d have $3,000 in i-bonds, at which point you could start buying them out of your cash emergency fund each month instead of out of pocket. Then, over the next few years, just convert all of that emergency fund into i-bonds. This would ensure that you always had at least $10,000 in easily available money for your emergencies. You just need to be careful in replenishment – if you cash in a $250 i-bond, for example, you should put $250 in savings when you can, then buy a $250 i-bond when you can, then take back that $250 in savings after a year because you’ve fully “replenished” your emergency fund with an i-bond you can easily sell.

This is a lot more complicated than just using a savings account, but i-bonds offer a very stable and far higher return than a savings account. The problem is that you can’t cash them in during that first year, which is a big part of why I can’t strictly recommend moving straight to an all i-bond emergency fund. Instead, you need to transition to them.

Q6: Sharing financial specifics with kids

I have two children, ages 16 and 12. My 16-year-old is taking a consumer education course at school and is really digging it. She has started asking questions about our family finances for her own curiosity. I am undecided as to how much detail to share with her. Thoughts?
– Jerry

I think it really depends on the teenager and your assessment of their character and maturity.

There are some teenagers (if they were my children) that I would feel completely fine sharing virtually everything with. There are others that I would not. It really comes down to their individual personality traits and character, which is something that I can’t possibly judge for you.

Has your daughter shown herself to be highly trustworthy? Does your daughter have a good “filter,” meaning she has a good sense to not speak about things she knows? Does your daughter exhibit greedy behavior and a sense of entitlement to your assets and wealth? Some kids have these traits and some do not. Kids that do have these traits are ones I’d be more open to sharing such information with.

For me, if my oldest were a few years older and asking such questions, I’d probably trust him with it. His younger siblings are still too far out to assess their maturity at this point, but I think they’re both on reasonably good paths.

Q7: Warm blanket recommendations

Do you have any suggestions for warm blankets. We have started turning the house temperature down at night but we’ve learned our bed coverings don’t keep us warm at night and we’re actually cold in the night.
– Jeff

Buying a single expensive warm blanket is fine, but it’s actually cheaper to just buy a few inexpensive blankets and cover in layers, just like you should do with your clothes when you go outside.

I’m going to stay far warmer in a bed with four or five cheap blankets on it than in a bed with one expensive “warm” blanket on it, and that one blanket is going to be more expensive than the four or five cheap ones.

This is exactly how Sarah and I cover our bed in the winter. We have a bedsheet, a few layers of inexpensive blankets, and our top bedspread. It gets nice and toasty in there, and if it’s too much, we can just ditch one of the thin blankets and that helps. With a single thick blanket, you can’t just ditch a little of it.

Q8: Paper planner usage vs. digital

Loved your article on 2019 goal setting. Was hoping you could explain more how you use paper planners versus digital tools.
– Ambie

In general, I use paper planning when I’m really thinking through what I want to be doing next. When I’ve decided that and written it down, then I transfer specific tasks to a digital to-do list tool that just tells me what I need to do next throughout the day. A lot of the “things I need to do everyday” are already in the to-do list tool and recur every day (or on every regular schedule I need) – if I decide I don’t need to do one of those things today, I just check it off.

I use a printed Momentum planner because it strongly matches how I plan things. I spend a bit of time each evening (or early morning) planning out what I’m going to be doing in the day to come, and I also do a weekly review each Sunday morning to review what the last week was like and set some plans for the week to come. Once every month, that weekly review becomes a bit bigger as I review the past month, reflect on any 30 day challenges I did, and come up with a few more. I also do big quarterly reviews and an annual review (usually early in December, from which that article came). That’s exactly how a Momentum planner works, too, on the same schedule of weekly, monthly, and quarterly reviews, so it just really clicks with me.

So, here’s what I actually do each morning (sometimes, I do part of this the night before if I do it before I’m completely dead and ready for bed). I’ll sit down and check over both my print planner and my to-do list program (I use Omnifocus, but lots of them are very good) and see what I left undone from the day (and feel good about all the stuff I actually did do). For each of those things left undone, I decide if I really want to do them or not and, if I do and I just didn’t get to it, I transfer it to the next day. I then look ahead at the next day and consider whether there’s anything I need to do in the next 24 hours that isn’t already written down. I usually brainstorm a little, but when I actually write something down in the Momentum planner, I intend to do it. Then, when I feel good about the coming day, I transfer everything new into my to-do list program. During the day, I mostly just operate from the to-do list program, checking things off as the day goes along.

That bit of reflection in the morning (or the evening before) is mostly intended to help me distinguish between things that are “urgent but not important” and things that are “important but not urgent.” I want to not bother with the things that are “urgent but not important” and I want to make absolutely sure I’m giving time to the things that are “important but not urgent.” I find that I usually don’t end up writing down the things that are “urgent but not important” and if I do, I immediately recognize it and cross it off.

If I just toss stuff into my to-do list program without thinking about it (which I used to do), a lot of “urgent but not important” stuff will get in there and I’ll feel overwhelmed with things to do and have a sense that a lot of it isn’t getting me anywhere. Using a paper planner and thinking about it more helps take care of that problem.

Q9: Old personal finance books

We were cleaning out my grandpa’s attic and among some old books I found a couple of personal finance books, The Seven Laws of Money and Financial Security. Are these books worth reading still? Or is it all outdated?
– Amy

For starters, I’m guessing that you’re referring to The Seven Laws of Money by Michael Phillips, first published in 1974, and Financial Security by Max McKitrick, also first published in 1974. I bet the books were vintage from the 1970s as those were among the “big” personal finance books in the 1970s.

So, here’s the scoop with old personal finance books. The principles generally remain true, but the specific tactics are really dated. The good personal finance books focus on principles and then give examples of those principles using tactics, and those books are still worthwhile as they show how the good principles are timeless. The bad personal finance books aren’t based on any real principles and just throw a bunch of tactics at you.

How can you tell the difference? Read the first chapter of a personal finance book and ask yourself how much of what was said would have worked thirty years ago and would also work today. If it’s a good timeless book, most of it will work in both timeframes. We’re talking about principles like spending less than you earn, investing the difference in a meaningful fashion, controlling your lifestyle inflation, and so on. Almost all of personal finance that actually works for a lifetime rests on those principles – the only thing that changes is the specific tactics you use to do those things.

I’ve read some older personal finance books that were still great and I’ve read some that were useless garbage. I can’t speak to either of those books, but you can probably tell within a few pages using that litmus test.

Q10: Used small kitchen appliance safety

How do you know that a used small kitchen appliance is safe when you buy it at Goodwill?
– Tom

How do you know that a new small kitchen appliance is safe when you buy it at Target? You find out by plugging it in and using it a few times while you’re nearby before fully trusting it.

That’s the same exact thing you do when you buy a toaster or a slow cooker from a secondhand store. You plug it in and use it a few times while you’re close by so you can unplug it quickly if there’s a problem.

Plug it in at the store if they’ll let you. If they don’t, take it home and plug it in and use it while you’re around. If there’s a problem, you’ll know it quickly.

Remember, most things you find in a secondhand store are there because they simply weren’t used by the original owner. Maybe the original owner passed away, or maybe they moved, or maybe they just cleaned out their closet. That rarely means that the item doesn’t work. In fact, the items that don’t work have often been filtered away and returned to the manufacturer or retailer rather than winding up at a secondhand store.

Q11: 401(k) paperwork and identity theft

I went in to sign up for 401(k) at work and the person there had a bunch of 401(k) papers just sitting out on their desk. At a glance I could see names and Social Security numbers. I do not want my information handled in this way so I didn’t sign up. I am not sure what to do.
– Jenny

If I were in your shoes, I would collect the paperwork regarding the plan and ask to take it home to read it, then contact the organization directly using the information on that paperwork. The papers may actually give you a URL for online signup; if not, contact them directly and ask about it.

I agree with you that this is really questionable office protocol regarding personal information of employees. Stuff like Social Security numbers should not just be sitting out on someone’s desk. It should be properly filed and locked away at the very least.

If you can’t sign up for a 401(k) online, I’d suggest giving an anonymous tip to that person’s supervisor, because that’s just a very bad protocol for the company’s HR person to be following. You may want to consider doing it anyway.

Q12: Should we have kids?

I am 26 years old. My wife is 24. I have a very stable job with the state. My wife is finishing up school as a dental hygienist and looks to have a job lined up in January. We are talking about when the right time to have kids is and whether we even want to have them. How did you and Sarah decide when to have kids and whether to have them?
– John

Sarah and I knew that we wanted to have kids when we were fairly young – close to your age – and that we wanted to have all of our kids in a bundle as quickly as we could and then stop there. That’s because we wanted to have multiple kids but have them close enough in age that they could be peers to each other rather than having a big age gap. My wife is close in age to her sisters, while I’m almost a generation apart from my older brothers, and we wanted a situation closer to my wife’s family than my own. This is a discussion we had and we had settled on even before marriage, and it was fairly obvious to both of us when to start trying to have our first child.

I will say that having kids will drastically change your life, particularly the first one, and it’s even harder if you don’t have extended family nearby to help with some things. Sarah and I live a few hours away from much of our extended family, so we’ve been unable to have aunts or uncles or grandparents help with anything at any point other than a “visit to the grandparents” a couple of times a year. It’s hard to overstate how much your life will change when you have a kid, because your freedom to do basically whatever you want in the evening will largely go away or will become very heavily dependent on babysitting. For the first year of the child’s life, a good night of sleep basically won’t happen, though that gets better. You’ll also find yourself constantly worried about things that were never on your mind before that.

Is it worth it? I think so, but not everyone feels that way. Sarah and I feel like we’re contributing three great citizens to the world. Our aim has been from day one to raise them to be good independent people who make the world better than they left it and I think we’re doing that, at least thus far. There have been a lot of wonderful moments along the way. At the same time, it has been a lot of work and worry, though, more than I ever expected.

The best thing you can do with your spouse is just talk it through in detail. Do you really want to have kids? I genuinely believe that the desire to have kids is a biological signal that isn’t really a rational choice for many people (though not all). They just deeply want children in a way that can’t be described, and if that sounds accurate for both of you, then you should have kids. I would suggest doing it early enough so that you’re in great health throughout their childhood and early adulthood, but late enough that they’re coming into a family that has some financial stability. It sounds like you’re building that stability now, so I’d just use the next few years to eliminate any debts you might have and maybe consider buying a home and then go for it, if it feels right in your gut.

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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