Questions About Financial Independence, Living Out of a Car, Grocery Delivery, Homebrewing 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. Financial protection against parents
2. Wedding observations and insurance question
3. Loaning money to friends
4. Is financial independence selfish?
5. High interest account offer
6. Job misery
7. Homebrewing question
8. Netflix still better than Amazon?
9. A book swap Christmas
10. Dealing with encyclopedia set
11. Brother living out of car
12. Grocery delivery

Like most of the country, we haven’t seen much of what you might call winter up to this point of the year. November and December are often cold and snowy, but until today it’s been mild and largely free from any kind of precipitation. In fact, the ground was clear but still wet yesterday.

Today, that all changes. We’re forecasted to get a foot of snow today and more overnight.

What have I done to prepare for it? I put batteries in the flashlights in case we lose power. I also made sure there were tons of blankets in the basement in one place so they’re easy to find. I put gas in the snowblower. We also made sure that we have plenty of food supplies in the cupboard.

We’re ready for whatever this winter storm hits us with.

Q1: Financial protection against parents

How do I protect myself from my parents? They are great people who mean well, but they’re about as bad as it gets with money. They are approaching 70 with only $10k in the bank. They both collect pensions, but rely heavily on my father’s as it is about 4x my mother’s. Neither has life insurance, and both smoke so much no insurance company will touch them. Other than furniture, they have no assets. I recently found out that 10 years ago they filed for bankruptcy to get away from their debts, of which they now have none. They have no will, and refuse to make one. There is no money set aside for funeral expenses. They make enough money to pay for their lifestyle, with virtually nothing left over. They are providing free child care for my sister’s kids, and my sister believes my parents are financially well off, so she takes all the handouts she can get. I know that their plan for the near future is to buy a house with money inherited from my grandmother, and I’m doing everything I can to talk them out of it. I need to protect myself from the financial fallout! If my father dies before my mother, she will not be able to afford to live alone. Having her move in with me is not an option, unless I plan to end my marriage, and I will not be paying for either of them to live in an old folks home.

Other than the awkward conversations I have to have with my family, what can I do to make sure I’m protected if their financial fallout, such as funeral costs or living expenses, comes my way?
– Jim

You’re only as exposed to their financial situation as you choose to be.

It sounds to me like your primary fear is that you’re going to end up having to care for one or both of them out of your own pocket. The thing to remember is that this is a choice you’re taking on, not something you’re legally obligated to do. It may be the “right” thing to do, but it’s not something you’re legally obligated to do.

At the same time, you can’t “make” your parents do anything financially that they don’t want to do. You can talk to them all day along about making better choices, but they’re not going to do so unless they want to.

What you need to do right now is decide what kind of support you’re willing to offer your parents in each of those scenarios and start financially preparing for that outcome. That conversation is going to have to involve your wife’s wishes, too.

The conclusion you come to might seem cold, but offering your parents full support when they’ve chosen not to do so effectively means that you’re financing their lifestyle right now. They’re sacrificing their future to buy silly stuff today because they know you’ll pay for what they need tomorrow. That’s not a particularly fair situation.

Whatever the two of you decide, you should make the results of that conversation clear to your parents.

Q2: Wedding observations and insurance question

I’m 36 and have spent most of my life single, up until about a year and a half ago when I met the most wonderful guy. We fell in love and after talking about it for a while (long story short), we recently decided to make our arrangement official and get married…and now, I’ve landed on the strange planet of Bride-To-Be. My first shock was The Dress. I couldn’t believe that women would pay such a stupid amount of money for an article of clothing they’d only wear one day in their entire lives…and most of the dresses are stupid ugly to boot. (I did find a dress at www.dawnsmedievaldresses.co.uk – I told her what I was looking for, sent her my measurements, and she made me a beautiful, very simple dress that I love. And it was less than $150. It’s still more than I’d normally pay for a dress…$12 at a thrift store is about the max that I like to pay…but I just don’t have the time to hunt for a good thrift store wedding dress.

The location that my fiancé and I have selected is at a natural feature in New Hampshire, near the Canadian border, on a state-owned property. In order for us to reserve the space, the state requires that we get a special use permit, and that we obtain wedding insurance. Prior to last month, I’d never even heard of wedding insurance (something single people don’t need, as your recent insurance article pointed out)! I’ve been told that insurance coverage needs to be $2,000,000, including personal liability ($1M for injury to 1 person, $2M for injury to 2 or more people) and property damage ($500,000). Is this a standard thing? Any ideas for how I can get the best insurance deals, and what I should be budgeting for this? Any scams to watch out for? Any guidance would be greatly appreciated!
– Kelly

You’re correct that modern weddings are often far too expensive. Some of the prices are just crazy. That’s just the reality, though, because so many brides (and grooms) are willing to pay those prices.

One of the few things that Sarah and I were frugal about before our financial turnaround was our wedding, mostly because bridal magazines and bridal guides struck both of us as being kind of tacky and over the top. We chose simple in almost every way.

The wedding insurance you describe is a pretty standard thing. Many properties are going to require that you have such insurance if they’re going to host a wedding there, as wedding insurance usually absolves them of responsibility. They want you to be financially responsible for unfortunate events during your wedding, after all.

The best way to find good insurance rates is to shop around. Get quotes from lots of different insurance providers for the type of insurance you need. The first place I’d look is with the provider that you already use for other types of insurance, as they may offer you a discount for being a known customer (as they already have a model of your risk level).

Q3: Loaning money to friends

I have a friend who needs money asap to pay for a tax bill she never dreamed of receiving. Long story. Anyway, I have agreed to loan her the funds as she is really in trouble, will need to put her house for sale etc. She has been a friend for some 10 years. Should i get something written up??
– Kaylee

Yes, you should always have a loan agreement if you want this to actually be repaid in the future.

However, there’s a huge catch. You would have to get that agreement legally enforced if your friend was unable or unwilling to pay you. I suspect that suing your friend would not exactly have a good long-term impact on your friendship.

On the other hand, without such an agreement, you have no recourse at all if your friend chooses not to repay you.

In the end, I view it as an absolutely terrible idea to ever loan money to family or friends. If you want to help, gift that person the money so that there’s never a need to repay it.

If you enter into a loan agreement, you become a lender and your friend becomes a borrower. Do you have warm fuzzy feelings about your bank or your credit card issuer? Probably not.

Q4: Is financial independence selfish?

I’m 53 years old and have about $700,000 in my 401(k) and IRA combined. I will easily be able to retire in a few years with no worries.

Lately though I have begun to feel kinda guilty about having that much money just sitting there, like Uncle Scrooge or something. There are people in my own town who don’t have enough to eat and I have $700,000 just sitting there not doing anything at all.

Do you ever feel guilty about this kind of thing?
– Stan

Not really. I see it as the result of making good choices with my money.

If I feel any guilt about not helping charities enough, it comes not from how much I have in the bank, but my income level. I feel like I could give a larger share of what I earn to charitable causes without damaging my day to day life.

On the other hand, I choose to work in a field that’s demanding in many ways. I have constant deadlines and expectations. Compared to other jobs, I have a lot of demands. I think it is reasonable that I earn more than some because I choose to use that time in challenging ways.

So, overall, I don’t feel guilty about my savings. I do feel a responsibility to give some of my income to charity, but my choices with what I choose to keep are my own.

Q5: High-interest account offer

My local credit union has an offer where they will give you 4.25% interest on your checking account which seems amazing. The only catch is the interest is only on balances up to $15,000 and you have to use your debit card at least 10 times a month to qualify for the interest that month.

I already use a card more than 10 times a month so this seems like a great deal. What am I missing?
– Nadia

Offers like that are great if you’re able to meet the account use requirement, but if you can’t, you often earn nothing at all.

Thus, my main suggestion to you is to look into what happens if you don’t use your debit card that often. Do you earn zero interest? That’s often the case.

Another thing to note is that this isn’t going to earn you a mint. Even if you kept your account balance at a $10,000 average during the year and followed the account requirements perfectly, the interest would add up to just $425. If you have that large of a balance in your checking account, it’s either simultaneously serving as an emergency fund or you’re foregoing better returns in investment accounts (like putting some of it into your Roth IRA or 401(k)).

Q6: Job misery

I’m going to simplify this without getting into details. Which is better, a job where you make $100K a year but the commute is long and the work is miserable or a job where you make $40K a year where you can basically walk to work and the stress is low? At the $100K job you can move toward retirement nice and quick but at the other job your progress will be really slow.
– Thomas

I would rather have the $40K job any day of the week in my current life situation. Being able to enjoy life with my family with low stress and an easy work commute is invaluable right now.

If I were single, however, the other job might become more tempting. I wouldn’t have the strong family demands that I have right now and a $100K job as a single person would make a path to early retirement much easier.

I guess that my advice to you depends on the life situation you find yourself in. Do you have a lot of things going on in your life outside of work? If so, then I’d lean toward the $40K job. If not, the $100K job provides a much stronger path to financial independence.

Q7: Homebrewing question

I recently read your article about brewing beer. I am requesting clarification. If I decide to bottle my own beer, would I skip the step of waiting two weeks for fermentation?
– Anna

No, you need to leave the beer in the bottle for a little while unless you want flat beer.

If you’re bottling beer, you allow two to three weeks for fermentation in a large container. Then, after the fermentation has stopped, you add a bit of sugar to the large container and then bottle it. The remaining yeast in the beer eats up that sugar, creating a bit more alcohol and some gas in the beer, creating the carbonated foamy effect that good beer has.

If you don’t do this, then the beer will be really flat. No foam, no texture on the tongue… it would just be flat, like a beer would taste if you opened it and left it out for a day.

On the other hand, you can’t do full fermentation in a sealed bottle because the bottle will explode. You want just a little bit, enough to add a bit of pressure and carbonate the beer in the bottle.

Q8: Netflix still better than Amazon?

With all of the new stuff that came out in 2015 do you still think Netflix streaming is better than Amazon streaming?
– Damon

Yes, but it’s closer.

Amazon is reeling off some good original series, like Transparent and The Man in the High Castle. While their portfolio isn’t as good as Netflix yet, it’s definitely improved over a year ago. I still think that Netflix has a superior selection of original shows and other programs, but the lead isn’t overwhelming any more.

The real perk that Amazon offers is that a year’s worth of Amazon streaming includes Prime shipping, which means free two-day shipping on pretty much anything from Amazon.

If you’re choosing one service among the two, Netflix still has a lead on quality and breadth of streaming programming, but Amazon offers additional perks that might make up the difference for some.

Q9: A book swap Christmas

We tried something different this year for Christmas with my brothers and sisters that I wanted to share with you and your readers. Since there are seven of us adults, everyone gets everyone else a gift but that can get expensive. Since we are all big readers, this year we decided to get everyone else books for Christmas. We each picked books for each other person and it was really fun but the best part is that we decided to turn it into kind of a book club. We’re getting together the last Sunday in January for lunch and then swapping the ones we’ve read and then having lunch the last Sunday of each month to swap the Christmas books and talk about the ones we’ve read too. We’re all looking forward to this and this could turn into a new holiday tradition that gives us tons to read and isn’t too expensive.
– Jerry

This sounds absolutely amazing. I would absolutely positively love to be involved with something like this.

In fact, I could probably arrange something like this with my wife and my three sisters-in-law, as all of them are avid readers and we have at least some overlap in our tastes.

This has given me a really great idea for Christmas next year, actually. The trick will be remembering to do it…

Q10: Dealing with encyclopedia set

Is there any value in a set of encyclopedias at this point? Does anyone use them? I have a set of World Book encyclopedias from the mid 1990s that I haven’t looked at in years because of Wikipedia.
– David

There is some value, but it’s not nearly the value that you paid for the encyclopedias twenty years ago.

You can probably find someone willing to pay $10 or $20 for a set of encyclopedias on Craigslist, especially if you offer local delivery. I’ve seen similar items sell in my local area.

However, you’ve identified one of the big problems with this set – for most people, it’s superceded by Wikipedia. Another problem is the age, as a lot has changed in the last twenty years. Many articles – not all, but many – will be outdated. Another problem is the space, as such a set of books will take up a full shelf.

Still, a set of encyclopedias can be a resource that some people will want, just not at a high price. Keep your expectations within reality and you should be able to sell it.

Q11: Brother living out of car

My younger brother graduated from college in August and has a job that pays pretty well but it is in a really expensive area. I thought he found an apartment there but at Christmas I learned that his address is still at our parents house. It turns out that he’s living in his minivan. He apparently sleeps in the back and uses the middle seats as a dresser. He has permission to leave his van parked at work and has a parking spot close enough to get WiFi. He has a propane stove and uses that for cooking. This seems weird and desperate to me. How can I help him get out of this mess?
– Carrie

I actually don’t have a particular problem with this scenario. There is a major league baseball player who lives in his own van, for example. A 23-year-old Google employee reportedly saves 90% of his income by living in the company lot. There’s nothing inherently wrong in doing this.

The thing I would look at is whether he is happy and whether he is able to take care of himself in this situation. Is he eating well? Is he keeping clean? Those things are obviously available to him, but not as easily as they’re available to other people.

If he’s happy and doing okay, then I wouldn’t worry about it in the least. It’s definitely a method for spending a lot less money and that may entirely be within his values.

Q12: Grocery delivery

My local grocery store is now offering a delivery service where they charge you $15 to deliver your groceries to your door. You just buy them online and use your credit card and they tack on a $15 fee. However most days I commute to work on the bus so I realized I could do the grocery shopping on the way home and then it would be delivered an hour or so after I get home. No trip to the store needed and no extra time spent shopping online either. So basically this $15 buys me about an hour of free time. I think most weeks this is pretty worthwhile.
– Kevin

I actually don’t have much problem with this service. You’re essentially spending $15 to have someone do your grocery shopping for you and if you have a smart grocery list, it’s a pretty easy way to avoid food impulse buys. I’m actually surprised that stores offer this service that cheaply as I would suspect they make more than that from people spending money on impulse buys in the store.

My only suggestion to you would be to do something worthwhile with that hour to make it really worth the $15. Simply watching whatever happens to be on television probably isn’t worth the $15, but engaging in a hobby or doing something fulfilling or taking care of other key tasks? That’s probably worth the money.

If this service were available to me, I’d at least strongly consider using it sometimes.

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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