Questions About Freezer Bags, iTunes, Work Boredom, Old Debt Guilt 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. Replacing an old credit card
2. Handling wants without spending
3. Diverging financial perspectives from husband
4. Guilty about really old debts
5. Bored at work
6. Money needed to retire early?
7. Value from iTunes gift card
8. PersonalCapital.com
9. Personal finance education in schools
10. Retirement savings in December?
11. Why not reuse freezer Ziplocs?
12. Minimizing television exposure for kids

As I watch my children growing older, there are moments when I wish I had held them more or done something more so I could recall what they were like when they were younger.

I have lots of memories and photos and videos. For me, the best ones are of the little things, like how our kids used to love to climb into bed with us if they woke up too early in the morning (our youngest one still does sometimes, but it’s not hard to see that it won’t be for much longer).

Part of me is quite sad that they will never be toddlers or small children again. They’ll never get to go through that period in their life without worry, with full trust in the world around them and the full sense that if something isn’t right someone will come in and fix it.

But then they’ll say or do something amazing, showing me that they have built an understanding of the world or that they have great empathy for someone or something else, and I’ll realize that this was my job, to build them as best I could into wonderful functional adults.

I might not have any two or three year olds running around my house any more, but I have some older ones that are developing into great people.

Q1: Replacing an old credit card

I replaced my old Visa card with a Chase Freedom card. Now I use my Chase Freedom for everything because it gives cash back. My old Visa card account is still open, I’ve had it since I was 18 and am now 29. Should I close it? I barely ever use it and it is charging me $1.50 per month just to have it around.
– Fred

It really depends on your credit usage and your other card. If you’ve had the Chase Freedom card for more than a year or two, then you’ll have a long enough credit history if you close the old one, so that won’t be an issue.

Do you carry a high balance on your newer card with any regularity? If so, you might want to ask for a credit limit increase before you cancel the old one so that your debt-to-credit ratio stays level.

Another factor to consider is whether or not you’re going to be taking out any loans in the very near future. If you are thinking of borrowing for a house or a car in the next few months, you’re probably better off leaving things as they are for the moment and closing the old card after the loan is in place.

If none of these things really apply to you, then I’d feel fine canceling the old card.

Q2: Handling wants without spending

How do you handle not buying stuff that you want? I have wanted a tablet computer for a month or so now and I feel like I am cheating myself somehow by not buying it. Do you just not get a sense of wanting stuff or what?
– Damon

My best strategy for this is to simply have a monthly spending allowance. I allot myself a certain amount each month to spend on whatever I want and I don’t worry about it within that amount.

Let’s say you choose to do the same thing and allot yourself $100 a month (it might be more or less, depending on your situation). You’re eyeing a tablet that costs $300. So, put half of your “fun money” away each month for six months and you can buy your tablet guilt free.

One big thing I like about this strategy is that, when I do it, I often arrive at the conclusion that I don’t actually want the item in question. So, in that scenario above, you might realize at the four month mark that you don’t really want or need a tablet after all, at which point you have $200 set aside for something else fun.

I’ve been using this approach for years and it’s been wonderful. I often find myself convinced that I don’t really want or need some of the more expensive items out there that I might be initially inclined to save for and that ends up being a great thing.

Q3: Diverging financial perspectives from husband

My husband and I got married about five years ago. We had a lot of the same interests and the same philosophy on spending. We bought nice cars and live in a really nice house that’s full of nice stuff.

About a year ago the debt started really bothering me so I started Googling stuff and found your site. I read almost everything you’ve written and read your book and a few others and now I feel very differently about money. I look at all of this stuff and this house and our debt and I honestly feel sick to my stomach.

The problem is with my husband. He feels the same way he always has about money and he just looks kind of baffled at me when I talk about getting out of debt and financial independence. I want him to feel like I do about things but I also think it’s unrealistic to expect him to change his mindset just because I do.

I’m just looking for ideas for how to make this work. Suggestions?
– Madison

Right now, you’re sitting in a situation where your perspective on personal finance has changed significantly in the last few years, while your husband’s perspective remains more or less where it was when you got married. You are the one who has changed, not your husband.

It is very, very easy in a situation like this to become convinced that you are right and that you know what’s best for your husband and that your husband is wrong and that he does not know what is best for himself. You can quickly dissolve everything into a “I’m good, you’re bad” kind of dichotomy, and that’s really dangerous.

The thing is, you’re two people who care about each other very much who just happen to have views that are a little different about how couples should manage their finances. This is a situation where compromise can really, really come in handy. You need to articulate to your husband that spending less and saving for the future is really important to you… but you need to understand that many of the routines of the life you’ve had up to this point are really important to him.

You need to look for ways where you can have both things. You don’t need to immediately shift everything in your shared life to an ultra-frugal hypersaver state, nor do you need to keep spending like you once were. Focus instead on continuing spending on the things you both really care about and look for things that are less important to cut bac on.

Talk about these things together. Don’t expect perfect resolutions overnight. Also, don’t expect that things will go smoothly, either. It will take time, and there will be bumps. The key is to talk about those bumps and avoid the sense that the other person is the bad guy.

Q4: Guilty about really old debts

In the early- to mid-1990s, I filled up several credit cards with stupid purchases. Then I did something even more stupid – I basically ignored the bills. I heard from bill collectors and the like and just ignored all of it and eventually they stopped bothering.

I finally got my life straightened out a few years back and since then I have been trying to fix all of the stuff I messed up back then (My Name is Earl ha ha).

I feel like I should pay back these debts but I don’t even know how to do it. Most of the issuers aren’t even in business any more as far as I can tell. Where do I start?
– Shawn

The truth is that you’re probably not even going to be able to repay those bills even if you wanted to. It’s likely that most (if not all) of these accounts no longer even exist in bank databases anywhere, particularly if they were with banks that no longer exist (probably because they were bought up by Chase or Citibank or Bank of America). Your account was sold to a debt collector that eventually gave up on collecting that debt. It’s basically gone at this point.

Not only that, even if you were able to dig these things up, they would cause a very negative blight on your credit report that is not at all reflective of the person you are now. It would cause a real negative impact on your financial state right now in the form of higher insurance rates, worse interest rates on car loans and mortgages, and possibly even an impact on things like getting an apartment or a job.

If you feel guilty about having done this and want to “pay it back,” I’d figure out how much you owed and make a commitment to giving that much to a charity.

Q5: Bored at work

Up until three years ago, I was the sole IT person at a 750-person business. I was constantly busy and feeling burnt out, but I did enjoy working for a relatively small business. So I applied for a job at a smaller business and became the IT Director for another business, this one with about 150 people.

Unsurprisingly, my work load has dropped by about 75%. I spend most days pretty bored at work. For the first year, I invented a lot of things to do, such as setting up templates for all of the computers and making everything remotely manageable and setting up a hardware workshop so I could just replace parts rather than buying new computers. But now I mostly just sit here. I can’t even conceive of things that I could do.

While I’m glad to have a job like this, I’d like to be able to do something. Part of me wants to walk away from this job and find something new to do.

Do you have any suggestions for me?
– Tim

If you have this spare time at work, you should be using it as a great opportunity to build new skills. Teach yourself how to program and dig into an open source project that’s useful to you. Get a bunch of certifications and do your studying while at work.

You can also do things that will save money over the long run for the business. Carefully look for IT spending opportunities that will really maximize the bang for the buck. Look for vendors that can offer you even better prices than what you’re getting now.

Look for new tools to do the things that you are responsible for, learn them inside and out, and deploy them. Spend time learning exactly how people are using their computers and look for ways to make that easier and more reliable for people in the company.

I worked in IT for a while and there are always things you can be doing. You have 150 employees in your business, all of which have some type of IT needs. How can you fulfill those needs as well as possible?

Q6: Money needed to retire early?

How exactly do you figure out how much money you need to have saved/invested to reitre early?
– Jane

There are a lot of ways to calculate this, but unfortunately none of them are guaranteed. All of them have drawbacks and caveats.

The most well known answer to your question comes from the “Trinity study,” which says that for a 30 year retirement, a 4% withdrawal rate is adequate in virtually all cases. A 4% withdrawal rate means that you’re just taking out 4% of the balance of your investment and living on it each year, so you’ll actually need to have 25 times your living expenses in order to make this work. The drawback, of course, is that this only works for a 30-year timeframe.

Different sources recommend different withdrawal rates. Personally, I would like to reach a point where the dividends or other income from my investments add up to enough to live on so that I have no reason to ever touch the principal. It can just sit there continuing to earn me money year in and year out.

For me, that means something around a 2% “withdrawal rate,” since most of my investments pay out dividends at about a 2% rate. So, if I wanted $50,000 a year to live on, I’d have to divide that by 0.02, and that would give me $2.5 million. That’s how much I would have to save in order to live off of the dividends at $50,000 a year assuming I earn nothing else.

As you can see, it’s tricky. My only advice to you is to not buy into the most optimistic projections. Stick with a pessimistic viewpoint, even if it means working for a few more years. It’s far better to work a few more years right now than to be stuck later on with a dwindling set of investments and a decade of no work record.

Q7: Value from iTunes gift card

My sister gave me a $25 iTunes gift card for Christmas last year and it’s still sitting here in a drawer. I don’t buy anything from the iTunes store so it seems like a waste but I feel really cheesy just regifting stuff or selling it. What are some good things to use an iTunes card for that I’m not thinking of?
– Clarisse

One of the few paid apps that I like in the App Store is Paprika. It is just such a good recipe manager from top to bottom. I consider it worth the few dollars it costs.

Another vital tool that I use all the time is a password manager like 1Password (my preferred one). It helps you generate super-secure passwords for all of your most important accounts and keep those passwords secure themselves, too.

Aside from that… are you a Netflix subscriber? If you are, you can always add a month of Netflix to your account using an in-app purchase, which would thus use your iTunes credit.

Those are the best uses of iTunes credit that I can think of.

Q8: PersonalCapital.com

Do you have an opinion about PersonalCapital.com? I’ve been hearing a lot about it lately from other bloggers and am wondering if it’s worth doing (I am only interested in its free component). Currently I use a Google spreadsheet to track my financials and it works, but would there be any benefit to setting everything up via Personal Capital? One obvious benefit is I wouldn’t have to log into each of my financial accounts separately, but then there’s the additional risk that my account information is more exposed. I understand it also tracks spending and investments which may or may not be helpful to me. Any thoughts would be appreciated.
– Jennifer

I absolutely don’t trust any personal finance tool that requires you to turn over login credentials for all of your personal finance accounts. That’s too much data in one place, I don’t care how secure those places are. I just don’t feel secure having all of my login information in one place.

This applies to Personal Capital. This applies to Mint. This applies to any and all services that follow that same philosophy of using all of your account details to scrape information from your accounts.

Because of that, I’m not interested in signing up for PersonalCapital and I changed all of my passwords after trying out Mint several years ago. They just don’t provide anything to make it worthwhile, at least for me.

Q9: Personal finance education in schools

Why do you think there is such lousy personal finance education in schools? Most states don’t have it at all and those that do present it in about the worst possible way.
– Jerry

I think that most schools today are primarily focused on either simply pushing students through to graduation or preparing them for college entrance exams. Neither of those things is supportive of personal finance education, nor is it supportive of any subjects that don’t appear on college entrance exams. In some schools, sports are a major focus as well.

Having said that, I do understand why schools approach things in this way. Their budgets are tight these days and that means cutting out every subject that isn’t required in the state standards.

What’s the solution? Without a serious change in the commitment that our society gives to high school education, there isn’t one. It relies on the parents to teach their children basic life skills and if they can’t do so, then their kids are going to have to learn it on their own.

That’s the truth. There aren’t resources available to teach personal finance at the high school level, so the responsibility for teaching it falls on the parents.

Q10: Retirement savings in December?

My father always waits until December to put money into his IRA. His argument is that there is an opportunity cost to locking away the money in there so he should wait until the last minute. But ignoring opportunity cost isn’t that a bad way to do it? Shouldn’t you put equal amounts in throughout the year?
– Devin

The best way of all is to contribute right up to the max as early as you can in the year. That way, you’re going to ride a year’s worth of growth in the stock market. Remember, most years are a positive in the market, so if you wait until December to contribute, you miss all of that growth.

The problem with that “best way” is it requires people to have all of that money at the start of the year rather than at the end of the year. That’s why most people contribute slowly throughout the year as they can afford it, usually through direct deposit. That way, at least some of the money can take advantage of growth throughout the year without putting a huge financial crunch on you at the start of the year.

Waiting until the end? It’s only the best move if you’re lucky and the year was one of those years where the market went down for the year, which is less frequent than positive years.

Now, what about opportunity cost? Of course, if you lock up money in a retirement account, you do lose the opportunity to use that money elsewhere. I agree with this to an extent – if you’re making your budget super tight in order to be able to afford to put away money earlier in the year, that’s a mistake. However, if money is not super tight for you, you’re probably better off putting the money in as early as possible in the year.

Q11: Why not reuse freezer Ziplocs?

In your recent food posts you have been discouraging use of freezer Ziplocs and encouraging instead that people use plastic containers. Why? The Ziplocs are cheaper and you can actually reuse them a bunch of times.
– Joe

My experience with freezer Ziploc bags has been widely varied. Sometimes, they seem to hold up well and can actually be used a few times with a washing. At other times, they already have holes in them after the first thawing, which means I don’t want to use them again.

At the same time, I’ve never had a plastic BPA-free freezer container completely fail me. The worst thing I’ve seen from such a container is some lid warping over a long period of time – many, many uses. I’ve had containers that have seen regular use for almost a decade now and they’re still going strong.

Given that it only takes between 4 and 6 uses for a freezer container to start saving money over a single use Ziploc, I’d rather just skip the Ziplocs and jump straight to freezer containers for my freezer needs.

Q12: Minimizing television exposure for kids

What strategies do you use to minimize TV time for your kids? Most of the stuff on TV is junk with lots of commercials and many of the programs are basically commercials too but the kids just constantly ask to watch.
– Mary

Before I get started on this, I will say that ownership of a television is an area where Sarah and I disagree. If it were up to me, we wouldn’t own a television at all, but she often watches television while doing professional busy work in the evenings, so I basically just view the television cost as one of her hobby expenses.

That being said, a television is sitting in our family room and it is definitely an attraction for our children. We usually allow them to watch a bit of television each day after school – maybe thirty minutes or so of a program they choose together – and then a bit more on the weekends.

They can earn more in various ways. Being helpful and going above and beyond normal household responsibilities will earn them some more television time, as will long sessions of playing outside. We also tend to relax the limits a bit on weekends where the weather is terrible.

There’s also a “lazy parent” factor as well. It’s really easy to just let them watch television when I have other things that I need to get done. For example, just this past weekend, I was trying to get extra writing done for the Thanksgiving holiday, but in doing so I basically opened the door to them spending some extra time watching television. I had to find a good balance between doing my own work and encouraging them to do other things with their time.

I’d estimate that our children watch between 4 and 7 hours of television per week, with our daughter on the higher end (she’s the most television-prone of our children) and our youngest son on the lower end (he’s probably the least interested in television).

I think the key is to just keep encouraging and suggesting other things to do rather than directly demonizing television. The children aren’t really dissuaded by negative comments about television, but they will often choose other things if I suggest them and encourage them.

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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