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. Frugality and abusing charity
2. Gifts for groomsmen
3. Spending in response to debt
4. Unlimited photo storage with Prime
5. Dave Ramsey’s 12% returns
6. Going without credit cards
7. Is home photo printing cheap?
8. Avoiding dollar store
9. Buying a grill for life
10. Death of the outlet store
11. Bad debt repayment strategy
12. Cheap smoothies at home?
13. Disagreements over big goals
14. Bi-polar spending
15. Reading book series
A while back, I had the pleasure of reading The Shallows: What the Internet Is Doing to Our Brains by Nicholas Carr. The book is essentially an expansion on the ideas he set down in his earlier essay Is Google Making Us Stupid?
The idea behind both things is that we’ve allowed Google, smartphones, and the internet in general to enable us to externalize a lot of ideas and information that, in the past, we used to internalize. He also argues that it was that very internalization of information that allowed us to have breakthroughs – after all, we can’t combine a pile of ideas together if they’re not in our mind to at least some extent.
My perspective is a little different. I think that the internet provides us with a nonstop flood of information and it’s going to be a giant boon to those among us who can absorb and process information quickly. On the other hand, I think it might be a detriment to those who internalize information slowly because their motivation to do so is shrinking.
What does that mean for the long term? I don’t know. I just feel as though the flood of information online will be very good for some and not so good for others in the long term.
Our town has this really great food pantry that gives out lots of great food including stuff that people grow in their gardens and donate. I recently learned that there are a few people in our town who kind of skirt the rules in terms of qualifying for the food pantry. They make fairly good money but they still go there and get as much food as they can get away with. There have been some complaints with the food pantry people but they say that they give to everyone who qualifies. Do you think this is distasteful and “un-frugal”? What can be done about this?
Nothing can be done about this unless the food pantry changes its rules. The food pantry clearly has a qualifying process of some kind and if those people manage to qualify through that process, they have just as much right to the food as anyone else.
The real question is whether something should be done about it. This goes back to an issue I’ve been struggling with a lot lately in conversation with a number of friends.
Let’s say you have two people that are both below the poverty line and thus eligible for food stamps and food pantry items. One of them gobbles up the food pantry items and uses all the food stamps and blows through what little money they have. The other one is incredibly careful with the money they have and actually manages to save a little because they’re super frugal. Eventually, that second person will become ineligible for benefits due to earnings off of their savings and investments, which basically means that person has a motivation not to be careful with money.
This actually describes why I have a problem with a “litmus test” for receiving basic assistance for food and other essentials. You know, sure, there are always going to be people who abuse any system, but when you start throwing up litmus tests, you start cutting off people who may actually need the help. I know of one person who is above the federal poverty line, but not by much, who is taking care of two disabled parents. That person could really use some benefits, but isn’t eligible.
We need to stop being so worried that everyone is just going to “rip off” the system and worry instead about whether everyone has food in their belly and a roof over their head. Everyone has a different situation and that situation is often not represented very well if you just boil it entirely down to a number.
I have been a groomsman at two different weddings. Boht times, the groom gave very nice gifts to each groomsman. I received a very nice engraved flask from one groom and a bottle of scotch from the other. I am getting married this summer and I’m trying to think of a less expensive but still nice and perhaps more practical gift for my groomsmen. Do you have any suggestions?
My suggestion would be to get them a well-made multitool, like a Leatherman Wave.
A multitool is a very useful thing to have around. It can reside easily in the pocket if you’re so inclined, but it’s also an amazing thing to have in a kitchen drawer or on the shelf in the garage as it can do a lot of things with one single device. The Wave, for instance, includes pliers, wire cutters, 2 knives, a saw (which I actually cut a small tree branch with a while back), scissors, 2 files, 2 screwdrivers, a bottle opener, and several other things. I quite like it.
I personally received this Swiss Army knife as a gift in this type of situation and it seemed very appropriate (I already owned my Leatherman Wave at that point, however).
There are a bunch of different varieties of multitools out there. There are some geared to tech workers, some geared to tinkerers, some geared to outdoors types, and so on. Take a bit of time to research them and pick a tool that matches the people in your wedding party.
I am 26 and my husband is 28. We currently have $125,000 in total student loans along with $38,000 in credit card debt. We know what we need to do to pay all of this off as a debt repayment plan isn’t really a mystery. Our problem is that when we sit down and look at this debt, we get so frustrated and overwhelmed that we end up responding by buying stuff to somehow “prove” that things aren’t bad. This seems dumb most of the time but it somehow feels like the right response when we’re seriously looking at our finances. What can we do to get past this?
$38,000 in credit card debt is amazing. If you’re paying 20% interest on that debt, you’re paying $7,900 a year in credit card interest. That’s just… a lot of debt. I’m amazed that you even had a limit that high.
You obviously know that spending in response to looking at that kind of debt is a pretty bad mistake. The best response is a desire to plow through the debt like John Henry with his hammer – but that not’s the response you’re getting.
So how do you cultivate that kind of response?
My suggestion would be to spend a lot of time talking about and visualizing your life without that debt. How would your life be better if all of that debt went away, particularly the credit card debt? How much stress would go away? How much more freedom would you have to save for other goals? Would you be able to move out of that apartment?
Think a lot about those things. Add to that some thoughts about how buying unnecessary stuff holds you in that trap with the stress and the failure to reach goals and the small apartment and all of the other things holding you back.
In the end, it has to be your choice. All you can do is prime your mind to make better choices.
You’ve talked a lot about Amazon Prime in the past and mostly positive. I wanted to alert you to another feature that I don’t think you have mentioned. Amazon Prime also gives you unlimited photo storage which makes it really really easy to move your photo library from computer to computer. Here is the info:
We have used it seamlessly to move copies of our family photos around to several computers and I even pulled some off at my sister’s house at Christmas. It is really useful for us.
This is a very good service! While I still use Dropbox to achieve basically the same exact thing, this is a great service for those who already have Amazon Prime.
Once you install it, it basically shows up as a new folder on your computer. Everything you put into that folder is now accessible from any other computer that you log in from, including your tablet and smartphone. It’s a great way to share pictures and documents with other people.
Amazon users without Prime get 5 GB of storage; Prime users get unlimited storage for photos (basically, they don’t count JPEG files against your 5 GB storage limit if you have Prime). You can also buy more storage if you wish.
It’s a sweet service. I know that I use Dropbox constantly and this seems like almost the exact same thing.
We have been following Dave Ramsey’s advice in paying off debts and it is working really well. We are starting to save for retirement now and are following Dave’s suggestions on that. One big question we had is about investment returns. Dave suggests that we should expect a 12% return on our money while you suggest 7%. Why the big difference?
The truth is that Dave overinflates the kinds of returns individual investors should expect to get with their money. He latched onto that number during an economic boom where housing and stocks were going up at a double digit rate per year and he stuck with that number for a long while. I don’t listen to his radio show every day, but as far as I know, he still sticks with that 12% annual return number.
I stick with what Warren Buffett says about long term returns. He suggests that they’ll be at about 7% for the long haul if you invest broadly, and that’s the approach that I follow myself and typically recommend to others.
Getting a 12% annual return on your money would be amazing. It’s just unrealistic over the long haul, as far as I can tell.
My husband and I have made the decision to go without credit cards entirely for at least one year just so we get completely used to actually having the money before we make a purchase as credit cards have gotten us into trouble before. As we pay off each card, should we cancel it? Or is there a better approach?
I would cancel every card except for your oldest one. I’d keep your oldest one in a safe place and ignore it, though.
Why? Your oldest card helps establish the length of your credit history, which can play a pretty big role in establishing your credit score.
Your credit score isn’t just important in acquiring new debts. It also helps you with things like establishing your insurance rates, job applications, and other things. Many companies check your credit score when doing business with you.
Let’s say I want to print a bunch of 4x6s for scrapbooking and photo albums. Is it cheaper to print them at home (I already have a printer) or just get prints at Target or Walmart? My math says that it is pretty close.
As I calculated a few years ago, it is slightly cheaper to print at home than to order prints from a store.
However, there are exceptions to that. There are often discounts on prints at major chain stores as well as at online printers like Shutterfly.
I usually use eighteen cents a print as the magic line for making that decision. If it’s cheaper than eighteen cents a print to have a company print them for me, I’ll do that. Otherwise, I prefer the control of printing them at home, as I can make prints at 11:30 PM in my pajamas if I want to.
There is a dollar store about two blocks from my house that sells a lot of household products that I use. I am scared to buy non-name brands there because the prices are so low that I am scared that they have horrible chemicals in them because they were made in some cut rate factory so I just buy things at the grocery store instead because the dollar store doesn’t save me any money. So I don’t get any value from the dollar store.
Most of the stuff that goes into household supplies are pretty straightforward chemicals. In most cases, it’s not really cost effective for a company to put “horrible chemicals” into a window cleaner (for example) than to just use the actual good ingredients, which are mostly water and vinegar with maybe a drop or two of other cleaning agents.
In other words, I’m more worried about foods that I might eat having been treated with weird chemicals than any household products I might buy. Most household cleaning products don’t go into my body, after all.
I guess what I’m saying is that I wouldn’t worry about it too much, and if you do worry about it, make your own mixes. You can make a great window cleaning solution by mixing two cups of water with 1/4 cup of vinegar and maybe two drops of dish soap, which is going to be cheaper than almost any window cleaner you might buy at the store.
Do you have any suggestions for a long-lasting outdoor grill? Mine seem to last for like three years before they are junk.
Here’s the thing: outdoor grills almost always die due to lack of maintenance rather than any design flaw. Like it or not, outdoor grills are extremely demanding in terms of maintenance and the work you have to put in to keep the grill in good shape is often judged as “not worth it” to people, so they just use it for a few years and then replace it.
If you choose to put in the maintenance time, most grills will last a decade or so. They’re not complicated devices. The problem is that, because of their nature, rusting and natural wear simply cause them to break down more quickly than you might expect.
If you want a truly long-lasting outdoor grill, my honest recommendation is to build a fire pit with a very thick and sturdy grill over the top. That will last for a very long time.
My husband and I used to shop at an outlet center near us all the time. It used to be loaded with clothes stores that sold items with minor flaws at really big discounts, like 75% or 90% off the original price. Most of the time the flaws were unnoticeable, so it felt like a huge bargain.
Over the last ten years that all changed. Now, the stores just sell off-season stuff – like their summer items are sold in Sept.-Oct. – and only give a small discount on them. I don’t want to buy a t-shirt in October for $15-20 for example.
Don’t waste your time with “outlet” centers unless maybe you want to stock up on out-of-season stuff. We don’t go there any more.
Sadly, I have to agree. I remember going to an outlet center in my teen years and it was much like you describe: lots of merchandise with slight flaws being sold at stiff discounts.
These days, we drive by a couple of outlet centers when visiting family. The last time we stopped at one, the stores were barely any different than their main stores except about a third of the items were out of season. The prices certainly weren’t very good. The only worthwhile store in the entire outlet center was the bookstore, which was unconnected to any chain I’d ever heard of and seemed to be in the business of buying overprinted books in bulk and putting them up for sale at great prices. Sarah and I each bought a couple of books there.
There may still be good outlet stores out there, but they seem to be rather rare these days.
We currently have four debts:
Student loan A: $24,000, 6% interest
Student loan B: $20,000, 5% interest
Credit card A: $6,500, 19% interest
Credit card B: $5,000, 15% interest
Student loan A is my student loan; student loan B is his student loan. My husband argues that we should pay off student loan B first because getting rid of it will ensure that one of us has good credit for future debts. That seems like the WORST debt to pay off first to me.
If you look solely at improving just his credit and no other factors whatsoever, then his argument makes sense. However, that’s only one factor – and a pretty minor one – that you should use in determining what to pay off first.
Assuming you are both up to date on your debt payments and don’t have any major black marks on your credit from the last few years, actually paying off Student Loan B first isn’t really going to help his credit very much at all. It will offer a small bump, but not one that is anywhere close to the value you’d get from getting rid of the high interest debts first.
Your main focus should be on minimizing your debt as quickly as possible, and the best way to do that is to pay them off in order of interest rate. That will maximize your dollars. Since the two of you are married, your financial lives are deeply linked anyway, so the paradigm of “my debt” and “your debt” doesn’t really make sense any more.
Is there a good way to make cheap smoothies at home? Seems like you have to have a really good blender ($$$) and lots of fresh ingredients ($$$) to make a decent smoothie. Isn’t it just cheaper to buy one at Jamba once in a while?
I agree that a really good blender that will make effortless smoothies can be pricy. I have been disappointed in the past by several blenders and have only really enjoyed making smoothies with our Blendtec, which is a $300 blender (we found it during a going-out-of-business sale, thank goodness). Other blenders have required us to blend for a bit, then manually mix the ingredients in the blender to expose the larger fruit pieces to the blades, then blend again, then repeat this whole process several times.
However, I don’t agree that fresh ingredients make home smoothies prohibitively expensive. Bags of flash frozen fruits are pretty inexpensive for starters. I often use green tea as the liquid and that’s very inexpensive to make at home, too. Many fresh fruits are very inexpensive, too – bananas are incredibly cheap, for one.
The real cost is in the blender, in my opinion. A good blender makes the process quite easy, and that encourages people to blend.
How do you and Sarah handle disagreements over big goals? You both seem to be on board with your financial independence goal, but was it always that way? How did you come to an agreement? Did one of you have a different goal?
We don’t always agree on big goals. What we do is sit down pretty regularly to talk about our goals and simply share what we’re each thinking. We listen to each other and take what the other person is thinking into consideration.
One thing we don’t do is start bringing up counterpoints immediately. Instead, if we disagree, we give that feeling of disagreement some time to mellow and some time to be reflected upon.
What happens is that often we both realize the good things in the ideas of our partner and, over time, we both reflect on things, share our thinking, and eventually arrive at conclusions that work for both of us.
The number one thing that poisons all of this is anger. You can’t come to that kind of thoughtful agreement if you’re angry with your partner. You have to recognize that your partner has valid ideas and thoughts that might be different from your own. The key is understanding those ideas and thoughts and how they often mesh up well with your own, even if you don’t initially see it. It takes time and patience.
I was probably first in feeling as though we should be moving more toward financial independence than towards buying a home in the country. I started to see more of the benefits of our current living situation, which made me realize that the country home might not be the best primary goal.
What do you think of “bi-polar spending”? This is an idea I heard about on a podcast (maybe Planet Money?) a few weeks ago. The idea is that you spend very frugally on almost everything, but spend lavishly on two or three things you really care about. So you might drive a really nice car or something, but you live very cheaply in other aspects of your life. Thoughts?
I think it makes sense to a certain degree. I agree completely on cutting back on the areas of your life that are less important to you.
However, I’m less sure about spending “lavishly” on a few areas of your life. It’s easy to watch your spending spiral completely out of control if you’re not careful. For example, if you decide you’re going to spend lavishly on golf, it can bankrupt you on its own. If you decide to spend lavishly on cars, owning two or three high end cars can nuke your finances.
I’m more in favor of giving yourself a frivolous spending “allowance” each month, where you’re free to spend as you wish within a certain dollar amount. I give myself an “allowance” each month which is primarily spent on board games.
If you’re the type of person who wants to save money by reading books, I highly recommend starting a book series with ongoing characters and story. They’re addictive. See if your library has a series that is in line with a kind of story you like (historical, romantic, sci-fi, fantasy, mystery, etc.) and then check out the first one. If it sets the hook, you have hundreds and hundreds of free hours of entertainment right there.
I actually agree with this. It can be really enjoyable to pick up a book where you’re already familiar with many of the characters so that the author can dispense with all of the character building up front and you can just dive right into a great story with characters you already know. Most of my favorite “page turners” are long series of books; in fact, right now I’m really in love with the Expanse series from James S. A. Corey.
The trick, though, is finding a series that clicks with you. There are series that are very light. There are series that are very complex. There are series that come from almost any genre you can imagine. There are some that are well written and some that are not.
The best thing you can do is try out the first book in a series and see if it clicks. If you finish the first one and immediately want more from those characters and that setting, grab the next one. If your library has the whole series (or can get them through library loan), you’re in for a ton of great entertainment for free.
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.