Questions About HSAs, Organizing Ideas, Art Degrees, 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. HSA open enrollment and fees
2. Organizing ideas for blog posts
3. Combining 401(k) accounts worthwhile?
4. Hot water heater problems?
5. Finding job with art degree
6. Renting or buying a minivan
7. Dryer problems
8. Long-term disability insurance
9. 15- or 30-year mortgage
10. Challenging problems at work
11. Personal loans for unpaid debts
12. Handling employer stock awards

In just about two weeks, my children are finished with their school year, which means that they’re going to start being at home all day instead of being at school. Sarah, being a teacher, also has a lot of overlap with the children in terms of several weeks off in the summer. As someone who works from home, this means a radical shift in how I work.

The biggest change, obviously, is people around the house. I work from home and our home isn’t particularly large. I converted the smallest bedroom in our home into an office and I can shut the door, but that doesn’t keep me from hearing children running about or the normal noises and shouts that come with having three children and my wife at home. It’s going to get noisier.

My children are also quite prone to come to my office door and knock and ask questions, even if it’s clear to them that “Dad has to work.”

The way this ends up working most of the time is that I work a lot more with my “portable office” at the library. My “portable office” is my trusty backpack which contains everything I need to work in a remote location – my laptop, the necessary chargers, notebooks and research materials, pens, and so on. I wrote an article about my travel bag several years ago – most of the materials are the same, but a few have changed.

So, this week and next, while the house is still quiet, I’m spending a bit of time getting this “portable office” ready to go, so that I can easily work at the library a few times a week throughout the summer months.

Q1: HSA open enrollment and fees

I have a question about HSA’s. I’m going through open enrollment at work right now and I think the monthly maintenance fee on the HSA that they offer is a bit too high. I was wondering if you might have a suggestion for shopping around for a new HSA account?
– Lincoln

The first thing you need to know is whether or not your employer makes HSA contributions on your behalf and, if they do, what kinds of restrictions are on those contributions. Do they only contribute to the plan that they offer? Will they contribute to any plan? Do they not contribute at all?

If they offer contributions to only certain plans, then you should probably restrict your choices to those plans. Even if their fees are high, they’re likely completely dominated by the contributions from your employer.

Another problem you may run into is that your regular health care plan might be tied to use of a specific HSA. You still might be able to open one on your own, but you’ll have to check on the specifics of your insurance package options.

However, if your employer does not contribute or will contribute to any plan and there are no other shenanigans going on, then you should shop around. One great place to start is at HSASearch.com, which is a great comparison tool for HSA plans.

Q2: Organizing ideas for blog posts

I’m wondering if you any suggestions on the best to organize blog post ideas. I keep a running list of ideas, and sometimes add a few sentences or thoughts to each idea. I don’t think I want a physical notebook per se, but I can’t seem to find an app that is simple enough. Thanks for any suggestions you might have!
– Carrie

I personally use a physical notebook for doing this. I devote a single page in the notebook to notes for each article that I might write – occasionally, I’ll devote two pages. Usually, these notes consist of a basic outline of what the post is going to contain along with some specific facts or anecdotes to support that point. This usually provides the structure of the post when I write it.

My usual routine is to go to the library a time or two a week and stay until I have 10-15 pages filled in my notebook, then I take that notebook home and use it as a sourcebook for writing. Usually, I just lift those outlines and notes directly. I don’t use OCR tools for this – I just leave the notebook open in my desk and copy them directly by typing, as this usually gives me some more ideas for arranging the article.

I used to use Evernote for this, but I found that having my laptop open for notetaking made it very easy to get distracted during this research process, so I moved to using paper notebooks and pens. If I had to recommend a digital tool for this process, I’d highly recommend Evernote.

What about one-off ideas? That’s where I do use Evernote, or use my pocket notebook. If I have a general topic idea or a one sentence suggestion to think about later, I jot that down and then try to use that as a basis for a full page in my notebook the next time I’m at the library.

Q3: Combining 401(k) accounts worthwhile?

Over the over the last 15 years of my working career I’ve had several different jobs resulting in several different 401ks and 403bs. Is there any advantage or disadvantage to leaving all these accounts as separate accounts? I understand the frustration of trying to manage the several accounts, different passwords, monitoring several statements, et cetera. However, I’m wondering from a financial perspective. Would combining accounts result in any type of financial gain? I spoke to a financial advisor who said he could combine for me but of course there was a fee. I feel like I could combine the accounts on my own, it would just take time and paperwork. Do you have any thoughts/recommendations?
– Nicole

It depends on the investments offered by each of the companies. The best thing you can do with this bevy of options is to have all of the money with the company that offers options with the lowest management fees, which will save you a ton of money over the long run and result in a bigger balance in your retirement accounts.

Since you’re probably invested in similar things across all of the accounts, I’d suggest comparing those investments. Which ones have the lowest management fees? I’d be more concerned about that than slight variances in investment returns.

One company that consistently has low management fees is Vanguard; Fidelity is usually also pretty good in this regard.

Once you find a company that offers very good management fees, start moving your investment over to the 401(k)/403(b) that’s managed by that company. You can do them one at a time so you’re not overwhelmed, or you can just do them all at once and deal with mountains of paperwork but just for a little while. I’d recommend allowing that company to help you through the process, as they’ll usually offer some very good free assistance here in order to get more money under their management.

Q4: Hot water heater problems?

My plumber thinks that the hot water from the water heater may be damaging the Moen replacement cartridges in my two showers, which started dripping after only 2 to 3 months. The temperature is set on the lowest setting (about 118 F). I would like to hear some ideas or solutions.
– Jimmy

If a Moen cartridge is leaking after just a few months, something is definitely wrong. Those cartridges should last for quite a while (a Moen cartridge is a piece for a Moen faucet that allows for a single handle faucet to regulate temperature and pressure).

My first reaction wouldn’t be the heat of the water, but rather that your water is hard or there’s something else in the water that’s causing your cartridges to fail early. Do you have exceptionally hard water or other water issues? Do you see a lot of buildup on your faucets over time? If so, you may want to consider a water softener.

If that’s not the case, you may want to consider a completely different system in your showers than the Moen systems you have in place. If you’re replacing cartridges several times a year, it’s probably going to be more cost-effective for you to get another system in place that won’t be prone to this, because this is not normal. (If your plumber is the one installing the cartridges, you may want to consult another plumber, too.)

Q5: Finding job with art degree

My daughter graduated a year ago with a bachelor’s degree in art and a minor in psychology. She has not found a good job yet and is thinking about going to grad school for a teaching degree. Is this the best route or is there another (preferably online) degree that would lead to a job? I saw how you ranked Industrial Organizational Psychology as #1. Could she do that without a business degree? Thanks.
– Kevin

Your daughter is not alone. According to this article in The Atlantic, only about 10% of people with art degrees end up with a career in the arts. Most end up making their mark in other fields.

That’s because the job options that specifically utilize an art degree are pretty few and far between. Often, jobs in the arts are portfolio based rather than degree based, and many people find their way into the arts from other degree programs because of the work they produce.

I-O psychology is a great field, but it usually requires graduate study in order to get into the field. SIOP is the trade organization for that field and can point a person in the right direction.

If your daughter is interested in teaching in the arts, a graduate degree and teaching certification is definitely a worthwhile path to follow.

Q6: Renting or buying a minivan

We recently had to take my wife’s car into the shop for the airbag recall and our rental car was a minivan. We loved it. We have a 1 year old and a dog and frequently take road trips to visit friends and family. We’re now considering buying a minivan but also had another idea: what if we kept my wife’s CRV and just rented the minivan for trips? The snapshot of our car financial picture is that I have a paid off ’04 Camry (200k miles, no serious issues), my wife has an ’07 CRV that we bought for $14K and have about $8K left to pay off at (I think) a 4.5% (or so) interest rate (115K miles). Do we buy or rent? Oh, and we probably do 5-10 road trips per year, with a distance of 2-7 hrs per trip.
– Chris

It really depends on how long and frequent your road trips are. How long are these trips between your departure and your return home? If the picture is more along the lines of five trips that are day trips, then renting is probably a better option for you. If the picture is closer to 10 trips and they’re either weekend trips or weeklong trips, then you’re probably in a situation where buying is a better option.

The reality is that the longer and more frequent your trips are, the higher (and higher and higher) the costs of renting are going to become. With just a small handful of day trips, the cost is definitely going to be lower than buying. However, the cost goes up with more trips and the cost goes up with longer trips.

At some point, you cross a threshold where it’s cheaper to buy than to rent. I don’t know exactly where that line is because there are a lot of variables here, but my gut tells me that the line is somewhere between the two possible scenarios you present here.

My suggestion is this: if most of your trips are day trips, rent. If they’re mostly longer trips, I’d probably lean towards buying.

Chris had a second question on a very different issue.

Q7: Dryer problems

Our dryer recently stopped heating and the timer broke so now it doesn’t stop. It will still dry clothes, but we just have to open the door to stop it and it takes longer to dry things since there is no heat. We obviously don’t look forward to dropping a lot of money on a new dryer, especially since our current one is technically drying the clothes. Should we hold out, or would it simply make more sense to go ahead with buying a dryer?
– Chris

Personally, if it were just the timer, I would keep using the dryer until it failed in a more functional way. With a dryer in this situation, I’d probably just set a timer on my phone whenever I started the dryer so that my phone would go bonkers reminding me to go pull the clothes out of the dryer. That’s because that’s how I use the dryer anyway, since the dryer is constantly out of my earshot. It’s in the basement and I’m usually two floors away in the upstairs.

However, without the heating element, I’m pretty sure it takes substantially longer to dry your clothes, and it’s the tumbling that consumes most of the energy in your dryer. Also, there may be energy still running to the heating element, gulping down energy without working.

Given both of those factors, I’d probably start shopping around for a new dryer. I wouldn’t make it an urgent purchase, but I would definitely start the process.

Q8: Long-term disability insurance

I want to insure critical illness but the cost seems heavy. And the disability seems like it’s not covering much. I’m overwhelmed. I’m 49?
– Nina

I’m not entirely sure if you are referring to long-term disability insurance or long-term care insurance here, so let’s talk about the differences.

Long-term disability insurance is designed to replace your income if, for some reason, you are no longer able to work. Usually, as you’ve noticed, these policies are very picky about what constitutes a “disability,” as, honestly, the insurance company would prefer not to have to pay out for this.

Long-term care insurance, on the other hand, provides for care for the beneficiary of the plan should that person require some form of long-term health care.

You’re correct – the cost of these types of insurance is usually pretty high and the policies tend to be very specific in what they cover. They tend to mostly be useful purchases for people with substantial salaries who can afford the premiums. If you’re struggling to keep the bills paid, the benefits of this insurance probably aren’t worth it.

In other words, if you have outstanding debts or have a low income, I wouldn’t make your life more challenging to afford this kind of insurance. Buy it if you can easily afford it and it takes care of a concern in your life – otherwise, focus on getting yourself into a place where you can afford it easily.

Q9: 15- or 30-year mortgage

I’m trying to decide between a 15-year mortgage and a 30-year with extra payments. Assuming $280k financed at 4% for the 30, with extra payments of $500/month, how does that stack up against a 15-year fixed?
– Erika

First of all, a 15-year mortgage usually comes with a lower interest rate. So, if you’re getting a 4% rate on a 30-year mortgage, you’re probably getting a 3.5% interest rate on a 15-year mortgage.

So let’s look at the numbers. If you’re making the normal payments on that loan you describe above, you’re paying $1,336.76 a month. Adding $500 a month on top of that gives you a total payment of $1,836.76 a month.

On the other hand, if you’re making normal payments on a $280,000, 15-year mortgage at 3.5%, your monthly payment is $2,001.67.

So, let’s bump your monthly payment on that 30-year up to match the monthly payment on the 15-year. In either case, you’d be paying $2,001.67 per month.

With a 15-year mortgage in that situation, you’d have the loan paid off in 180 months.

With a 30-year mortgage in that situation as described above, with a $1,336.76 monthly payment and a $664.91 extra payment, you’d have this loan paid off in 189 months.

In other words, it’s better to go with the 15-year mortgage, provided you can actually save a little on the interest rate. You’re going to want an interest rate that’s at least 10% lower than the 30-year one, though, or else you won’t pay it off any faster.

Q10: Challenging problems at work

I am a volunteer with [a non-profit organization]. My director is allowing a paid volunteer to spend months at home with pay and has not reported it to finance to place her on leave. All the while the volunteer member has no intention of committing to this grant years obligation, until the end of the program. She plans to make up hours, (with some fudged) doing hours in a few “personal” civic clubs and groups. Should I report and how?
– Lila

This sounds extremely unethical. I don’t know the details, but this sounds really, really fishy.

I don’t have a sense as to how big this charity is that you’re talking about, but it sounds fairly large. If I were in your shoes, I’d probably quietly request a meeting with whoever is the boss of your director. If your director doesn’t have a boss, I’d look up who was on the board of directors with your organization and have a meeting with some of those people individually.

These situations are always messy because the director probably has some power over your future and your reputation. However, assuming that other people in this organization are in fact ethical, you should blow the whistle here.

Q11: Personal loans for unpaid debts

Does it make sense to get a personal loan to pay off collections items on your credit report? Will paying off those collection items boost your credit score?
– Monique

Yes, paying off items in collections will improve your credit score. It won’t suddenly cause it to become a great score, but it will move it from being a bad score to being an okay score over the coming months.

Now, should you take out a personal loan to do this? The problem is that if you have items in collections, you probably have a poor credit score to begin with, making it very difficult to get a personal loan unless it’s a “handshake” loan from a friend or someone you know personally. After all, your credit is in poor shape and that’s why you’re doing this, right?

If you actually have access to a low-interest personal loan in your current financial situation, this might be a good move for you. I would suggest negotiating a little with the creditors before paying them off and ensuring that the payoff is reported to the credit agencies correctly so that you get the credit score benefit. ConsumerFinance.gov offers some great advice for negotiating with debt collectors.

Q12: Handling employer stock awards

I have a bunch of my employer’s stock awards vesting over the next few years that I don’t know what to do with. I have an emergency fund of 6 months and max out my 401(k) and Roth IRA every year. I was thinking of using the stock for a down payment on a house in 8-10 years. Does that sound reasonable?
– Tessa

This sounds like a reasonable plan to follow, provided that you’re confident in the long term health of the business you work for. You do need to be careful with this, however, because if a sudden event changes your opinion and you suddenly exercise your options in response to that news, you’re participating in insider trading. You’re fine if you’re trusting your sense of the overall health of the company, but reacting to specific news is illegal.

Personally, unless I were extremely confident of the long term health of the company, I would exercise a lot of my options as soon as I could and then diversify my investments. That way, there’s no issues with potential insider trading and your investments are diversified to boot.

If you do this, you’ll still have lots of stock to use as a down payment in five or ten years. It just won’t all be stock in your company – instead, it will be diversified.

If you’re thinking of following this route, I suggest looking into index funds. I personally invest through Vanguard, which specializes in index funds. Index funds are essentially a very low cost way to diversify your investments. Here’s a basic explanation of index funds if you’re curious.

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.