Questions About Life Insurance, Kindle Books, Bicycles, Green Onions 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. Term or whole life insurance
2. Inexpensive and free Kindle books
3. US banking for Canadian residents
4. REI dividend update
5. Landscaping question
6. Investing policy like business plan?
7. Applying for job at megacorp
8. DIY fermented foods cost effective?
9. Recommendations for bicycle commuting
10. Regrowing green onions
11. The incredible shrinking numbers
12. When to throw things away?

A few days ago, my oldest son suddenly became fascinated with buying a new LEGO kit that he saw at the store. He had been saving money for another goal for a while, so this sudden switch somewhat surprised me. I encouraged him to give it a little bit of time and think about it first, but that it was okay to change goals if you give it some thought.

I was surprised because his interests had changed. He went through a multi-year phase in his life when he used to put together LEGO kits all the time and that’s all he wanted for his birthday or for Christmas, but over time he found himself spending less and less time on them. His last few LEGO kits from Christmas this past year were unfinished.

Later on that day, I asked him why he had changed his mind on the subject and his answer was interesting. He said he still thought of himself as a fan of LEGOs even though he hadn’t been putting together or modifying any kits recently, and when he was in the store he realized that it had kind of faded away from him. I asked him if he felt like part of who he thought he was was suddenly missing and he said yeah. Then I asked him if he felt like buying that LEGO kit would bring back what was missing and after fifteen seconds or so he said yeah.

I told him very gently that it’s okay to change and grow as a person and that he will probably do that for his entire life. Sometimes interests will fade over time and that’s okay, and you can tell what your real interests are by the time you actually spend on them. I told him that it was backwards to spend money on hobbies that you aren’t actively trying to spend time on and that the time you spend should lead your hobby spending. If you’re not spending time on something any more, then you shouldn’t spend any money on it either and just let that hobby go. It’s the time you spend that really matters.

He understood that. When we got home, he got out a LEGO kit from Christmas and finished it, but when I asked him later if he still wanted to buy that new LEGO kit that he saw at the store, he said no.

(I’m an admirer of LEGOs as a toy, by the way. This is just a tale to illustrate changing interests.)

Just some food for thought for today. Let’s get on with some reader mailbag questions.

Q1: Term or whole life insurance

Term or whole (IUL)? Will search if you have something. Why are these tools sold and how do these agents believe this stuff? I guess the real question is what is really the smart move? You can find as many articles arguing both sides. Will see what i can find from your archives. I am getting term but I question my cousin-in-law about the advantages of IUL’s and usually his answers are vague with guarantees sprinkled in. Basically too good to be true. Will i always earn interest, yes. Will my beneficiary get paid out the full amount? Yes. Can you give me the fees? Well it varies for each package. Googling is no better. I found one agent who argued IUL bad. Whole is great.
– Alex

For those curious, IUL refers to Indexed Universal Life insurance. This kind of insurance policy contains an investment component. When you buy such a policy, it includes a small life insurance policy, but the package is also tied to some kind of investment – in this case, the stock market, usually. When the stock market goes up, a proportional amount of those gains are put into your “account” that you’re allowed to use with various restrictions. When the market goes down, you get nothing.

The catch here, of course, is the “proportional” part. Most such packages have an upper limit on annual returns, meaning that if your upper limit is 10% and the stock market jumps 20%, you only get 10%. Even on years where it’s below 10%, you’re often only getting a percentage of the actual gains – a 12% stock market return might only put 8% in your account.

Now, in a period between 2009 and 2017, where the stock market has consistently gone up and up and up, salespeople can make some really great claims about this account. Look at all the returns! What they rarely show you is a direct comparison to the index they’re matching that includes all of the caps and fees that come along with the package.

I do not recommend whole life or universal policies based on the structure of them alone. It’s the equivalent of buying your investments from a middleman who stacks on some fees and doesn’t offer you anything other than a little bit of upfront convenience. I have seen many different sales pitches on whole life and universal policies, both by email and face to face, and they all end up trailing into vagueness when you start digging into specifics. If someone can’t answer your specific questions, don’t put your money in the product. Ever.

Q2: Inexpensive and free Kindle books

You recently mentioned cutting back on buying books to read on your Kindle. Did you know you can borrow e-books to read for free?

Try the OverDrive and Hoopla apps. The apps themselves are free, and borrowing e-books from the library networks that you select is also free. (Movies and audiobooks, too.)
– Denae

Most libraries do have some kind of ebook service that enables readers to download books for their Kindle in various forms. I’ve used these systems and read books from them many times.

What I’ve learned is that the title availability is often pretty limited. If you’re looking for a new release, you probably won’t find it on there. There’s also often a waiting list, much as there is with checking out physical books (because the library only has so many licenses) and they disappear from your device after a certain period of time.

Now, I don’t have any problems with those drawbacks, really, and I’ve checked out more than a few books this way. The challenge comes when you have a specific book in mind that you want to read and the waiting list for a physical copy is 25 people long and it’s not even available digitally. That’s when I find myself drawn to buy a Kindle copy – and it happens fairly often.

Maybe a better routine would be to just not read any books during their first year or so of release…

Q3: US banking for Canadian residents

I was reading some of your reviews online about U.S. banking. We are a Canadian family who own a home in Arizona. We are experiencing issues with regard to Chase bank and their restrictions in accepting $U.S. cheques that are drawn from a Canadian bank. It can take up to 6 weeks to go through a security check before the deposit is finalized and we are not able to use their online deposit tool. All of our cheques are coming from the same account in Canada, yet we run into this problem consistently.

I did check with one of the online banks, Ally, and they advised that they do not accept cheques from Canadian banks at all?

Have you had any experience in dealing with situations similar to ours, and if you have, are there any ‘best solutions’ for us to look at as an option to Chase? I thank you for your time and your reply.
– Mary

Over the last several years, a number of new laws have come into effect that make banking across the US border more difficult for everyone, regardless of citizenship. Almost all transactions across the border receives a great deal of scrutiny. Many banks simply won’t deal with the hassle and those that do generally have long waiting periods, as you notice.

The only exception to this is that some very large banks will hasten things for familiar customers, but that seems to be entirely at their discretion and they seem to be just fronting the money in order to provide better service to a frequent or high valued customer.

In other words, you’re not alone, not at all, and there isn’t really a way around it. Your best bet is to use a bank that also operates in Canada, which you are, as many smaller banks are even worse with regards to handling international checks.

Q4: REI dividend update

I saw in your mailbag that you answered a question about the REI Dividend.

If someone lives near a store, they can get their dividend in cash by just waiting until July 1 — https://www.rei.com/membership/benefits#faqs

I usually get my dividend this way rather than putting it toward products even though I shop at REI with some frequency as I’d rather get the 10% back on my new purchases (which you don’t get if you use the dividend itself).
– Mark

That’s some good advice, Mark!

If you have REI dividends, it’s worth noting that using that dividend as store credit means that you won’t earn a 10% dividend on that money. So, let’s say you go to a REI store and you have a $40 dividend there and you spend it as store credit on a $60 purchase. Only the $20 you actually pay out of pocket earns that 10% dividend, so you’ll come away with just a $2 dividend.

However, if you wait until July and get a cash payout of your dividend, you’re fine. You could (theoretically) use that cash to then buy something from REI and get the 10% dividend on that money.

So, it probably makes sense to wait until July, cash out your dividend in the store, then spend that cash instead of using it as store credit.

Q5: Landscaping question

Spring is here, so I wanted to get your thoughts on the value of landscaping purchases. You see, I’ve never really liked the flower bed in the front of my house.

Part of me wants want to rip everything out and make it look more professional, but the other part is convinced it isn’t worth it to spend hundreds of dollars replacing shrubs and flowers that are perfectly healthy.

Do you see flowers, bushes, trees etc. as a good purchase? What are some ways to bring the costs down?
– Kendra

In terms of dollars and cents, gardens and shrubs and flowers do help boost the curbside appeal and the value of a home, but only to a certain extent. Putting in a pleasant small flower bed or a bush or two where there’s nothing is probably going to be a positive, but replacing one flower bed with another isn’t likely to give much of a property value boost.

Plants that can provide a direct financial benefit for residents include herbs and vegetables, which you can eat, and trees, which over the long haul can provide some shade on the home and reduce heating and cooling costs.

The biggest benefit for you to replace your current gardens is for your own happiness and peace of mind. If it makes your own home better for you and you enjoy the gardening process, then it’s worth it.

Q6: Investing policy like business plan?

Loved your recent article about business plans for side gigs. Completely agree. It’s hard to launch anything well without a good plan in place. Have you ever written about writing an investing policy or investing plan? It would have the same goal bout would talk about your investing plans.
– Danny

A personal investing plan is absolutely a good idea for anyone making investment decisions regarding their future. The goal of such a plan is similar to that of a business plan – you sit down, detail your situation and your goals, figure out how to get from your current situation to your goals, and look for any pitfalls.

Unlike a business plan, there really isn’t any standard format out there for an investment plan. I would definitely include sections covering your current budget and spending, your goal in as much detail as possible (including timeline and budget), a list of investment options that can take you from your current state to your goal, evaluations of the benefits and drawbacks of those options, and a final selection of a particular plan to get there. Then, I’d let that plan rest for a little while and review it again before implementing it. If you have friends who you trust enough to review it, let them review it, too.

This type of process works well for any big decision in your life and it can really guide you well to the best option.

Q7: Applying for job at megacorp

Do you have any advice for applying for jobs at large corporations that require you to fill out a bunch of online forms rather than sending in your resume? It basically makes working on a resume pointless. I absolutely feel like just another number in a database when I’m doing this, too, as though a computer is going to look at my application and automatically discard it for some reason I don’t get.
– Jared

You’re right – much of the job application process for large corporations is managed by algorithms parsing through a database and pulling out good matching applicants for a real person to review. Mostly, this is a filter to get rid of people who aren’t good fits for the position.

The best thing you can do in terms of getting a job with a large corporation is to build relationships with people already there, as internal references often go a very long way in terms of helping a potential candidate make the cut. It’s not a guarantee – nothing is – but it definitely helps.

How do you do that? Your best bet is to get involved in online and (if possible) local groups and communities where people from those companies might be participating and strive to be a positive force in those groups, building lots of relationships there. Almost every career success I’ve had involved either a relationship with a mentor or participation in a group or community.

Q8: DIY fermented foods cost effective?

I’ve been reading a lot about fermented foods lately (things like sauerkraut and kimchi and pickles and kombucha) and I am wondering if it’s cost effective to make them. It seems like it’s cheaper in terms of ingredients to do it at home but then you have to deal with the work involved. Have you done this? Does it save money?
– Gary

I have made all of the items you list above and have extensive experience making most of them (and many other fermented foods). It’s a fun little side hobby of mine and, indeed, it’s far less expensive to make your own sauerkraut than to buy similar quantities at the store. I can turn three heads of cabbage (which is less than $1 in cost) and some salt and a bit of water into about a gallon of sauerkraut (seven or eight pounds of the stuff), for example.

You can get started on a small scale with many of these foods pretty cheaply. You can make tiny batches of sauerkraut in a quart Mason jar, for example – all you need are some ceramic pie weights (you don’t strictly need these, but they drastically reduce the chance of a batch going bad), a lidded Mason jar, a head of cabbage, some salt, and some water. Just cut out a disc of outer thick cabbage leaf that’s a bit wider than the diameter of the jar, then shred the rest. Add a tablespoon of salt to the shredded cabbage, mash it for several minutes with your hands until it’s giving off a lot of water, then fill a glass jar 2/3rds of the way with the mash. Put the cabbage leaf inside the jar, holding down the salty cabbage, and put several pie weights on top of the leaf to push it down. If you don’t have an inch of liquid (at least) above the weights, add two tablespoons of salt to a quart of water and add that salty water mix to the jar until you have at least an inch of clearance above the cabbage. Put a lid on the jar and put it out of the way. Open the jar once a day or so to let it burp as gas will build up in there. (Some people use a cheesecloth or a special lid with a water lock on it.) After two weeks or so, taste it and you should have some good sauerkraut.

If you want to make larger batches, though, it gets expensive quickly. Larger batches made all at once tend to produce enough gas during the ferment that a sealed jar is a REALLY bad idea, so you usually need a crock of some kind. I received a nice five quart ceramic crock with a water lock built into the lid as a gift, but investing in your own food safe crock isn’t particularly cheap. I’d suggest making things like sauerkraut and kimchi in a jar at first to see how it works out for you and whether you want to move to a larger scale.

With kombucha, all you really need is tea, sugar, water, and a bottle of natural kombucha to start with (look for a kind that’s a bit cloudy or even has a bit of growth in it). You just make up a big batch of sweet tea and mix the bottle of kombucha in there. All you really need is a rubber band, a cheesecloth, and a large jar – I make mine in a gallon jar for now – and maybe some bottles to store it in.

Honestly, fermented foods are like any hobby – you can end up investing a lot of money in it. But you don’t have to, especially if you’re willing to stick with small batches of stuff. Plus, you end up producing a lot of foods and beverages for a pittance that would cost you quite a lot at the store. I think it’s a good frugal hobby.

Q9: Recommendations for bicycle commuting

Just moved to a place that’s about 2 1/2 miles from my workplace. About 1 3/4 miles of it is a giant park with bike trails so I am very tempted to start walking to work or biking to work to save money. I can get to work on foot in about 45 minutes without pushing myself hard enough to sweat (which would be messy) but I’m not sure how fast it is on a bike.

Before I make the leap, I have some questions.

1. How expensive is a “good enough” bike for this purpose? I see people spending thousands on bicycles and that just doesn’t seem cost effective for this, but I don’t want a junk bike that just falls apart.

2. My new office is close to a grocery store and a few other shops so part of the reason I am thinking of a bike is to carry stuff home after work. What’s the best (cost effective) way to make it easy to carry some stuff on a bike like a few books or a few days of groceries for myself?

3. You have mentioned biking across town to buy groceries before which is why I decided to ask. What is your setup like?
– James

My honest suggestion for you is to buy a pretty cheap bike at this point. A cheap bike will teach you pretty quickly whether you like doing this over the long haul or not, plus you’ll learn pretty quickly what there is to like and not to like about a bicycle. What features annoy you? You figure that out from experience, and that helps you a lot in terms of picking out a good bike that’s right for you later. Just go to a bike shop and say you want a low-end starter bike or a used bike for short rides to figure out if this is a hobby for you and they’ll point you to a good one.

The best add-on for a bike, in my opinion, is a pannier. A pannier is a basket or bag – usually one of a pair for each side of the bike – that usually hangs from a rack over the rear wheel of the bike. These baskets/bags are easily removable, so you can take them with you when you park your bike. You just install the rack, then put the bag/basket onto the rack and click it into place. Most panniers provide plenty of space to store a few groceries and parcels.

I don’t actually have a pannier. When I go to the store, I usually wear a backpack and just put my items in the pack. I also have a small clip-on basket where I put things I don’t want to get smashed, like bread, but I only put on that basket when I go to the store or on some other errand – it’s not on there the rest of the time. (I would like to have a pannier setup someday, though.)

Q10: Regrowing green onions

Did you know that most of the time you can regrow green onions really easily in any old pot? If you have a pot with some soil in it, buy a green onion at the store, then chop it off down just to the point where it turns white. Chop up the green part finely and use it in your dish, then take the other part and plant it in the soil. The green part will start growing again! You can actually keep trimming off the green part for a long time! It’s a practically free way to add onion flavor to dishes. I keep some growing all the time on my back deck in a pot and I just trim off the tops when I need a bit of onion flavor in a dish.
– Anna

This actually works really well! My wife and I have a very similar setup with chives, which grow perennially in a patch near our back porch. We just cut them short whenever we need chives and often use them as a substitute for onions in a lot of things.

Green onions are just like that. As long as you leave the bulb in the ground (or in a pot), the green portion will keep growing back and can be used in a lot of dishes.

The thing is, you have to like the flavor of the green portion of a green onion. I would definitely encourage people to try it for themselves before planting them and thinking they have an infinite source of onion. The green portion of a green onion has its own distinct flavor and texture that’s like a yellow or white onion, but also pretty distinct.

My suggestion? Buy a few green onions at the store and use the green part in some dishes. I actually like sautéing them and then using the sautéed portions in lots of things. If you like it, then pop a few in the ground and start trimming off the green part as needed. You can do the exact same thing with chives, too!

Q11: The incredible shrinking numbers

Just wanted to share some thoughts with a commenter who seemed overwhelmed by the size of the numbers needed to retire on.

When I was little, $5 seemed like a ton of money. When I was a teenager, $100 seemed like a fortune. During my early career, $1,000 seemed like a mountain of cash. Later on, $10,000 seemed imaginable, and then eventually $100,000 seemed like more than I could imagine.

The more years I spent being smart with my money, the less scary those big numbers seemed. They went from seeming impossible to seeming impressive to seeming reachable to seeming like my investment account balance to seeming like a small part of my investment account balance.

I worked hard to build a career and I spent less than I earned and a lot less than I earned during my last decade or so. The big numbers just kept seeming smaller and smaller the longer I worked at it. (Inflation helped too.)

Keep your chin up and keep making good choices every day. It won’t seem so scary before long.
– Art

I completely agree with Art.

It can seem really disheartening when people are talking about huge numbers, but those numbers don’t seem so huge when you apply the steady pressure of time and effort to them. They wear down.

I actually like the analogy of a rock on the beach. It might seem enormous at one point in time, but over the course of many, many years, the constant force of the waves against it wears it down until it’s nothing more than sand. What once seemed enormous and immovable is now tiny beneath your feet.

That’s what time and consistent effort does to large financial obstacles. They slowly wear down a large rock to nothing.

Q12: When to throw things away?

When you’re cleaning, when do you make the decision to throw things away versus keeping them because they might have a use someday? If you find something that you might be able to sell for a dime at a yard sale at most and Goodwill won’t take it, do you keep it or toss it? How do you decide?
– Dana

My usual strategy is to put things that I’m not sure about in a box and then date and label that box. Anything still in that box a year later can be eliminated without any question, because if I haven’t used it in a year, it doesn’t have much value.

As for the sell it/toss it/Goodwill it conundrum, what I usually do is if I think it has any value at all, I have a yard sale or list it on Craigslist for something cheap, like $0.25 or $0.50 or $1. If I still have it after a week or two, I take it to Goodwill. If I genuinely don’t believe it has any value to anyone, I’ll toss it.

It’s not a perfect system, but I’ve found that it works pretty well for my purposes. I may have tossed a thing or two that I could have sold for a quarter or something, but I really don’t lose any sleep over it.

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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