Questions About Retirement, Identity Theft, Bread Makers, Towels 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. Handling financial issues in marriage
2. Buying LED light bulbs
3. Library book sales
4. Finding better housing options
5. Protecting elderly from identity theft
6. Tax-free growth for retirement
7. E-book reader options
8. Borrowing money for others
9. Towels, washcloths, and thrift stores
10. Buy it for life?
11. Contracted employee advice
12. Bread maker thoughts

To Kill a Mockingbird is one of the greatest novels I’ve ever read. It had a huge impact on me as a pre-teen growing up in a very small town that, in many ways, reminded me of Maycomb Junction, the Alabama town where the book took place.

I have had mixed feelings about the sequel that was just published, Go Set a Watchman. It’s really hard to tell whether this book should have been published or not. Was this an author being manipulated without people looking out for her best interests as she fought mental decline? Or was this a book she did intend to publish, either at the end of her life or following her passing? Did Harper Lee’s sister really not want this to be published in an effort to “protect” her sister, or was there a conflict between the two? Who knows? I don’t. Still, there was enough unease about it that I had some serious hesitation about the book.

Honestly, I expected it to be a train wreck, but my love of Scout and Dill and Atticus Finch made me choose to read it anyway.

I am forever glad I did.

Yes, it is rough-edged. I don’t think it went through the editorial “spit and polish” that To Kill a Mockingbird did. There are places where the language is a bit bumpy.

But I loved it, in a way I didn’t expect to.

Go Set a Watchman is about how childhood heroes aren’t the perfect people you thought them to be. It’s about how we see the world with such stark lines between “bad” and “good” when we are young, but as we grow older, the in-between areas begin to pop out at us – and those changes can hurt. Our childhood heroes are shattered, no longer the perfect people we once thought them to be. Instead, they’re people – good in some ways, imperfect in others. And it can hurt when those people suddenly come into focus and aren’t exactly the heroes we thought they were.

I think that for many readers of To Kill a Mockingbird, this revised picture of all of the characters – a sometimes shrill Scout and a flawed Atticus – could be hard to swallow. But if you look at To Kill a Mockingbird as a child’s perspective on the Finch family and Maycomb Junction, and see Go Set a Watchman as a somewhat morally shrill adult’s perspective on that same family and same town, they become a really interesting pair.

I’m glad I had the chance to read this book, even if I’m unsure as to what brought about its publication. I don’t think Go Set a Watchman will become the lasting classic that To Kill a Mockingbird has become simply because of the relatively darker picture it portrays, but it’s still an amazing picture, one worth digging into.

And that’s enough of my literary reviewing for the next two or three years, I’d say. I was mostly motivated to write it because of the huge impact To Kill a Mockingbird had on me as, well, a child and my mixed feelings and anticipation for this sequel.

Q1: Handling financial issues in marriage

I just got married to the loveliest guy in the world last February. I am very lucky to be with the person whom I can confide with, laugh with and just be myself. He is the love of my life.

We met in 2009 whilst we were both in University back in UK. When we graduated last 2011, I had to go back to my home country, to help with my struggling family business. We have spent 8 months apart; he could not follow me straight away, as he had to save up for flights to see me.

There’s no way that I could go back to the UK and leave my family to deal with the family business. Adam understood this from the start and decided to move to the Philippines to be with me. As he knew that this is the only way that we could be together. We have been together for 5 years now and I am very much happy and very much in love with my husband.

We had been talking about marriage for a while but put it off because of financial issues. However, we were living together in the Philippines in my parents’ house. My mother was not happy about this set up as we were not married and spoke of our sin every day. Therefore, in respect of my parents’ beliefs, we’ve decided to get married not that we had a chance anyway as she had already booked the church and the time of the wedding.

I love my mother to bits; however she wanted it all done her way, the simplest way possible, which is not what I wanted. She also stated that it was ok for her, if Adam’s family weren’t present as long as we got married, Adam was not happy with this and we would not allow for this to happen. So one thing led to another, it went from simple to over the top wedding as we felt rich with our loans not thinking about the heavy interest rates. On reflection, I know that it’s my entire fault. Adam has tried several times to cut the wedding budget but I was blinded by my wedding dream like any other bride. I really thought that I could handle the debts, however, they’ve stacked up and I’m now drowning.

I don’t know why I am actually writing this to you, I don’t have an amazing story or inspirational story to tell. I am alone in my office, crying and really down about everything. We had an amazing wedding; it was the best wedding I have been to. I think I went overboard because I wanted the best for Adam and ME. And I didn’t want to disappoint our guests who travelled all the way from the UK.

I have paid for most of it and so as my husband. When I say I have paid for it, I mean I am paying for it now, I have used different loan sharks to pay for my own wedding, I have put myself on this and I am now suffering financially, mentally and emotionally. Unfortunately, my husband cannot do anything as I am the one that Ok’d everything thinking that everything will be fine. I feel bad for him as I know that he wants to help me but just cant. He’s given me everything he has.

Every day is the same battle for us, I try to look for money to pay off debts but I always end up borrowing from another person with more interest.

I am really upset now as I think I am working harder and I don’t think my husband is doing the same (or so I feel), I think I am working harder as it is me that made most of the decisions in our wedding.
– Kelly

It sounds like you are in a rough position right now. The only way you can get out of this is with a singular focus on getting rid of those debts, which you have.

In situations like this, I usually come away with the impression that there’s not clear communication going on between the two partners. Usually, one partner is very worried about something and the other partner is not as worried, and that discrepancy comes from a lack of communication. Rather than both sides talking about their views on something that’s impacting them both and coming to a shared understanding, both sides just assume that the other side “doesn’t get it” and it begins to fester into a real problem.

My suggestion is to spend some serious one-on-one time with your husband and tell him exactly how you feel. Lay out the exact debt situation you’re in and the impact it’s having on both your shared finances and your personal psyche. This problem needs to be addressed, because it’s not just a dollars and cents problem. It’s a relationship problem, too. I wish you the best of luck with it.

Q2: Buying LED light bulbs

I have decided to get on board the “LED train” and replace the bulbs in my house with LEDs. However I am not sure how to compare them to the bulbs I already have and get good matches. I tried replacing a 60 watt bulb with a 60 watt “equivalent” – one looked great and the other looked awful. Can you give me some tips?
– Billy

For most home light bulbs, you’re better off looking at lumens rather than wattage when comparing incandescent and LED bulbs. You’re going to want the bulbs to have equivalent lumens, as that expresses how much total light is given off by the bulb. Compare the lumens between the incandescents you normally use and the LED you’re considering – don’t worry about the wattage too much.

Some bulbs also list their candelas, which for most home lighting aren’t as important. It can be important for spotlights or some kinds of recessed lighting, but they rarely show up in most homes.

You’ll also want to pay attention to the color. Most bulbs list the light color of the light they produce in kelvins. Almost all incandescent light bulbs are between 2700K and 3500K, so you’ll want your LED bulbs to be in that range. “Warm” lights – those with a yellowish or orangeish tint to them – will be on the low end of that range (close to 2700K) and “cool” lights – those with a slight bluish tint – will be on the high end of that range (close to 3500K). I actually like something in the middle, very slightly toward the “cool” end of the spectrum. 3300K is about what I like.

Knowing those things should help you find the LED that you want.

Q3: Library book sales

My local library has a book sale where they sell old books and donated books for $1 each. I usually go there and buy a bunch, but when I’ve read them they are pretty hard to resell and get anything out of them as they are beat up old library books that the library didn’t even want. I definitely get $1 out of them but then I don’t know what to do with them next. Help?
– Annie

Honestly, in this situation, I’d just give them away. See if any charities or people in need want them, like a local church or a retirement home, for starters. You can take them to thrift stores like Goodwill, too, or list them on something like Freecycle.

Another option is to use BookCrossing and leave the books out there for other people to find. Yet another option is to just have a “free books” box somewhere and list it on a place like Craigslist or Freecycle.

You might get lucky and find a used bookstore that will accept them in trade. Some stores will allow you to trade at a three for one or four for one rate. You can also try Paperbackswap, though I wouldn’t expect high demand.

You’re not going to get much monetary value for highly used library rejected books, no matter what you do. Instead, focus on getting the books in the hands of people that would actually enjoy them and get value out of them.

Q4: Finding better housing options

My husband and I are both self employed. We have both rented commercial spaces for our work in the past, and both now work from homes. (I from our apartment, and he from his mothers house… not ideal and not working out at all either with him or his clients) We have looked into renting space for him again, but it would be the same cost as renting a home or having a mortgage (with the cost of our apartment). We currently pay $1,320 for a one bedroom near Chicago. In our area, this is a moderate/low-end priced apartment. For him to rent commercial space suitable for his work, we are looking at a minimum of $1,200/month. We are also expecting a child, and have been planning to stay in our one-bedroom apartment until we no longer can. Considering I see clients at the apartment, appearance is important. A cheaper apartment would put us in a sketchy area. We don’t have a downpayment at all for a mortgage. Would a rent to own home be a good option for us? Renting a house may be tough for us w/his work and a landlord allowing him to do what he does. He is a luthier, so has machines and such around. Thoughts? Suggestions? Our goal is to combine work/ home without wasting money.
– Nadine

If you’re in a major metropolitan area, a rent-to-own situation that facilitates the specific needs you’ll have (plenty of workspace for a luthier and presentable space for you to show clients and living space for two adults and a baby) is going to be a rare bird, indeed. If you can find one, good for you, but it will be a lucky situation as rent-to-own situations are pretty rare even without special requirements.

I don’t know what your financial considerations are, but I would look to rent a house somewhere that has a garage (for his workspace) and is at least somewhat presentable. Given that you’re currently paying $1,320 in rent for an apartment and a commercial space on top of that, you clearly have some kind of budget that you can use here.

To find what you need, you may need to broaden your search area and look in less expensive neighborhoods and areas further from the city center.

Q5: Protecting elderly from identity theft

My grandmother is 86 years old and a sweetheart of a woman. She lives alone and takes good care of herself, but I am very worried about her falling into identity theft traps. She uses the internet sparingly and spends most of her time watching television and baking but I have overheard her listening way too long to telemarketers and seemed to be on the verge of giving them her information. How can I help her avoid some common identity theft traps?
– Alice

The first thing I would do is convince your grandmother to never, ever trust a caller that she does not personally know. Instead, if she’s actually interested in what they’re saying, she should write down the name of the business separately and look up their phone number independently, perhaps with your help. This ensures that she’s not giving her information to a scammer that called her with no evidence of who they actually are.

I would buy her a paper shredder – one that does cross-cut shredding – and make sure that she uses that on all of her documents. It’s better to just get rid of a lot of that stuff.

I’d also recommend that, rather than dropping any outgoing mail in a mailbox by the road, she piles it up and allows you to mail it at an actual postal box or at the post office itself. Mail sitting in a mailbox is a great target for people who are thinking of identity theft or are just looking to steal an outgoing check.

I’d also encourage her to never, ever click a link in an email.

If she does those things, she’ll avoid most of the routes of identity theft and scamming that strike the elderly.

Q6: Tax-free growth for retirement

Is there any way to take advantage of tax-free growth when your employer either doesn’t offer a 401k or offers a non-optimal one?

An IRA is fine, but at ~5k a year it’s not enough for early retirement or serious wealth creation. We do that, but even with a couple it’s only ~10k a year. Let’s ignore IRAs for now.

My employer has an okay 401k at work (2% matching), good vanguard funds, but no roth after-tax contributions, and it fails the discrimination check each year. This means I can only sock away ~17k (say ~20k with match) a year instead of the limit at ~50k a year.

My wife’s employer doesn’t even have a 401k. Is she just plain screwed?

The only solutions I can see are:
1. Change jobs
2. Invest in something tax free (ex: muni bonds)
3. Live with reduction of investment returns (taxes)
4. Somehow make >100k in self-employed income and setup our own solo 401ks

#2 is not enough return for entire portfolio
#3 is giving up
#4 would be great, but it will take a long time/effort to get to that level of income to be able to max out solo 401k as you can only use self-employed income (and possibly only “earned” income at that)

Is the only solution for both of us to change jobs to employers that allow us to each contribute ~50k to our 401ks for tax-free growth? We like where we’re working, but it’s really hard to ignore missing out on ~100k a year that can grow tax-free.
– Sam

First of all, a 401(k) is not tax free. It is tax deferred. You will have to pay income taxes on it when you take the money out in the future. You’re just not paying it right now.

The disadvantage of investing in a purely taxable account is that you’re investing in after-tax dollars. However, the advantage of it is that you can use it without restriction whenever you like and you will only pay taxes on the gains. It is actually quite far from “giving up.”

In general, I don’t encourage people to even contribute to a 401(k) plan in their workplace unless they’re receiving matching funds from their employer. The investment options that they provide are usually pretty poor compared to what you can find in your own IRA. The only exception to that is if you’re a really, really high earner that is edging into the very highest tax brackets and really need the tax relief that a 401(k) provides.

If you’re in that situation, I would suggest talking to a tax advisor, who can help you figure out the right situation for your huge income. That’s the only situation where the much lower returns on a municipal bond will touch the much bigger returns you’d get from a broad-based index fund, even after the initial income taxes, and a tax advisor would have a much better grasp on what you should do when looking at your real numbers.

(Of course, if you’re in that situation, you probably want a completely different structure to preserve your income and this entire discussion is moot.)

If you’re not in that situation, I would simply max out both your IRA (or Roth if you’re eligible) and your spouse’s IRA (or Roth if your spouse is eligible) and invest in something with post-tax money.

Q7: E-book reader options

I am in the process of doing some serious downsizing of my possessions so that I can easily move into a smaller apartment. My goal is to be able to put all of my possessions in the trunk of my car so that moving wherever becomes quite easy.

I am an avid reader with a decent sized book collection that I am planning on selling off. I am planning on using at least some of that money to buy an e-book reader but I am unfamiliar with the options. The Kindle is the obvious choice I suppose but what other options are there that make sense?
– Denise

It really depends on what you want to do with it, but I’d lean toward a Kindle in almost every case.

The Kindle is perhaps the best all-around option right now. It allows you access to the Kindle Store, which is the best all-around option for buying e-books, plus there are tons of free e-books out there from other sources, such as your local library and Project Gutenberg or even Wikipedia.

There are a lot of e-readers out there that will allow you to read just public domain books and other books released in a similar free fashion.

I am hesitant to recommend other e-readers besides the Kindle because I am wary as to how long their online stores will last. Barnes and Noble is shutting down the international Nook store, for example, and that worries me about the future of the US store.

I love my Kindle Paperwhite, by the way. It goes with me almost every time I leave the house and has a semi-permanent home on my bedside table or on the table next to my favorite reading chair in the basement.

Q8: Borrowing money for others

I’m a fellow Iowan who enjoys your blog. Here’s a topic I have never seen mentioned in it – have you seen these offers to make money by allowing some entity (business or individual, I’m not sure) to simply use your credit score of 720 or higher for their borrowings? I can’t help but wonder if there is a way this is legitimate. Is it maybe related to factoring?
– Lynne

I would absolutely not trust any such arrangement with a ten foot pole.

If someone needs your credit in order to be able to secure a loan, that means that said person or business does not have good credit. Since it is your credit history that is on the line and not theirs – and they already have a history of not making positive credit moves – there’s very little that would encourage them to repay the loan.

There is almost no kind of contractual promise I would enter into that would allow this. They would have to be offering me far more than it could possibly be worth for them to get me to sign on, and in that case I’d want a lawyer to pore over the contract first.

Q9: Towels, washcloths, and thrift stores

Are towels and washcloths something that makes sense to buy from a secondhand store or a thrift store? This seems like a good idea to me by my friend freaked out when I suggested that at all. She told me it was a terrible idea and that the towels from there would be dirty and that I wouldn’t want to touch my body with them.
– Kelly

I have no qualms whatsoever about buying towels and washcloths from a secondhand store. In fact, I think it’s a pretty good idea, provided they’re not threadbare.

The big reason I can see that someone would skip over these kinds of items is the very issue of wear. I wouldn’t buy a secondhand threadbare towel. I would expect it to be thick enough to dry me well and, ideally, to match the colors of my bathroom.

The idea that a clean secondhand towel would be “dirty” for some reason strikes me as paranoid. It’s not any different than using a hotel towel, as far as I can tell.

Q10: Buy it for life?

I have enjoyed many of your posts and mailbag questions about “buy it for life” items. I have a question about them in general. How do you tell when it is a good idea to pay significantly more for an item that will last “for life” (or a very long time) or to just buy a really cheap item that will do the job but won’t last nearly as long? For example, it doesn’t make sense to buy a $100 pen (to me) because you still have to refill it with ink but it does make sense to buy an enameled cast iron pot (to me).
– Erik

My rule is pretty simple. I buy the cheap version and see if it does a good job. If I have no significant issues and then it breaks, I look at the lifespan of that item and then I compare that to the expected lifespan of a much more reliable version. I then multiply the lifespan of the “cheap” item by how many times more expensive the “buy it for life” version is.

If it’s close, I get the “buy it for life” version. If it’s not, I get another copy of the cheap version.

Of course, that’s never an exact science. It doesn’t account for sales or other unexpected events. At least some of my “buy it for life” items – like the very Nalgene bottle I’m drinking out of as I write this – came to me as gifts because I often ask for those kinds of items if someone asks me for a gift idea (my in-laws often do this, for example).

Q11: Contracted employee advice

About four months ago, my previous company stopped being able to meet payroll and folded abruptly leaving me and several other people out of a job. I finally found another job but it is a job where I work remotely. I am paid very well but I am a contracted worker and I am paid via a 1099 which means they pay me and take nothing out and it’s all up to me. Can you give me some general advice as to what I should be doing here? I realize I shouldn’t be spending a lot of this money that I’m earning but I don’t know what I should be doing.
– Tom

The absolutely first thing you should do is read and fill out IRS Form 1040-ES. Welcome to the world of estimating and paying your taxes on a quarterly basis! Going through the process described in 1040-ES will give you a great grasp on what you will need to be paying on a regular basis from here on out.

I would do the same thing for your state taxes if you live in a state that collects state income taxes.

Filing taxes early next year will become a bit more tricky than before, but it’s nothing that good tax preparation software can’t easily handle. I’ve used TurboTax for years for all of the craziness of our taxes and it’s worked like a charm.

A final tip: keep track of every dime of expense you incur related to your work from now on. If you have a receipt, save it. You’ll be glad you did.

Q12: Bread maker thoughts

My local Goodwill has had a bread maker sitting on the shelf for $5 for a while now and every time I go in there I eye it. Sure I could just spend $5 on it but if I took it home and used it once it would just wind up taking up space and I would have to just take it back there in a year or two so I don’t want to buy it unless I could actually use it.

I read your article on home bread making (note: I assume she means this one) and wondered if you had suggestions on bread makers. Do they work well? Your recipe looks yummy but it looks like a lot of work to me.
– Emma

In my experience, bread machines make decent to good loaves of bread, depending on the model. I prefer the bread that such machines make to most loaves from the store (store bread is mostly too soft for my tastes and turns soggy real quick in the presence of even a bit of moisture). I prefer my handmade loaves, but the bread machines are certainly more convenient.

My number one complaint with bread machine bread is that they often have a “hole” on one end of the loaf from the paddle and, on occasion, that can result in a big “bubble” inside of the loaf. Some models minimize this and others do not. It’s never been bad enough that th eloaf has been ruined, though.

It’s really hard to tell how good this $5 used bread machine is, but my philosophy would be that as cheap as it is, if it works, it’s probably worth picking up if you’re willing to make at least two loaves with it. If you make two loaves, it will have paid for itself at that price, so even if you return it to Goodwill, you won’t be out any money compared to buying bread at the store.

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.