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. Afraid to invest in 401(k)
2. Cutting off child
3. Musings on a difficult house
4. Sabbatical and job risk?
5. Sharing Simple Dollar information
6. NY Times on early retirement
7. Cloth kitchen towels are inconvenient
8. Twine app question
9. Animation career advice
10. Opening an insurance company
11. Thoughts on Patreon
12. Finding uses for iPad
In the last year or so, several people in my life have become parents for the first time.
I love being a parent and I wouldn’t trade it for anything, but the reality of it is that if you actually do your job as a parent with any degree of responsibility, it’s going to massively change your life. You suddenly find yourself trying to figure out how to do a bunch of new things. You find yourself with a ton of additional time commitments that largely boot social activities and much of your solid blocks of free time out of your life. You often don’t get as much sleep as you once did. All of that hits at once, and it’s hard, even if you think you’re ready for it.
Some of my closest friends in the world are people who were friends with us before we had kids and have remained friends with us through all of the changes. A lot of friends simply fell off the radar at some point – we became inconvenient for them. I would far rather have five true friends than a diverse social life.
It’s been interesting watching the various people in my life deal with these changes. Some have handled it in stride. Some are very stressed and tired. Some are struggling with little free time. Some are dealing with friends that are “disappearing.” Some are just glowing with the new experience.
Different people handle things in different ways.
On with the questions.
I started working at my current job in 2013. 29/F/single. I know I should sign up for the 401(k) but I am really freaked out by the prospect of just losing some of my hard earned money to the market. From reading about retirement planning I would say I am extremely risk averse. How should I save for retirement if I don’t want to lose any of my savings?
There are very few investment options out there that are so low risk that you have almost no chance of losing money. The problem is that such investments have a really poor return, barely matching inflation.
For example, you can put your money in a money market account which will return around 1% per year these days and won’t lose money. You can buy some bonds that will return better than that and slightly beat inflation with very, very, very low risk, but you can’t touch the money for years (unless you sell the bond to someone, I suppose).
The thing is, short term risk and return usually come hand in hand. If you demand no risk, you’re going to have almost no return on your money. That’s just the reality of things. The return comes as a result of that risk.
You should always remember that you have a very long time until retirement. There is no period of 25 years or more in which people have ever lost money in a broad investment in the stock market (like matching the S&P 500). Losses occur only over shorter time frames, like three years or five years. I think my best advice to you is to stop looking at the time frame of a day or a week or a month or a year or even a decade when it comes to your investments. All that matters are returns over the course of 20 years or more. Focus on that time scale above all else.
My husband and I are in our late forties. We have a child that’s 24. He graduated from college two years ago with a degree in electrical engineering that we thought would quickly net him a great job but he basically never bothered to apply for anything. He just moved into his old bedroom again and spends most of his time playing video games. We told him he had to move out if he didn’t get a job so he got a dead end job at a gas station. When we bring up the subject he says that he hates electrical engineering and would kill himself if he had to do that for the rest of his life but he has no answer about what he’s going to do with his life. We were considering downsizing to a smaller home before he moved back in. I don’t mind helping him if he’s trying but it doesn’t feel like he’s trying beyond matching the letter of the absolute minimum we ask of him. What should we do?
You should raise the absolute minimum of what you’re asking of him.
The only way to get him to start building a life for himself is to nudge him out of the nest like birds do. That nudging starts gently and keeps increasing in firmness until the bird leaves. For some, it takes only a gentle nudge. For others, it gradually escalates into nearly being shoved out of the nest.
What is the next step your son needs to accomplish on his route to full independence? I’d say that he’s either actively applying for electrical engineering work or actively in the process of going back to school. If he’s not doing either, then he needs to move out. Be firm about this policy and stick with it.
Recently, after 9 years of overseas posting (and just as many years of overseas education prior to that), our family just moved back to my in-laws’ place. By this time my parents are deceased and we have no house, so we figure that this temporary arrangement would work out best for everyone concerned: we got a place to stay, near a good school for the kids, we can ‘take care’ of the aging parents, while they enjoy having the grandkids about instead of somewhere beyond some seas. Too bad life is not perfect, right?
Thankfully we have not gotten to a bad personality clash, however, we do get afoul on a big problem: stuff. Like, literally, objects, posession, belongings…. stuff. There are just so much stuff in this house. My in-laws are (thankfully) doing pretty well financially, and they live in a 1500 sq. ft. house in the city. The house, however, is FULL of stuff. There are equipment kept from years back, clothes (quite a portion of them does not fit anymore), freebies (both my in laws are doctors), etc etc etc. Neither of them are quite hoarders, but they do find it difficult to throw stuff away. Then there is also a sister in law (not in residence) who seem to treat the house like a secondary storage facilities while she continues feeding her shopping addiction.
In addition to the stuff is also the fact that my in laws did not seem to believe in the value of having things done by professional. The house was basically designed by a medical doctor, and most probably built (and maintained) by non-certified contractor that also sells his services as jack-of-all-trades with disastrous results in various aspects of the house: working design, electrical wiring, plumbing etc. Cleaning the house is not easy, and all the stuff being kept here also complicate the problem.
Basically this is a very high maintenance house that does not work well and very much beyond the ability of 2 aging pensioner to keep properly. Unfortunately they refused to move. So.. I suppose we have to make it work.
My sharing basically boils down to a few things:
1. There is value in having professional do their stuff: designing a building, building, wiring, plumbing. The question you want to ask yourself: how difficult would you like your life to be?
2. Empty nester, do a mirror check, and admit if sticking to an old standard (big house, lots of stuff, etc) is really what you want to do with the rest of your days
3. Kids who already left the house: your parents house is NOT a back up storage facility. Take responsibility of your own stuff, people!
Sometimes, I don’t even know why my husband and I are even making the effort to clean up the house (oh yeah, I guess we would like to feel comfortable while we stay here) when nobody seems to care. But then I remember something. I had to deal with my parents’ stuff after their death and it was pretty overwhelming. Their stuff is still meagre compared to what I am facing now and it was pretty overwhelming still. Now that we are in between jobs (we still have enough savings and we do plan on taking a couple of months break), it seem like a good time to do this just so it wouldn’t be too much just in case something happen to either of them. The current timing is ‘convenient’ which is not something you can count on at any other time. So we forged on.
Angela’s story is a perfect example of why it’s incredibly valuable to keep your possessions under control and why it’s a good idea, particularly as you age, to live in a smaller and easier to maintain home with fewer possessions.
I wish that I had good advice for moderate hoarding situations, but I don’t, aside from simply asking yourself what good really comes from saving this item, whether you’ll actually remember it when you need it, whether it’s requiring a larger home just to store it, and how this stuff will be dealt with when you pass. Those thoughts have already moved me away from having as many possessions.
I’m trying to nudge my parents in this direction, too. They have a small home, but it has a lot of things hidden away in there.
I am 29/M. I have dreamed since I was a kid of walking the Appalachian Trail. I have been doing tons of hiking since moving to Colorado 5 years ago and I want to actually do the Appalachian Trail in the next few years. I estimate it will take me six months to do it.
Obviously this would require a sabbatical from my job. I have worked at [a very large business] for the last five years and I think I have a strong reputation here.
What would be the best approach to taking a six month sabbatical in a year or two that wouldn’t risk permanently losing my job?
Sit down right now and talk to your boss about it directly. Simply state that walking the Appalachian Trail has been a lifelong goal of yours and that you hope to do so in the next two years, but then describe what it would take for you to do so.
Being at a large company actually works in your favor here because it’s easier for them to spread out your work during your sabbatical, provided that you prepare appropriately for it.
There is always a risk with a sabbatical that your organization might devalue you while you’re gone leaving you in a worse career position when you return. The best way to counteract this is to build a strong reputation for quality work before you leave so that your absence is missed.
So, my advice? Do a good job. Talk to your boss sooner rather than later. Start documenting now.
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Wanted to get your thoughts on this article. https://www.nytimes.com/2018/09/01/style/fire-financial-independence-retire-early.html
This is a solid article on aggressive saving for early retirement that spells out the strategy with some nice stories.
My only objection to it is that it explains this strategy as a “millennial thing.” I don’t agree with that. While it’s definitely a strategy that can be used by millennials to great success, that doesn’t mean that a person who is older can’t start saving aggressively in order to retire earlier than they might otherwise have done.
Financial independence is a good financial goal for everyone. It’s not just a “millennial thing.”
I took your advice and switched to having a “cloth towel drawer” in my kitchen rather than using paper towels for everything. I got a bunch of them for cheap. After using them for a month I am just finding them less convenient than paper towels mostly because of the need to wash them. Advice?
You just need to get a system in place.
Our system is simple. We have a cloth towel drawer in our kitchen. Whenever we use one and it’s no longer reusable without being cleaned, we toss it either into a small bin under the sink or directly down the stairs so that it’s close to the laundry room. Those towels usually get washed in the next load of whites, folded, and returned to the drawer.
It really doesn’t take any more time than throwing the paper towels in the trash and then dealing with the extra trash. Instead, we’re throwing the cloth towels down the stairs and then dealing with a bit of extra laundry (it doesn’t cause another load, just another item to fold and return).
Given the savings (no more paper towel purchases) and the minimal time cost, it’s a good system.
Has anyone a review on John Hancock’s Twine app? I’m trying to find the best way to invest some short term savings (saving 20k for a car) and I’m wondering if there are ways to invest the money other than in a savings account.
Twine is a “savings app for couples” that encourages couples to link their separate accounts together so that both can see the account balances and set and plan for goals together.
It’s a great idea for newer couples who are in the process of merging their financial accounts or older couples who simply want convenient glances at their partner’s retirement and investment accounts for planning ahead.
The thing is, over time, many couples migrate toward sharing all of their day-to-day accounts and openly share access to their retirement accounts anyway. In other words, I think Twine is a great bridge from separate accounts to shared accounts, but eventually it’s not necessary. I know it’s not useful for Sarah and myself.
I am an artist wanting to pursue a career in the animation field. Considering that it is kind of the norm for animators to have bachelors degrees, is it wise for me to go to a technical school and graduate with a certification degree instead where I can graduate and learn faster in that specific major? Is it optional to still make it inside of the doors, just as any one else with a bachelors degree instead?
If I were you, I would ask animators already in the field. What do they recommend for education? Some fields offer a lot of employment opportunities for trade school graduates, while others do not. The only way to know is to ask around within the industry.
If I were you, I’d identify a big handful of working animators and contact them individually asking for educational advice. Twitter is a great place to start with something like this.
I will say this: regardless of where you go to school, one of the best things you can do is to start working on complete projects of your work that can be shared as a portfolio of sorts. Take what you’re learning and go beyond the classes into actually making things, then share those things. This will not only teach you a lot, but it gets something of a portfolio for yourself out there.
How can I open my own business insurance company?
There’s already a good article on The Simple Dollar covering most of what you need to know. Check it out – How to Start Your Own Insurance Business.
I will say that one of the most important things in insurance sales is personality. Are you charismatic and extroverted? Can you easily build rapport and good relationships with people? If you can’t answer those things with an honest and resounding “yes,” then you should be very careful about entering a field that relies almost entirely on sales and customer service.
I would also be careful about taking out loans for such a business unless you already have a strong roster of potential clients. If you’re going into this with a future of nothing but cold calls, you either need to be an exceptional salesperson or very lucky.
I support several of my favorite writers and podcasters through Patreon. What are your thoughts on Patreon? Do you have one?
I do not have a Patreon for my personal finance writing. The big reason is that I would prefer that any readers who get genuine value from my writing “pay” for it by either sharing the stuff they value with others or getting their own financial house in order. The site earns income through ad support and affiliate links.
Having said that, I would definitely consider Patreon if I were writing or producing content consistently in other fields. I think that the idea of “micro patronage,” where people who support a writer or a podcaster or a video maker support them by giving them a couple of dollars a month or a dollar for each new article/video/podcast they make, is a great strategy for both parties. It allows people who really value content and want to see it continue to actively take part in that, while it gives the content creator some financial support to continue their work either as a part time gig or a full time one.
I am a huge believer of supporting what you value. If you value someone’s writing or their podcast or their videos, support them in some way. You can do that by throwing a few dollars a month to their Patreon if they have one, or just sharing their articles or videos or podcasts with your friends or with people you know who are fans of the topic. The same is true for companies that provide services with a free version and a paid version; if you find yourself using the free version a lot and relying on it, it’s worthwhile to pay for the paid version just so it’s more likely to stick around.
My kids got me a 9.7″ iPad and an Apple Pencil for my birthday. I played around with it but I really don’t know what to do with it. Writing on it is clunky (I am sending this email on my old laptop!). What do you do with your iPad? I don’t want to just sell it because my kids were so thrilled to get it for me but I don’t find myself using it at all.
I have a 10.5″ iPad Pro with a Pencil and a case that has a keyboard built into it and I use it for a bunch of things. Here’s a brief list:
– I sometimes use it for writing articles for The Simple Dollar.
– I use it alongside the Pencil to take notes when I’m reading a book.
– I often prop it up on its side in the kitchen when making something that involves a recipe or a video.
– I do the same when doing some DIY or repair projects, just propping it up on its side with the case to watch a video when doing a project.
– I really like reading on it, so I often use it as a Kindle or to read PDFs or other documents on it. In fact, I really wish my entire cookbook collection was in PDF format so I could just keep them on an iPad. I turn off notifications when doing this by toggling it into Airplane Mode.
– I have several games I enjoy playing on it, especially Twilight Struggle.
– I watch Netflix on it occasionally.
– I often use it as a “second screen” when working on my laptop or my desktop computer, as I prop it up on its side in the case when doing so. It usually displays my to-do list.
Between those things, I find myself using it daily, usually multiple times a day.
Having listed all of that stuff, I really don’t recommend investing a ton of money into a new iPad. Instead, I’d try to get an older used iPad off of Craigslist or something and see if you find value in it. For some reason, iPads seem to click well with some people and not click with others.
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.