Questions About YouTube, Negative Families, Moving Out, 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. Family negative about financial goals
2. Free MBA
3. Feeling pressure regarding inheritance
4. Old financial magazines
5. Box wine tip
6. Buy it for life: bottles
7. Coupon bonds
8. Making YouTube videos
9. Discussing family finances with kids
10. Preparing for an inheritance
11. Time to move out?
12. Length of employment for resume
13. Why care about credit scores?
14. Worried about buying a condo
15. Audiocassette collection

I’ve always been a sucker for graduation speeches – at least the ones where people put thought and care into their words.

A graduation can be a powerful and reflective moment for people who have achieved something and are looking forward from that mountaintop to many more things.

I often find that the words are very applicable to anyone who has achieved a goal in life, only to find themselves ready to take on bigger challenges.

Q1: Family negative about financial goals

Over the last few years thanks to the advice on The Simple Dollar and a few other sites, I have paid off all student loans and credit cards and am now debt-free. I have no intention of owning a home for the foreseeable future so right now I am just saving like mad for retirement. I am contributing 20% + 6% match to my 401(k) and maxing out my Roth IRA and also building up a 6-month emergency fund which means I am living on about half of my income. Whenever I tell my family about my goal of retiring early, they just tell me reasons why I can’t like that the cost of health insurance will be too high and so on. I get discouraged every time I talk to them.
– Sam

Don’t worry about them. Their words are primarily a reflection of their own experiences, not yours.

In my experience, one area that many people simply do not understand is how people can choose to spend a relatively small fraction of their income. The vast majority of people let their spending swell until it fills up almost all of their income and often pin that down with regular bills such as a healthy mortgage, car loans, a big cable bill, a big Internet bill, a big food bill, and so on. Since that all begins to feel like “normal” spending, it can seem strange that someone is able to only spend half of their income.

The thing to always remember is that most other people will use their own experience as a measuring stick, and when someone else’s experience diverges from their own, they’re often not going to respond in a positive fashion. That’s just human nature.

Don’t let it bother you. Trust me – you’re doing well.

Q2: Free MBA

Just saw that University of Illinois is putting all of their MBA classes online for free.
– Kenny

This is really cool. If you’ve ever been interested in an MBA, this is a great day to dig into the material behind it. It’s really a coup for Coursera, a service I’ve used and enjoyed before.

It’s important to note that this won’t get you an MBA. It just gives you access to all the coursework that would lead to an MBA. You can work with the University of Illinois to actually earn an MBA using this material, but it’s expensive.

Once the material is up on the site, I’m strongly considering going through the MBA material myself. It’s a topic I’ve long had an interest in studying.

Q3: Feeling pressure regarding inheritance

I have paid off a few thousand dollars in credit card debt and have approximately $25K in debt remaining between student loans ($20K) and a car note ($5K).

I have a question regarding what to do with a generous inheritance. My fiancé’s grandmother passed away last year. When she passed she left each of her grandchildren just south of $70K in inheritance. A very generous amount that leaves me feeling intimidated. While I understand there are worse problems to have, this is an incredible amount of inheritance that I never expected to be a part of.

We are scheduled to be married in September of this year. I am 28 and will be 29 in June. She is 25 and has no debt presently. We rent a small apartment and are both employed full time. Our household income is about $85K.

Right now we have the money in a savings account with the bank. I do not want to spend this money other than maybe using some for a down payment on a house at some point. We have discussed using no more than 10% of the total sum of the inheritance for any down payment in the future.

The big question I have is what to do with the rest of that money. I have been thinking that we can start a nice emergency fund with that cash, should invest some (most) of it or pay down some of my remaining debts. I do not want to pay down the debts with this money as I do not feel I have a claim to use it for that purpose. I also feel I have been plenty aggressive in my debt repayment strategy and have a good working plan to become debt free.

I currently have a traditional IRA with a credit union and have a little more than $5K in that account. I have not been contributing to it other than a few dollars here and there that get left over at the end of a given month. She does not have any retirement accounts and/or investments.

I am currently gathering information regarding mutual funds and investments. T. Rowe Price has good options from what I can see. But I would like to get some additional input as to what you think about this inheritance as I feel this is a BIG chance for us to start our financial journey on solid footing.
– Pete

The first thing I would do is pay off all of your debts, as well as paying off all wedding expenses and honeymoon expenses. After that, I would make sure that if you have a car replacement cycle coming up in the next few years, you have money put aside in savings for that purpose, as well as a healthy emergency fund.

After that, start thinking about goals. What do you want to do with the remaining money? Is it going to be a house down payment? Is it going to be for retirement? What do you consider to be the more pressing goal in your life?

Once you decide on that, figure out how long it will be until you hit that goal. If the timeframe is a few years or less, leave it in cash. If it’s between five and 10 years, invest it in a mix of things – some cash, some bonds, and maybe a little in stocks. If it’s over 10 years, put it in stocks.

If you’re looking for an investment house to trust, I recommend Vanguard. I love their total market index funds as they have really low expense ratios. The company has great customer service, too.

Q4: Old financial magazines

Is there any use in keeping old financial magazines? My father has a closet full of old money magazines dating back to the 1980s. Any value at all?
– Alexis

The specifics of investing in magazines that old are basically useless. A lot of the funds and things that they’ll mention probably don’t even exist today. The businesses they recommend are in a completely different world.

The only value they really have is in the principles. A lot of the core principles of personal finance never really change. Spending less than you earn and investing the rest worked in the 1980s and it works now.

The thing is, you can find those principles in books from your local library, usually with much more modern and relevant examples and specifics.

I wouldn’t find much value in saving those magazines, in other words.

Q5: Box wine tip

I’ve found that although boxed wine may have gotten a bad rap from cheap wines like Franzia, there are actually some really solid boxed wines on the market today. A couple of personal favorites are Big House and Black Box brands: 3-liter boxes (the equivalent of four bottles) run between $20-30, depending on where you are, so at $5-$7 a bottle, it’s a better deal than buying wine of a similar quality by the bottle in most wine stores. Another plus is that with the pouring valve keeping a vacuum seal on the bag inside the box, the wine stays good after opening for nearly a month. Especially if you’re only having a glass or two of wine a couple of times a week, it’s great not ending up with sour, vinegary wine after just a couple of days.
– Alex

I have had good experiences with box wines in the past. They do have many advantages, as you mention – the valve is a very good one.

I think the negative view of box wines comes from people who bought some of the really cheap and pretty poor ones like the Franzia you mention. If someone tries a box wine for the first time and it doesn’t taste good, they’re going to come away with a negative view of box wines.

I have at least one friend who just keeps a wine box in the fridge and pours herself a glass whenever she wants one. She just opens the door and gets some from the spigot.

Q6: Buy it for life: bottles

I’ve got a “buy it for life” question for you. Water bottles. Which one should I buy that would last forever? Nalgene?
– Marvin

Nalgenes are amazing and practically indestructible. The cap is the part most likely to fail, and you have to do something truly vicious to make that happen.

If you’re wary of plastic bottles, Klean Kanteen makes a great stainless steel bottle that, again, is practically indestructible.

I don’t think you can go wrong with either one.

Q7: Coupon bonds

I just read about something called zero coupon bonds. The example I read about, a couple bought one of these bonds for $1,000, with a time frame of 15 years or something like that, and cashed it out for $15,000. It was one solution for them for paying for college for their kids, and it seems amazing to me. In fact in almost seems too good to be true. Is there a downside I’m missing here, other than not having access to that money for such a long period of time? Any thoughts of experiences you might have on the subject would be appreciated!
– Marjorie

Zero coupon bonds are bonds that don’t pay out any form of interest during the life of the bond. Instead, they sell for the face value upon maturity. Companies and other institutions will sell them at a discount. So, for example, they might sell a zero coupon bond for $5,000 this year and you will be able to return it for $10,000 in 10 years.

Zero coupon bonds tend to have a better rate of return when there’s more risk involved. If a company is trying to raise money, for example, they might choose to sell bonds, but if that company is in bad shape, there’s a risk that the company will go out of business before the bond matures. That’s part of the risk, and that’s why corporate bonds usually have a better return than government bonds – corporate bonds are more risky.

If your friends actually did what you claim – bought a bond for $1,000 and then cashed it in for $10,000 in fifteen years – they likely bought a pretty risky bond. That’s about a 16.5% annual rate of return, and the only way you get that is by buying a very risky bond and then getting lucky that the company didn’t fail. It’s not something that’s easily replicable.

Q8: Making YouTube videos

Can you explain to me exactly how people make money making YouTube videos? I have seen you mention this several times but I don’t understand the “money making” side of it. Thanks!
– Daniel

People make money on YouTube by uploading videos and then enabling advertisements to be shown before the video and as a banner ad during the video. Over the course of a thousand video views, a person can make roughly $2, give or take (it actually varies a lot).

So, the way to succeed on YouTube is to have a lot of videos on a lot of subjects so your videos get found by a lot of people with a lot of different search terms. That way you get a lot of views on your videos and people might stick around for more of your videos, amping up your income.

That’s how it all works. Uploading one or two videos won’t generally make you a lot. But making dozens or hundreds of interesting videos on topics people are interested in can start earning you a nice steady income.

Q9: Discussing family finances with kids

How do you discuss family finances with children when you are divorced and a) there is a BIG difference in values, especially as evidenced by how money is spent, between you and the other parent, and b) when you do not want specifics of your financial situation (income, how much you spent on things like a home, vacation, etc) getting back to your former spouse?

In every other area of life I feel like I can be totally frank with my kids, it strengthens our relationship, and allows for great learning opportunities. But when it comes to finances….not so much. I worry that I’m sending the message that we can’t talk honestly about money, and that we are missing crucial learning opportunities because I won’t give them all the information. And yes, I realize that I could give them answers and tell them to keep it secret from their dad, but that’s a burden I don’t want to put on them. I also don’t want to badmouth their dad’s financial choices, though I’m hoping that as they grow older they will recognize on their own how dangerous and unhealthy his choices are….or at least, that by the time I feel they are old enough and mature enough to hear my reasons for divorce–which include the financial fallout from his decisions & addictions–they will be able to hear it without feeling that I’m simply trying to paint him in a negative light.

My oldest is 12. They are prime ages for really digging in and learning about money and how it works in daily life. We’re doing a lot of things right….but I feel like I can’t fully implement “best practices” in teaching kids good financial management because of this issue.
– Nadine

I don’t think there’s a ready made formula for any family for how to talk to their children about finances.

In your situation, personal privacy is at a premium. I think, if I were in your shoes, I’d focus on not doing any comparisons to what their father is doing at all. Don’t mention him at all.

Instead, focus solely on your own best practices for financial decisions. Show them how you grocery shop and how you identify the best bargains at the store. Talk about credit card use and how it makes sense to pay things off in full every month. Then tell them about the benefits of doing these kinds of things – you have more money for other things that you want in life, both big and small. Reinforce how painful debt can be.

Given your situation, just look for very clear and actionable principles you can talk about. Make them very clear, and tie them to personal actions and choices.

Q10: Preparing for an inheritance

I am due to inherit about $125,000 from my father in 6 months or so. It will be mostly in stocks and from his IRA. I don’t know whether to leave it in the stock market and set up an inherited IRA or cash in the stocks and put the money into my personal IRA. I will be retiring the end of November. Should I see a financial advisor or a tax attorney? If so, how do I find a good one?
– Tom

The description above is too vague to really give you good advice.

With the amount involved, I wouldn’t worry about a tax attorney too much. Instead, I would search around for a fee-based financial advisor in your area and take all of the information to this advisor. Do not go to a commission-based financial advisor for this. That should be your first question when checking out advisors – fee-based or commission-based.

Your best strategy for finding a good financial advisor is lots of good local recommendations. Are there any local people or groups you can ask for suggestions on this? Some advisors look great on paper but don’t work well at all in person, and it’s hard to figure this out without direct recommendations and advice.

Q11: Time to move out?

When I graduated from college, my parents said that I could live with them as long as I stayed employed at least 20 hours a week and actively looked for a permanent job in my field or had a full time job. I’ve been doing this for about two years and when we talked recently they made it clear they are in no rush for me to move out as long as I keep up my side of the bargain.

So when do I decide that it’s time to move out? I’m reasonably happy living here. Unlike a lot of people I don’t have any real conflicts with my parents other than some political stuff.
– Jim

If you don’t have a compelling reason to move out, I wouldn’t do so. Staying where you are – if everyone’s happy with it – is the smartest financial move for you.

You’ll personally know when the time is right to move on from living with your parents. You’ll desire having a place of your own and it won’t seem like such a big financial leap.

That’s when you should move. If you don’t feel duly motivated to make it happen, stick with what you’ve got.

Q12: Length of employment for resume

How long can you work at an employer before you can count the experience on your resume?
– Travis

I don’t think time is as much of a factor as relevance. Did you do anything at that job that was relevant to the jobs you’re seeking?

Whenever you’re preparing a resume or job application, you should be trying to think of it in terms of the person doing the hiring. What do they care about? What do they want to see? What are you trying to sell them about yourself?

If a job is telling them something positive about you, then include it. If not, find other things to include. Length of employment can be a useful thing, but it’s not a big factor when it comes to most short-term jobs. I wouldn’t hesitate to skip a job I had for a few months if it didn’t contribute anything to my professional experience that would be useful to another employer.

Q13: Why care about credit scores?

Whenever I read financial sites or watch TV, I see people that seem utterly obsessed with their credit score. Why do they care? I get why you’d want a clean credit report, but what difference does it make to me if my credit score is 720 or 740?
– Miranda

The number itself really isn’t that important, especially given that different companies use different methods of calculating a credit score.

The thing to remember is that a credit score is just a one number representation of one’s credit report. A company takes your credit report, grades it in a way that’s not all that different than a homework assignment, and gives you a score based on it.

Just like in school, if you turn in good work, you’ll have a good grade. So, if you keep your credit report clean of negative things, have a long credit history, and don’t carry a big balance on your credit cards, you’ll have a good credit score.

Q14: Worried about buying a condo

As a single person, does it make more sense to purchase a house or a condo? I have to admit that a condo has some perks (no yardwork!) but I’m worried about the re-sale value. I’ve had several friends who have purchased condos when they were single, only to have trouble selling them when they were ready to move on to something bigger.
– Eric

The ability to easily sell condos varies a lot from place to place. In some areas, you can put a condo on the market for a day or two and it will sell (I’ve heard from another reader very recently that condos in Boston sell almost immediately). In other areas, like yours, perhaps, a condo can sit on the market for a long time.

Not only that, markets change over time. Places that were once hot can cool off, and vice versa.

There’s another factor, too – sometimes people expect to get a huge return on their condo and drastically overprice it when they try to sell it, then are disappointed when it doesn’t sell.

My honest opinion? You should rent an apartment instead until you’re ready to live in a place for several years at a stretch without major family changes.

Q15: Audio cassette collection

My grandpa recently passed away. He had a huge collection of audio cassettes from the 70s and 80s. It’s mostly country music. Is there any value here? Where would I sell them?
– Denise

Unless you find an unusual collector, country music cassettes from the 1980s aren’t going to be worth a whole lot.

People who still enjoy the early musical stylings of Randy Travis either already have their own tapes or would prefer to buy them on CD or in digital form for easier playback or on vinyl for collecting purposes.

There are rare exceptions, and you can take a shot by trying to sell them on Craigslist, but I would be thrilled to get a buck apiece out of them.

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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