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 old collection
2. Interesting experience with generic aspirin
3. Good books about financial independence
4. Dealing with a pay cut
5. Too tired to enjoy it?
6. Expensive cars
7. Devaluing of the dollar
8. Is it hopeless?
9. Product “downsizing”
10. Airbnb and vacation
11. Dollar stores aren’t always cheap
12. Meals for less than $2
13. Saving old magazines
14. Shame on you!
15. Cheap puzzles
One thing I’ve noticed with my own long-term goals is that, once the fire is lit, I’m good at maintaining motivation, but it almost always takes an external push to start that boulder rolling down the hill.
At any given time, I can list several changes I want to make in my life, but without a good external motivator to push me over the edge, I usually won’t get started on a change.
That’s why I actually find it wonderful when someone in my life – my wife, my kids, my parents, or a close friend – gives me that push that I need.
I will nutshell this as its a long story. I was married briefly until my husband of less than a year told me he had made a mistake. We divorced and he remarried immediately. The period following his declaration was very difficult. I had moved away from my family, a job I had been in for three years and a course of study in college (going this time in my forties) to relocate after marrying. I was moved into possibly the worst neighborhood in town and subsequently robbed and held at gunpoint during an attempt to get me out of my car. Fear and financial stress were overwhelming. I worked my way backward and could not get myself out of debt. Once divorced, I moved back to where my family was, moved in with a friend to share expenses, and slowly began to get myself out of debt.
An old account that remained from prior to my marriage always took the back seat when deciding what I could and could not pay. This account balance was originally just over $900 dollars. It eventually was turned over to a collection agency. I attempted to make arrangements with this company to pay the debt through automatic payments coming directly from my bank account. I signed up online and waited for the first payment to come out. When that did not happen, I called the company and was told that the site had issues. They would call me back. They did call and advised me that the offer was not valid, payments could not be made in this way and I needed to make payment in full within 15 minutes or the debt would be charged off. I was at work and in no position to discuss this with them. The threat pushed me over and I shouted for them to go ahead and charge it off, that I would not be emotionally blackmailed at my job to make a payment in full over the phone, and that I could not do so even if I wanted to pay it off all at once.
I have stubbornly refused to address this debt ever since, through multiple buyouts from one collection agency to another where various fees have almost doubled the amount due. I have read varying opinions on whether it is even logical to open the can of worms that is this old collection and try to make arrangements to pay it after several years. I do not plan on buying a house or a new car or anything that would require incurring a new debt, and I live pretty much paycheck to paycheck. But I would like to know how to handle paying this debt off in a way that will not allow the agency to take advantage but that will help me do the right thing and remove this painful reminder from over my head. Can you help?
The first thing you should do is only communicate with them in writing. If they call you, inform them in no uncertain terms that they should not call you again and that they should only communicate in writing.
Then, send them a letter making them a reasonable offer for the debt, along with a requirement that the debt be marked as paid in full on your credit. They will likely write back with a different offer. You should respond to this offer by only going up about 25% from your original offer (again, in writing).
One important thing: when you come to a resolution on the debt, be sure to note how much of the debt was forgiven. That’s because you need to pay income taxes on it; the collector will send you a 1099 form at the end of the year and you’ll have to file it as part of your taxes.
I get pretty strong headaches about once a week. I have since high school and the doctors really don’t know why. Anyway, I’ve found that taking two aspirin right at the start and then two more a little bit later takes a lot of the edge off of my headaches.
My mom always bought Bayer aspirin and so that’s what I always bought. I was completely convinced that Bayer was the only thing that would work and generic aspirin was junk. My husband argued with me about it but I wouldn’t hear of switching. I stuck with Bayer.
About a month ago, my husband asked me if my headaches were getting worse or better. I thought about it and I told him they were about the same. He also asked me if the “Bayer” was still doing the trick, and I told him it was. He smiled and told me that six months beforehand, he had emptied out my Bayer bottle and put generic aspirin in there instead. I went and checked and sure enough the pills did not say Bayer on them.
Turns out that the generic aspirin works exactly the same, at least for me. I thought I would share this with your readers because this has saved me some real money on buying aspirin (as I take 6-8 per week).
There are a lot of medications out there – both over-the-counter and prescription – where there’s a generic form of the medication available at a much lower price.
There’s no reason not to try a generic medication, particularly if your doctor approves of the generic form. If your doctor encourages you to try it, give it a shot.
There are a few cases, like my own experience with Synthroid, where the generic simply doesn’t work for some people, but your doctor should be able to guide you.
Do you have any good suggestions for personal finance books that look at financial independence as a goal? All of the ones I find either focus on debt freedom or they just focus on getting rich off of investments which is fine but doesn’t really hit what I’m looking for.
My favorite personal finance book, Your Money or Your Life, focuses specifically on financial independence. The entire focus of the book is about readjusting your relationship with work and with money and the end result of that is reaching a state where you no longer have to work for money.
Another good book on this topic is Jacob Lund Fisker’s Early Retirement Extreme. It offers a ton of very good direct advice on personal finance with a focus on retiring extremely early. The only strange part about this book comes in the latter chapters, where advice is given on exercise and other semi-related topics.
Both of these books are very enjoyable. I highly recommend both of them.
Due to stress, I am reducing my working hours from 45 per week to 30. It’s a quick fix that spares me from having to look for a different job; I can still do that later if I have to. This means that I’ll receive at least 20% less net income, and my concern is that it won’t cover our expenses. What would you suggest in terms of steps I can take to break even?
Some details to provide context:
I live in Europe, work in IT and am the breadwinner. We get by on my salary while my wife is at home to care for our kids, aged 1 and 4. She will return to part-time work in the health sector in a year, but her earnings will not significantly exceed the increased daycare expenses. We have a healthy emergency fund, a small home in great condition, one reliable car, no cable TV, and generally not many expenses except for various insurances. I don’t think I were saving enough for retirement but my wife disagrees. I don’t see any obvious items to cut, but you probably have ideas.
Without a deeper look at your budget, I can’t really identify things that you can cut to save on expenses. I don’t know what your day-to-day lifestyle is like, either. Do you eat out regularly? What do you do for entertainment? Is your home as energy efficient as reasonably possible?
You may want to consider filling those fifteen hours with some other form of work to make up for the difference. Do you have any IT freelancing opportunities, such as fixing computers in your area? Are there businesses that you could work for a few hours a week fixing computers or going on house calls?
The devil is often in the details when it comes to situations like this one. You need to walk through each line in your budget and see whether or not anything can be cut out. You also need to think deeply about your employment, as right now you have a household with four people in it with just one person employed – and not on a full time basis. That would stretch almost anyone’s finances.
When I was a kid I watched my dad work two jobs constantly to provide for us. He paid for a great education for my sister (at MIT) and I (Cornell). He came home from work one Friday evening while we were both in school and dropped dead on the living room floor of a rupture in his brain.
I see what you’re saying about financial independence, but I don’t want to end up like my father did. During the last few years of his life, he seemed tired all the time and he never got to really enjoy all of his efforts. I don’t want to live like that. I want to enjoy life now while I still can.
There’s nothing wrong with having different goals than your parents. I know people who save their money diligently so that they can go on an amazing trip each year. I know others who are working their tails off to retire at age 45.
Neither one is “right.” Neither one is “wrong.” But they do have a few big things in common. In both cases, they’re avoiding debt. In both cases, they’re planning ahead so that their final years aren’t spent in misery. In both cases, they recognize that daily pleasures don’t bring lasting life fulfillment.
There’s nothing wrong with “living for today.” Just make sure that you know what it actually means.
I am 44 years old, my wife is 42. We have no debts and own our own house. We have three children, two of which are moved out and one is a senior in high school.
The one bad financial choice we make is that we always buy expensive new cars. We both drive a Lexus – she drives a SUV and I drive a sedan.
We sat down recently and figured up how much these cars have cost us over the years. Our first four of them were bought with loans, but we paid cash for the last two. We tend to drive them to about the 100,000 mile mark and then trade them off for new replacements. Compared to buying less expensive used cars, we think these cars have cost us $200,000 over the years.
Since then, she has felt really guilty about it and thinks these cars have cost us early retirement. I don’t think so and I am glad we have owned them. What do you think?
You’re both right. Those expensive cars have probably cost you guys a few years of retirement. However, you have received some pleasure and (likely) some reliability out of those cars.
Should you feel guilty about it? Not at all. At this point, it’s water under the bridge; you shouldn’t feel guilty for your past spending choices.
The interesting question is the one going forward from here. What will your next car purchase look like? That’s going to be a harder question at this point, since your wife seems to be rethinking the luxury car issue.
I suggest spending some time talking about it well in advance of that purchase.
I have been reading your blog for awhile and I have never seen any mention of the devaluing of the dollar–and how to protect your savings. I wondered what you thought about this and what you are doing?
It depends on what you mean by “devaluing of the dollar.”
If you’re thinking of inflation, that’s pretty much an economic constant. The best way to manage inflation is to have your savings in a variety of investments, some risky and some not-so-risky, so that you get a consistent return that’s ahead of inflation. For most people, that means having some money in savings and some money in retirement (balanced among stocks and bonds and other things). Gold is certainly not the answer; neither is Bitcoin. They’re both incredibly volatile.
If you’re talking about some sort of future financial apocalypse, I don’t buy it. Investment “experts” like Peter Schiff have been selling fears of financial apocalypse right around the corner for most of a decade now, yet most financial signs point to a brighter future, not a darker one.
I don’t think I can realistically save enough for retirement, so what should I do? I am 51 and single and have about $10K in a Roth IRA. I just signed up for my company’s Roth 401(k) and contributions started last month. When can I ever retire?
I would think about retiring in twenty years if and only if you throw everything but the kitchen sink into retirement. By that, I mean you should be contributing amounts on the order of 30% or 40% of your annual income to retirement savings. You should hold out until the last possible moment to start Social Security, too, so your benefits are as large as possible.
The other possibility is to assume that you’re going to be living on a very small amount. Can you survive on your Social Security benefits? You should receive an annual statement from them indicating how much they’ll pay you each month. Is that enough for you? How much more do you need?
If you’re not willing to do that, you will probably be working for as long as you’re able to do so. With modern medicine, that could be into your late seventies or even later.
What’s your strategy to guard against product downsizing? I have noticed this at my grocery store. I used to buy Finish dishwasher pellets and they were in a big jumbo box but then I noticed recently that the count went down by 16 but the price didn’t change. That seems like a ripoff.
You shouldn’t look at the sticker price of products. The only price that matters for non-perishable goods (anything that doesn’t rot, basically) is the price per unit. That’s it. Nothing else really matters.
In some areas – I know this is true in New Jersey, at least – stores are required to list the price per unit on the tags in the store. Many other stores do this voluntarily, though some do it in fairly small writing.
Let that be your guide when it comes to making grocery choices. Whenever they do this kind of tricky “downsizing,” you’ll just blow right through it.
One thing you do not mention which bears pointing out is the AirBnB.com/short term vacation home rental option. I flew my family of 6 down to WDW from Seattle last November and found a relatively extremely inexpensive 3 bedroom home with pool, BBQ, full entertainment system, fully equipped kitchen, etc, etc for about $900 for the week (note that rental rates change throughout the year too with park traffic flow) – almost half of the cheapest hotel I could find PLUS we had all the comforts of home PLUS we had all of that privacy and we were only about a 10 minute drive away from the park gates. I would highly recommend it as a very inexpensive yet very comfortable WDW accommodation option.
I think this is an awesome option for travelers. We’ve done something similar in the past on summer vacations and it’s a great option, not just for Disney World but for any vacation.
I will say that we found a really nice resort hotel down there with two bedrooms for about $80 per night, and this was during the high traffic summer season. We did that by camping out at Hotels.com and looking for daily deals there.
The more options you have on the table, the better.
I live in a small town where the only “grocery” store is a Dollar General. You would think that with a name like that they would have low prices but that’s not true. Everything there is really expensive. Just because it says “Dollar” on the front of the store doesn’t mean the prices inside are cheap or even reasonable.
This is absolutely true!
There’s a Dollar General not too far from where I live that has rather high prices on staples. Their pricing policy is strange, as there seem to be really good prices on some things and really high prices on other things. I am sure it’s because of their location as there aren’t any real grocery options nearby.
A dollar store is not a guarantee of high discounts. You need to always be checking the prices, no matter where you are.
You’ve mentioned in a couple posts that your family keeps a list of food recipes that came out to less than $2 per meal. Would you be willing to share some or all of these with us?
A few years ago, I did a series based on recipes from NPR’s “How Low Can You Go” series, where I tried to make interesting meals for a family of four for less than $10. Here’s an index of these posts, which feature eight recipes.
I also once shared this list of twenty dirt cheap meals. Most of these fall far below $2 per meal.
You might also want to check out this flexible casserole recipe, which works well with sales.
Here’s a dilemma. I subscribe to magazines as my primary way to read. I get about ten of them and I spend a few hours a day reading them (I don’t have television).
When I get done with a magazine, I usually save them in a magazine box and keep them all in a closet, but that closet is full. I just realized the other day that I never look at the old ones. Even when I know there’s something in there I want to look at it is too much work to find it so I don’t bother.
What can I do with all of these old magazines? Is there a place to donate them? Should I just trash them?
My solution with magazines is to rip out articles that I might want to refer back to in the future, then scan them and save them electronically on my computer. I then toss out the magazine.
If you have an entire closet full of magazines… that might be a really tall order. My instinct would be to just trash all of them.
You can contact your local library and see if they would want them. My guess is that they’ll pass, but they might want to include them in a book sale at a price of a nickel or so each. If they have your address on them, you might want to cut that address off or cover it in black marker first.
If you feel up to it, you can start going through them and tearing out articles that you want to save, then trashing them. If you know how to use a desktop scanner, this process isn’t very hard at all. It just takes time.
I have a relative who has a credit card addiction, and I have been trying to research this online to provide her with help.
HOWEVER, I felt compelled to write to you, as I find it EXTREMELY appalling that you have multiple offers for additional credit cards smack dab in the middle of your article saying how bad credit card addiction is; MEANWHILE, YOUR ARTICLE POINTS OUT that addicts tend to transfer balances and move from one card to another.
How can you do this in good conscious??
That’s like having beer and wine ads in the midst of an AA article. Or, an offer for drugs in the midst of a “treating drug addiction” article.
I understand that companies try to make money by advertising, but this is one of the most unethical and pathetic attempts to try and market to those who are faced with these horrible addictions.
SHAME ON YOU, THE SIMPLE DOLLAR! I WOULD CALL YOU THE SIMPLETON DOLLAR FOR THIS DUMB AND IRRESPONSIBLE MARKETING! JUST TAKE A LOOK AT YOUR LINK, ANY DECENT HUMAN BEING CAN SEE THIS IS WRONG!
Here’s a quick summary of how advertising works on The Simple Dollar (and most sites on the internet).
Most websites simply aren’t large enough to have a dedicated advertising department that screens advertisers and works out specific contracts with companies. Not only that, an independent site like The Simple Dollar would not want to do this. Why? Those companies buying ads might request an editorial voice on the site. They might insist that we write an article a certain way, making a certain credit card or other financial service seem great when it’s really not.
The solution most sites use is to simply offer auction-based advertising. We use the Google AdSense program to do this. What that means is that we offer a block of ad space on our website and companies bid on that ad space. They do that by using key words on the site – words that show up frequently. We completely stay out of the auction and avoid all direct relationships with the advertisers.
The end result of that is when you write about credit cards, credit card companies will buy ad space – but so will credit recovery agencies. Whenever you load the page, you might get an ad from a credit card company or you might get an ad for a credit recovery agency. Anyone who wants to buy ads matching the key words on that page can do so – we have no direct association whatsoever with those companies.
It would be nice if things didn’t work this way, of course. I’d love it if we lived in a world where we could go advertisement free and rely solely on donations or patronage. Unfortunately, we need the resources to cover the server expenses and the tens of thousands of words of content that appear on the site every day and the system we have now is the one with the least number of conflicts of interest.
If someone wants to donate a few million dollars to keep The Simple Dollar running in perpetuity without ads, though, we’ll certainly listen!
I take the subway to work each day and on the way I do puzzles. I used to print them off of the internet from a few puzzle sites but I think that it might actually be cheaper to buy puzzle books. Can you help me run the math?
Puzzle books generally are cheaper in the long run. Trust me – this is a calculation I’ve done myself.
Depending on your printer, the paper you’re using, and the ink, the cost per printed page can vary anywhere from $0.05 to $0.25 from your home printer. Given that you’re printing simple puzzles, the cost per page is probably closer to $0.05, but it’s really hard to say for certain.
On the other hand, you can subscribe to one of those pulp puzzle magazines for about $10 per year (depending on the magazine) or, better yet, buy one of the bundles that they make available. For example, if you enjoy sudoku puzzles, you can order this bundle that gets you about 7,000 sudoku puzzles for $11.95, for example, or this bundle that has about 25,000 puzzles for $24.95. You’re simply not going to beat that with a home printer even if you ignore the time commitment.
Got any questions? The best way to ask is to email me – trent at thesimpledollar dot com. 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.