Reader Mailbag #15

Each Monday, The Simple Dollar opens up the reader mailbags and answers ten to twenty simple questions offered up by the readers on personal finance topics and many other things. Got a question? Ask it in the comments. You might also enjoy the archive of earlier reader mailbags.

As usual, we’ll start things off with a few links to older articles that directly answer questions I’ve heard recently.

How to translate your passions into additional income
Financial tips for minimum wage earners
My thoughts on The 4 Hour Workweek

And now for some great reader questions! (This week, I included a number of food-related questions because I seemed to get a ton of them over the last couple of weeks.)

Another bank has a slightly higher savings account rate than my current bank. Should I switch?
– Micky (among many others)

My personal feeling is that jumping from bank to bank to chase a rate difference of less than 1% is a waste of time unless you have hundreds of thousands of dollars in your account, in which case you should be investing most of that in something else. If you’re leaping from a very low interest account to a high interest account, the exact rate at the moment means very little, too. If the rates at the banks you’re considering are within 1% of each other, ignore the rates.

There are two reasons for this. First, the rates among most of those high interest banks change very regularly. They bump up. They bump down. One bank might go up a bit the same day another one goes down. There’s really no pattern to it other than a general following of the direction of the Federal Reserve’s actions – if the fed raises rates, the rates go up, and vice versa.

The features you should be looking at revolve around ease of use. Does the bank have great online services, including robust bill pay? Is customer service easily available? Is the ATM network enormous, with an ATM card that also has a Visa or Mastercard logo? These are the real questions you should be asking, not about a minor difference in rates that will probably change by the end of the month.

Instead of having another child, why don’t you adopt one of the kids who has already been brought into the world and neglected?
– Johanna

Before we had children of our own, my wife and I looked very seriously at adopting two older girls (ages five and eight), but their custody situation changed before we had the opportunity to do so, leading to what appeared to be a reunion with their real parents.

We would be hesitant now to adopt an older child because I’ve witnessed very closely what can happen in a family where there are already children and an older adopted child enters the household – everyone is pushed to a stress limit, especially the younger children already there. It’s not something that’s fair to burden my own children with, so for the moment, we’d only be interested in adopting a very young child (one less than a year old).

That being said, my wife and I would love to adopt a very young child, and there’s a very strong chance that’s what we’ll do if we add any future children to our home. Our only real concern at this point is cost and legal protection. An acquaintance of mine has adopted two children from Russia, a path my wife and I are considering, and he’s offering us a lot of advice on how to do that.

My daughter will start first grade next year, and I’m curious as to whether I should have her buy school lunch or make her lunches at home. What do you think is the most cost effective option? Is the time saved worth the money saved? School lunch is $1.50 per day.
– Lisa

The first question to ask is whether or not there’s refrigerator space at the school for her to keep her lunch cool and also microwaving options for reheating. If there’s not, I probably wouldn’t bother with it. If there is, then I’d strongly consider it, as there are many good sack lunches you can prepare that are delicious (better than the school food, because even a magician can only do so much with government surplus) and cheap.

The primary concern, though, is food quality, not time. You’ll not be able to beat $1.50 a meal if you’re considering both your own food cost and the time involved. The reason for packing your child’s lunch is to ensure that they’re eating quality, healthy food for their lunch.

I heard about this great investment opportunity called an 801k. How much money should I be investing in this great opportunity?
– Ron

If you hear about some great investment opportunity and can’t find a strong multitude of opinions on it both online and in print, don’t invest. Almost always, opportunities like these are scams.

So, look at it this way. Let’s say such opportunities are rip-offs 90% of the time. That means you’re taking a 90% risk of a significant loss if you invest. There’s no investment on Earth worth that.

Even if it turns out that this opportunity was a good one, you likely wouldn’t be much worse off just investing your money in an index fund returning 8-10% a year. So I’d just take my money to Vanguard instead of into some sketchy scheme.

I like reading cooking magazines at the grocery store in order to get ideas, and so I’ve decided to start subscribing to one. You’re a foodie – what’s the best one to subscribe to?
– Milton

I currently subscribe to bon appetit and Cook’s Illustrated (both were gifts), and I often flip through several others on the newsstand. I rarely fail to pick up at least one idea from any cooking magazine.

The cooking magazine I get the most out of is Cook’s Illustrated, but that’s not the end of the story.

The cost for Cook’s Illustrated is $26.95 for a year’s worth of issues – that’s six issues. My bon appetit subscription cost $12 for twelve issues.

If I were going to pony up $25 for cooking magazine subscriptions, I’d probably go with bon appetit and another one, say Food & Wine or something else that matches a more narrow interest. For example, I also subscribe to a home brewing magazine that I believe costs $15 a year.

Cook’s Illustrated is the best, but it’s not the best bang for the buck. Since I use such magazines as inspiration, I get more overall by subscribing to two other magazines for that price.

I just won $13,000 playing the lottery. What should I do with it?
– Andrew

First tip: stop playing the lottery. Just stop. Every time you get the urge to play, take the cash you were going to spend on tickets and put it in a jar somewhere in your house and forget about it. After a year, go look in that jar. You’re a winner!

Now, about that $13,000. The first thing I’d do with it is pay off any outstanding debts, particularly anything with an interest rate over 7%. Provided I didn’t have that, I’d invest 60% of it or so and spend the other 40% on some sort of memorable experience like a trip somewhere interesting, something I wouldn’t forget.

Speaking of not forgetting, don’t forget that you’ll be required to pay income tax on those winnings. That’s a large enough amount that the IRS will definitely be interested.

My career dream revolves around playing baseball, something which has proven impossible. I’m depressed and don’t know where to go now that I’ve realized my life long dream will never happen. Any ideas?
– Al

If baseball is your passion, stick to baseball. Match it with other skills you have. Are you a good writer? Look into becoming a sportswriter, or start a sports blog. Like to travel? Look for opportunities to become a scout. Like interacting with young players? Become a high school or college baseball coach.

If you know what you love most in your heart, try to find whatever angle you can to keep that passion alive. You can’t play, but maybe you can share that enjoyment with others in various ways. Maybe you can help the next generation of players live out their dreams.

You recently talked about your Global chef’s knife and how it was worth a $100 investment to you, but what about beginners? What sort of knives should a beginner get?
– Emily

You only need one knife to start with for your entire kitchen, and it shouldn’t cost more than $20. Just get an 8″ chef’s knife at your local department store, along with a honing steel. All together, your purchase should be about $25 or so. Then, just use that honing steel on the knife every time you go to use it.

This type of setup was all I needed for many years. I only recently upgraded to a Global after trying one and discovering how nicely it fit my hand, which is very large. If I had a smaller hand, I’m not entirely sure I would have ever upgraded – the Global just fits my hand substantially better.

I just got hired at my new job and I’m unsure how to dress on my first day. Any ideas?
– Amy

My approach would be to call and ask someone at the company. Just ask what appropriate dress is in the department you’re joining, and wear a fresh and crisp version of that the first day. Then look around, watch what the others do, and stick to the high end of what’s appropriate in your department.

There’s no reason to be embarrassed about making this kind of call. Many, many people have this exact same question when they go to a new workplace. Just call and ask.

What’s your favorite kind of barbecue sauce?
– Chet

I prefer my own homemade blend (which has some family secrets in it that I’m loath to share). But, in terms of the ones you can buy at the store and are widely available, my favorite is Stubb’s Smokey Mesquite. It’s not perfect for everything, but it’s good to great on almost everything and makes the best grilled beans I’ve ever tried.

In the end, though, I’d rather make my own. Here’s a modified recipe from my favorite one that’s good for general use: 2 cups ketchup, 1/2 cup chopped onion, 1/2 cup Coca Cola Classic, 2 cans chipotle chiles, 1/4 cup brown sugar, 2 tablespoons oil, 2 tablespoons apple cider vinegar, 1 tablespoon Worcestershire sauce, 2 minced garlic cloves, 1/2 teaspoon celery salt, and 3/4 teaspoon black pepper. Just use the oil to saute the onion and garlic in a large pan until the onion is soft, then add everything else and stir it until it’s roughly consistent, then simmer over low heat until it’s as thick as you want. This recipe is pretty sweet – if you’d like it less sweet, swap out the Coca Cola for water. (This is fairly close to my favorite, but I can’t reveal that one in its entirety).

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

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