Reader Mailbag #18

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.
101 goals in 1001 days
When is it time to move from the city to the country?
Financial success for minimum wage earners

And now for some great reader questions!

My wife and I are ue to come into a large sum of money we hope to use as a down payment on our first home. I have a substansial amount of debt (making me a bad candidate for a good mortgage)that is being taken care of with our budget. My question is what is the best way to make this money “work” for us for say 24-36 months whle we clean up the rest of the mess?
– HippyKidz

Unless your debt is really low interest, use the money to get rid of the debt, then start saving for your down payment. This gives you a lot more flexibility in terms of future decisions. You can “snowball” your debt payments right into that savings for a down payment, plus if you decide that you want to do something different in a year, you can do that.

I’ve come to the belief that the best argument for debt freedom is the freedom part. It gives you the power to make major life changes much more easily – if you don’t have any debts and some cash in the bank, what’s stopping you from spending six months in the Amazon? It’s a lot different if you’ve got big financial burdens on your back and you’re chained to your job.

What are your personal nicknames?
– Carlos

I can really only think of one. When I was in high school, I was involved in extracurricular activities and a lot of people I met from other schools called me Elvis, because when I would give a presentation, I used to work in an Elvis Presley impression as an icebreaking and self-deprecating comedy bit. The fellows who I was involved in this project with thought the whole things was so hilarious they’d practically wet their pants when I’d curl my lip. In fact, I saw one of those guys recently and he still just called me Elvis.

Trust me, the people who know me personally that read this are either baffled or are shaking with laughter. I have absolutely no rhythm or singing skill.

Is it a waste of time to sit around and daydream about being rich?
– Norman

Not if it fuels you to take some sort of action. Being “rich” is a great goal – but that’s what it is, a goal. You’ll never reach that goal if you don’t get up and start doing something.

Instead of daydreaming about being rich, spend some time thinking about how you can get from here to there. Do you have a talent you could be cultivating? Could you be working harder at your current job and perhaps earn raises or promotions?

Or is it really being rich that you want? Maybe you just want a greater degree of freedom – or you want someone to love you. Spend some time figuring out what you’re really daydreaming about, then use that for fuel to start making real changes in your life.

A daydream can be a nice start – but that’s what it is, just a start.

I don’t know anything about buying wine, but I enjoy a glass with my evening meal. Any tips?
– Melissa

Stick to inexpensive bottles. Don’t spend $30 or $40 on a bottle of wine if you’re unfamiliar with what you’re buying. Look at the recommendations and scores at your local wine seller and stick to sub-$10 wines that seem to be recommended. Try a lot of different types of wines, and different varieties within that type. Look very carefully at food matching advice – for example, if you’re eating a pasta with a tomato sauce, try a nice red Zinfandel.

Another cheap way to figure out what you like is to regularly go to free wine tastings. Go to several and note which ones you seem to be drawn to regularly, then focus on those.

Most people shouldn’t bother paying more than $15 for a bottle of wine. There are tons of great wines for less than that – why blow your cash?

Why did you stop posting Consumer Reports Magazine overviews? Do you still subscribe?
– Louise

I still subscribe, but the posts weren’t very popular, so I stopped with the monthly Consumer Reports and Money articles. Instead, I just read each issue and try to find specific things to comment on either to support articles I’m working on or as the basis of a new article.

I’ve considered a monthly “magazine roundup” post, but that would require me to subscribe to a number of personal finance magazines, most of which I don’t like.

What do you consider to be appropriate preparations for a devastating global event?
– Will

Well, you have to look at this type of situation much as you would an insurance policy. The type of global disaster that would cause you to have to turn to emergency rations has an extremely tiny likelihood of happening, so from a cost standpoint, it’s not reasonable for the average person with a non-faith concern to spend a ton of money preparing for doomsday.

If I were to prepare for such devastation, I’d probably have a lot of potable water in the basement – a few giant jugs of it that would last for a while. I’d also have a bunch of dehydrated food that could last a very long time – several of these would do the trick. The advantage with things like this is that you could actually use them in a pinch – for camping and such.

At least one person I know has enough supplies in his basement to feed his family 2,000 calories a day per person for more than a year.

In truth, though, your best way to prepare is through knowledge and consistent behavior. Know how to do basic things for yourself. Start a garden, and know how to do it. I recommended books on off-the-grid living a while back, particularly the SAS Survival Handbook.

I don’t want just an investment guide. I want one that also teaches me how the stock market works. Got any recommendations?
– Anna

The best book I’ve found in terms of a general introduction to the stock market that also teaches a bit of investing is Burton Malkiel’s A Random Walk Down Wall Street. It is not the best investing book out there, nor is it an unstoppable economics tome, either.

Instead, it’s just a readable book that explains how the stock market works in pretty solid but engaging terms, and then uses that explanation to point out some basic investment advice.

How do you write articles in advance when you make timely references?
– Annie

Most of the time, when I write about things I’ve done recently, that article is really freshly written. Sometimes, I’ll write in advance of something I’ve got planned to do in the next day or two when it’s just an offhand reference, like a plan to do a small home improvement project or something, but those are pretty rare. When I do write something that’s very topical, I just slip it in there and move the scheduled article back to a later date.

Doing this helps me not only have stuff written in advance, but it also lets me write about topical stuff if I need to. You can think of it like a newspaper edition – an article might be scheduled to run, but then at the last minute the editor slips something else onto the front page and that article waits for another day or two to run.

Do you have any suggestions for online software that can track my spending habits?

I have tried, but I don’t especially like how it works.

Do you have any other recommendations?
– Melinda

The best option I’ve found for basic budgeting online is PearBudget. It does exactly what it says on the marquee – budgeting. I wrote about PearBudget in detail a month or so ago.

While it doesn’t have some of the bells and whistles of services like Mint or Wesabe, it does the core function of budgeting very elegantly and protects your privacy very well, too. It’s also entirely ad-free and doesn’t weigh you down with product come-ons a la some other online budgeting tools. My only complaint is that it is subscription based (for the time being, $2.95 a month), but you can try it for free for a month and see if it works for you. I still tinker around with their free spreadsheet on occasion.

I keep hoping to hear more about your cooking site. Any news on that front?
– Shan-Oh

The cooking site is on hiatus for the time being, as I try to decide what to do next. I have a ton of potential projects in front of me right now – a second book, an image bank, some software updates to The Simple Dollar, and about five other things that I want to be doing that are connected directly to The Simple Dollar.

A cooking blog, while fun, would probably be even more of a time sink than The Simple Dollar. Right now, I just don’t have the time to give it the love and care and nurturing I would need to give it to be a success.

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

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