Reader Mailbag #21

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.
Tactics for making financial changes when your spouse isn’t on board
My personal finance background
The best “pop psychology” book I’ve read

And now for some great reader questions!

If you’re learning more about personal finance, is it helpful to read economics books?
– Lanny

It’s helpful in the sense that it provides context for personal finance. We make money and spend money, and because of that we function as a piece of the overall economy. Understanding how economies work can be very insightful as it can teach us why prices vary, how supply and demand works, and so on.

I’ve read a ton of economics over the last six months (a phase that’s winding down, actually) and I’ve found that after engrossing myself in the topic, I now understand quite a bit more about the whole nature of buying and selling beyond just picking the best quality item for the buck. There’s a large and complex game going on there.

Is it necessary reading? No. Is it insightful and interesting? For me, definitely. If you can stand it, I recommend starting with Adam Smith’s The Wealth of Nations – it’s dry in places, but if you really think about what he’s saying and try to apply it to what you’ve seen in your own life, it’s massively insightful. Follow that up with any sort of modern economics that looks interesting to you.

Trent, I know you’ve posted about moving among several majors in college. What degree did you actually end up getting? And in what sector did you work before you took the plunge to write full-time?
– Lisa

I finished college with a degree in biology, then went back immediately for a degree in computer science. After that, I worked in a pair of computer-heavy office jobs for several years before quitting to work on The Simple Dollar – I was largely a programmer, but often found myself doing stuff like desktop publishing, poster design, and so on.

In a lot of ways, it trained me well for doing this. The periphery skills, like the software that runs The Simple Dollar, are already in place. The area where I really need to work is on the writing itself.

How do you face the loss of a job from the main wage earner in the family. We have a four month emergency fund, but once it hit us – I am very worried. Four months is not a long time. We have auto pay on most bills and investments. Do we automatically stop the investments until a pay check starts flowing – or try to keep up with investments out of the emergency fund. Once a new job is obtained, do you rebuild the emergency fund first – or keep up with investments.
– Joanne

Yes, stop the investments for now. You can restart them later on. The key thing is to make sure you don’t sink right now, so tighten up all of your leaky spending and hit the pavement to find new work.

When you get back to work, rebuild your emergency fund before doing anything. Your emergency fund is your buffer zone – it keeps you financially alive during crises. Murphy’s Law pretty much states that the second you let your emergency fund slack off, you’ll find yourself really needing it.

Do you think America is heading in the right direction?
– Dennis

Yes, I do. Most people are really worried about America because of the poor choices our government has made over the last decade or so. The government is not America. America is all of the people out there quietly doing their job, having fun on the weekends, and trying to better themselves here and there.

That America is doing just fine. I see lots of people working their tail off. I see lots of people creating useful and interesting and exciting things. I see kids playing in the park across from my house. Just a few months ago, I saw tons of people helping each other hand in hand during the Iowa floods.

The media might like to put up scare messages to stir up ratings, but from where I sit and the people I talk to and see living their lives, things are generally all right. Of course there are things that could be improved, but there’s always something that could be better. If there wasn’t, we’d have nothing to work for. Right now, for instance, people are worried about oil prices. I see tons of wind turbines going up all over the place, and I see people all over investing in huge numbers of more of them – and solar panels, too. I see people scared about the housing crisis and banks failing, but we went through more or less the same thing in the 1980s with the savings and loans and that turned out fine.

I think America is all right, and it’s in much better shape than a lot of people like to think.

What do you think about investing in real estate?
– Marvin

I look at real estate as just another commodity to invest in. You’ll have speculators come in and bump up prices and you’ll also see things bottoming out from time to time.

I do think that real estate is something that does reward the patient and the focused, especially those who have a lot of cash in their pocket. If you’re willing to spend your time really hunting out real estate deals, you can do very well in real estate – but the time investment you need is likely enough that it would have to become your career to make it work.

I would love to read your thoughts about Amazon’s new Kindle.
– JB

My wife has a Kindle and she loves it. She reads (on average) four books a week and she is convinced that it is pretty much the most convenient way possible to enjoy books.

She’s particularly passionate about reading classics (for example, she’s reading Wuthering Heights at the moment), which is particularly convenient because tons of classics are in the public domain and available for free. All she has to do is point her Kindle’s web browser at and download away, all the classics she wants in Kindle format for free. The best part is that the web browser on the Kindle works anywhere that cell service works.

Her only real complaint is the relatively high price for new releases from the Kindle Store. She thinks they should always be substantially lower than the paper price since there’s basically no production cost.

Hi Trent, I am curious about how you plan to handle it if your children don’t turn out to be as finacially responsible as you are? Do you think you would help them out of financial problems by loaning them money, etc?
– Emmy

My feelings on this are somewhat related to my own background and what I’ve observed in similar situations.

With my own kids, I have no problem helping one of them out, but I don’t like the idea of lending them money and I especially don’t like the idea of helping one child more than another one. Thus, my wife and I have largely decided that if we have one adult child that needs, say, $500 for something and we decide to give it to him or her, we’ll give the same exact amount to each sibling to do with what he or she pleases.

Any other scenario I can think of seems unfair to someone.

What are your thoughts on the ethical argument for not eating animals? Specifically, the argument from Gary Francione that states that since animals have a vested interest in continuing to exist, we should not infringe upon that by killing them.
– John

I have one major problem with this argument: it applies to plants just as well as to people. Plants also have a vested interest in continuing to exist, so why is it ethical to eat plants and unethical to eat animals? Plants can sense external stimuli, just as animals do. Plants have defense mechanisms to sustain their life (thorns, for example). Why is it acceptable to eat plants, but not acceptable to eat animals?

From my perspective, the best case for vegetarianism is that it makes healthy dietary choices much easier. Just consume no meat at all and your diet is bound to get healthier.

How do you deal with it when you fail to achieve a financial goal?
– Ed

The first thing I do is try to look at all available data and see where I failed. When I set a goal, I usually try to keep track of progress towards that goal, and that means keeping careful financial records and so forth. So, for example, if I didn’t meet a target for the month, I look through my bank statements and my credit card bills and try to figure out where I went wrong.

Usually, I fail at goals because I either made a really dumb mistake or two or I set the bar too high. If I can find the mistake(s), I focus on them intently in order to correct the problem. If I can’t find mistakes, I assume I must have set the bar too high and use that knowledge for future goals that I might set.

You’ve mentioned that you might try something completely different with your career again in several years. What would you think about doing?
– Linda

Honestly? Teaching. I’d love to be a high school English, history, or math teacher. My only concern with that type of job is dealing with parents. I have a pretty low tolerance for people who look to blame others for their own mistakes, and I’ve seen plenty of parents who become infuriated with teachers because of things like failing a student because he or she cheated.

I just don’t think I’d deal with that situation very well. I can certainly say I wouldn’t bend on such a thing – if my cheating policy was automatic failure and the student was aware of it, that student would fail. And I’d stubbornly stick by it, probably until I got a pink slip.

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

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