Updated on 08.25.08

Reader Mailbag #25

Trent Hamm

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 make your partner happy (for free)
Psychological tricks of department stores
How I deal with a cold on the cheap

And now for some great reader questions!

How can I get [my husband] to be more open with me about money? He is always telling me he’ll take care of it. That’s all well and good, but I need to be included in his plans. Do you have any tips?
– Emily

The issue here could be any number of things. It might be a lack of trust, it might be a need to be in control, or it might just be a genuine desire to prevent you from having to worry about it.

Here’s the tactic I’d use, Emily. I’d sit down with your husband and flat-out tell him that this situation makes you uncomfortable. Say that you feel like you’re driving down a highway in the dark with the lights off – you don’t know where you’re going and you don’t know how far you’ve come. Because of that, you don’t know if you’re making a wrong turn or not – you can’t make an informed decision about whether you can afford certain items, when you need to cut back, and so on.

I usually think the best place to start is to talk about goals. What do you both want? What personal steps can you take to get there? What’s the threshold for success each week in working towards that goal?

Mmmm… cheese… I just can’t take most diet gurus seriously, because life without cheese? I’m not sure it’s worth living. I would give up so many other things in life before the simple, satisfying pleasure of cheese and wine.
– Sara

Cheese tends to be my dietary weakness as well. I love cheese. I love making homemade macaroni and cheese from scratch. I love grating cheese myself, taking little tastes, and including it in dishes.

In fact, my affinity for cheese is so strong that one of the highlights of a recent family vacation was a stop at a cheese factory. I got to look at some of the inner workings, taste a ton of cheese, and we wound up buying several different small pieces of cheese to take home with us. Deliciosu!

Trent, I would like to hear how being optimistic has has influenced your frugality. You seem very optimistic even in the face of criticism.
– Jessica

For me, optimism comes from seeing something work. I tend to start out pretty skeptical with something new, but when I actually do it and realize that it does in fact work really well, I tend to switch around and become a cheerleader for it.

Because I tend to talk more about the things that do work for me and less about the things that don’t work, I do come off sounding really optimistic most of the time.

On the rare occasion when I do talk about something I don’t like, I do tend to let it fly with both barrels, often almost to my own detriment. Things like Rich Dad, Poor Dad and freecreditreport.com tend to get me going.

Do you ever go camping? I think it’s one of the greatest frugal ways to have fun, especially with a family. I am camping this weekend and am really looking forward to fishing and making food over a fire or in a dutch oven. If you do camp, do you have any favorite camping recipes?
– Dave

When I go camping, most of the food is either just fish or a mix of fresh vegetables spiced and wrapped in aluminum foil with an ice cube and tossed on the fire. This actually works very well, forming a well-cooked meal that can have almost-infinite variations.

Try potatoes, onions, peppers, chili, beans, eggs, fish, hamburger, and carrots in any combination you can imagine (or desire), wrapped in aluminum foil with an ice cube. Toss that package on the coals, wait fifteen or twenty minutes, pull it off, and give it a taste. Quite tasty, quite easy, and quite distinctive.

Do you understand what two-cycle billing is? Can you explain it in terms that a financial dummy can understand? I’ve read explanations on a couple of websites but I am embarassed to admit that I just don’t get it.
– Kristina

Most credit cards use your average daily balance to calculate the finance charges they charge you for a given month. The difference between one-cycle and two-cycle billing is how they calculate their average daily balance.

An example On April 1 it has a $0 balance. On April 16, you charge $2,000 on the card. On May 1, you still have that same card with a $2,000 balance with a charge you put on it on April 16. You don’t touch the balance during the entire month, so at the end of the month, it’s still at $2,000.

Single cycle billing With single cycle billing, only the balance for the previous month is used to calculate your average daily balance. Since your balance from May 1 to May 31 is $2,000 every day, your average daily balance for the card under single cycle billing would be $2,000. The company will then multiply that by your daily periodic rate (the percent interest you’re charged each day, as stated in your credit card agreement) and multiply that by the number of days in the month. So, if your daily periodic rate is 0.05% and the days in the month is 31, you’ll have a finance charge of $2,000 times 0.05% times 31, or $31.

Double cycle billing With double cycle billing, the credit card companies use your last two months worth of balances to calculate your average daily balance. From April 1 to April 15, you had a $0 balance (15 days), then from April 16 to May 31, you had a $2,000 balance (46 days), your average balance would be ($2,000 * 46) / 61, or $1,508.20. If your daily periodic rate is 0.05% and the days in the month is 31, you’ll have a finance charge of $1,508.20 times 0.05% times 31, or $23.38.

Double cycle billing is cheaper when you continually add more charges to your card, but it works against you if you’re trying to pay off your card.

Another example On April 1, your card has a $2,000 balance. On April 16, you pay off the entire balance. What happens at the end of May?

Single cycle billing From May 1 to May 31, you never carried a balance, so your average daily balance is $0, and thus you don’t have any finance charges.

Double cycle billing With double cycle billing, the credit card companies use your last two months worth of balances to calculate your average daily balance. From April 1 to April 15, you had a $2,000 balance (15 days), then from April 16 to May 31, you had a $0 balance (46 days), your average balance would be ($2,000 * 15) / 61, or $491.80. If your daily periodic rate is 0.05% and the days in the month is 31, you’ll have a finance charge of $491.80 times 0.05% times 31, or $7.62.

If you have a tendency to charge up your cards and carry a high balance, it will be slightly harder to pay that balance down with two-cycle billing, but you’ll have an easier time of it on the way up. I tend to believe two-cycle billing slightly encourages people to keep a higher balance, so I tend to encourage people to avoid cards that do it, even though the real dollar difference isn’t much at all over the long haul.

Any ideas where someone might go to improve their public speaking skills?
– Nate

Practice is the key. The two best places I’ve found are my local church (doing the readings before the congregation is a great way to get in some practice before an audience that won’t heckle you if you are nervous) and the local Toastmasters.

Take every opportunity you can to speak in front of others. It’ll do nothing but improve your own skills and self-confidence. If you’re paranoid about failure, start with friendly audiences – wedding reception toasts, church readings, and so on.

If you do meet all of your financial goals, you’re almost certainly going to have a good chunk of cash until both you and your wife pass away. Have you thought about what you’d do with that? Would it be bequeathed to kids, or do you have other thoughts about how to use it?
– Steve

My wife and I currently plan to leave small fixed amounts to each of our children and then turn over the rest of our estate to a specified charity or two. We hope to have things arranged so that we do not become a financial burden on our children near the end of our lives.

By doing this, we hope to avoid any silly fighting over our estate that we’ve seen from other families. They’ll know what they’re getting up front, all of them, and it won’t change, no matter what.

What do you do for an exercise routine?
– Ed

I had a very steady exercise routine in the spring that consisted of a lot of Wii Fit and various other exercises, but several summer trips plus a very long cold completely destroyed the momentum I had.

Over the last week, I’ve started doing a morning jog again along with the lifetime fitness ladder, which I was using in the spring. Basically, 30 to 45 minutes worth of varied workouts, mostly with a focus on burning calories, five mornings a week.

Would adding my husband to one of my card accounts give his credit a boost, or would it be better to just get him his own card and start building that way?
– ama

It depends on the shape you’re in. If the card you would add him to already has a balance equal to 50% or more of the credit limit, you’re better off getting him a card on his own. If you have a low balance or don’t carry a balance at all, sharing a card is probably a better choice for raising his credit score (as it will have a higher limit than he’ll likely be able to get on his own).

Remember, the point of getting this card is simply to raise his credit score. Don’t start letting it become a buying crutch.

It’s interesting that the disdain GVR shows for video games is the same disdain you show for television shows. As you correctly pointed out, video games can actually help sharpen the mind and help in personal growth; similarly, the television can be very useful if used intelligently.

Just like people can waste hours on mind-numbing video games, people can waste hours on mind-numbing tv shows; it boils down to how you use the tv and video games. I would encourage you to be mindful of this fact.
– Joe

I don’t have any problem with television if it provides content that promotes intellectual growth. Most popular video games today do just that, from sudoku puzzles on the DS to complex adventures that develop problem-solving skills.

In comparison, here are the top seven regular television programs of the 2007-08 season: two different airings of American Idol, three (!) different airings of Dancing with the Stars, Desperate Housewives, then another airing of Dancing with the Stars. The first show that potentially provides intellectual growth comes in clear down at #8 (House). There are some worthwhile, educational, and inspirational programs on television, but that’s not what people watch.

In contrast, the large majority of 2007’s best-selling video games revolve around puzzle solving or problem solving, from Brain Age 2 (portable sudoku and puzzles) to Final Fantasy Tactics (a very complex strategy game) and Call of Duty 4 (a very complex action-strategy war game). Most modern video games, in moderation, encourage problem-solving and quick thinking skills. Even the games that could be described as “junk,” like Guitar Hero III, promote intense focus, concentration, and hand-eye coordination.

By all means, watch Nova or Planet Earth or even House, if it’s in moderation. But, frankly, that’s not what the audiences are tuned into. If the people watching 5+ hours of “mindless escapist” television turned it off and did anything else with their time – including sleeping – they’d find themselves in a better place. And that’s why I encourage people to turn off the television.

Television isn’t inherently evil. Television just used to fill time is, when people could be sleeping to become well-rested, enjoying time with their children or families, or improving themselves or their financial state. The same is true for any activity engaged in just to fill the hours that doesn’t leave you with any sort of intellectual, personal, spiritual, or social growth.

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

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  1. Lola says:

    Dear Trent, I was a bit disappointed with the answer I got from you in the last Reader Mailbag. And, judging from the comments it generated, maybe you could go into that a bit more? I asked if, by calculating our monthly expenses, we could multiply that by 200, and if that would be enough to retire. So, if one’s expenses were about 24,000 a year, if having 480,000 would be enough. And you said – rightly so – that this figure doesn’t include inflation, and that a safer amount would be close to 2 million! That’s a lot of money, and I must agree with one of the readers who said very, very few people can afford to save that amount during a lifetime. I’m 41 years old, and though I never earned well, I still manage to save 50% of what I earn every year (meaning that I’ve always been frugal and spent much less than what I earn). That HAS to be enough for someone to be able to retire before 80 years old, no? Because, frankly, if someone who has saved 50% of what she’s earned for the last 20 years can’t retire by 65, then what you’re really telling me is that no one can do it.

  2. I went to a cheese factory recently too. Favorites included a veggie jack, habanero cheddar, 5-year old sharp cheddar, and cheese curds. Cheese curds were new to me, nice and squeaky!

  3. Chris says:

    Who or what is GVR?

    Love the blog – keep it up.

  4. Nick says:

    If you are on a diet and love cheese, maybe a low carb diet is right up your ally.

  5. Trent Hamm Trent says:

    “hat’s a lot of money, and I must agree with one of the readers who said very, very few people can afford to save that amount during a lifetime.”

    That’s because you’re looking at today’s dollars and you’re also not looking at investment growth.

    If you figure 4% annual inflation and you’re 25, when you turn 45, $1 will have become $2.20. That means for every dollar you put in now, if you get just cost of living increases between now and then, you’ll be able to put in 2.2x as much in 20 years.

    If you figure 8% investment growth and you’re 25, when you turn 65, every dollar you put in at age 25 will be worth $21.72.

    $2 million is only a big number if you’re looking at your own feet with regards to where you’re standing right now.

  6. K says:

    I think Trent may be offering a large number just to keep you from jumping into retirement without planning. Most experts say you can withdrawal 4% of your total each year and still account for inflation. That is assuming that your portfolio is earning something like 6-8% minimum, which is why you should consult a professional yourself. 4% means you should multiply your yearly withdrawal rate by 25, or your monthly income needed by 300. So to withdrawal $24k a year, a $600k nest egg is what most experts would recommend. You may be able to “retire” on less than that if you have a plan for supplemental income, or you may feel like you want some extra security and want to go up to $1M. I would also take a careful look at how you plan to spend your retirement. You may spend $24k now, but may need additional income if you plan to travel, give nicer gifts to your grandchildren, etc.

    But Trent is also correct that $2M seems like a bigger number than it is. Saving $1000/mo for 30 years at 10% interest would yield over $2M. The most important thing is to get started early and be consistent.

  7. Amber says:

    From a dietary standpoint, cheese is not bad to eat at all. You can have whatever type of cheese you like in the correct proportion-just like every other food. I go to an Amish cheese factory at least once a month to get my favorite cheese for a lower price and high quality. Low carb diets are not safe for most people. Only a few people should consider them and only after consulting a dietitian. Your brain runs on the fuel carbohydrates yield. You want to eat enough.

  8. Doug says:


    K gives good advice. What other sources of income will you have when you retire? Will you work part time? Will you have social security? If so, consider that income when making plans. For instance, $1500 from social security per month would provide you with $18,000 annual income. Couple that with the $19,200 from your retirement plan (4% x $480,000) and you might be fine. Some people expect to spend less during retirement, some more, so those expectations should also be considered.


  9. Sean says:

    For Nate-

    Toastmasters! I know Trent mentioned it, but I just want to second it whole-heartedly. There are very likely to be clubs in your local area, and you can check out a few and find one where you like the atmosphere (go to toastmasters.org for a local listing).

    When you join a club, you will get a manual, which helps you practice different aspects of public speaking (i.e. organization, use of voice, use of gestures, and so on).

    And of course the audience will be friendly and want you to succeed, and they will do their best to help you become a better speaker.

    There’s no better place to learn than Toastmasters!

  10. Stephanie says:

    I like your take on TV. We’ve always been too cheap to pay for cable/satellite and used an antenna. We lived in an apartment for 6 months with no TV reception. So we had an (unplanned) experiment in lacking TV service. We watched DVDs, podcasts, and bought shows off iTunes. With that much effort being required to put content on the TV, we became much more picky about what content was worth the hassle. And, we never saw a commercial.

    After moving into a house with an antenna, our TV habits did not revert. We still plan and evaluate the content we’re about to watch before turning it on. We try not to watch series we’ve never seen before to avoid becoming “hooked.” Since we don’t watch ads for those series, that’s very easy.

    We can’t stand commercials now that we’re no longer used to them. They use loud sounds, jarring graphics, and lightning-fast changes of topic and scene. I hadn’t realized how conditioned we were to watch them and absorb their message unconsciously. Now, if we have to watch them, we mute them. While they’re muted they don’t command attention and we can talk, read a bit of a book or do a quick chore.

  11. Billy Ng says:

    This comment is for Lola. What you’re not taking into account Lola, is that you are going to be spending considerably more money during your retirement than you are today.

    If you are 40 today and retirement is 25 years away for you, and assuming 4% annual inflation from now till that day – the 2033 equivalent of $480K is $1.28 million. And that’s just what you need to maintain your current standard of living.

    Chances are that with all this frugality, all this saving, you are hoping to enjoy your retirement. Maybe take up a hobby, maybe travel a little. The reality is that if you don’t do both of these, you’ll likely end up extremely board and frustrated with retirement. But to do these things, you’ll need more money (think of what a flight to Europe is going to cost 25 years from now!).

    Also keep in mind the fact that Social Security has a snowball’s chance in hell of still being around 25 years from now – so unless you’ve got income from a rental property coming through the door every month or you work for one of the seemingly half-a-dozen companies in America who actually have a pension any more – the full burden of your retirement will be on you.

    Let’s not even begin to get into what the cost of health-care will be in 25 years.

    I think $2mm is right on the money – maybe even a bit low.


  12. Debbie M says:

    For Emily, make sure to ask your husband the reasons why he wants to take care of it. It’s probably not just about financial goals but maybe about his role, what he’s good at, or what he likes doing, or maybe he’s having trouble.

    Also, of all the reasons you want him to share, start with the ones that will resonate best with him. Another way for the marriage to be a partnership? A way for you to make more informed decisions about how to spend and what it’s possible to save for? Ideas you’d like to try? Fear of not knowing what to do if something should happen to him (getting sick, etc.)?

    If you still can’t get him to talk, maybe there are other compromises you can make. Just getting him to write down account numbers someplace where you can access them? Getting a certain percentage of the income to make decisions on yourself? Calculating how much can go into a dream fund?

  13. Jessica says:

    I am really enjoying reading your Monday posts. Can’t I second (or third?) the cheese comment? It is wonderfully delicious, especially sharp cheddar.

  14. Jen says:

    Mmmm, cheese…. Trent, I’m going to venture a guess that you, too, are familiar with the glorious cheddar cheese curds of Monroe, WI. :-)

  15. carol says:

    I do like TV. I have found it productive time as long I am doing something else and I limit how long the TV is in use during the evening. Knitting is my favorite. Wii Fit has a free step and free run trainning mode I use while watching TV. We do have TiVo. I gladly skip the commercials

  16. Amy says:

    I use DDR (on Wii) for exercise! It’s decent cardio but you do have to stop a bit between songs. Lately it’s gotten a bit boring because I made a lot of progress in the first few months (unlocking songs, increasing the difficulty, etc.). I can’t turn up the difficulty anymore because I just can’t keep up with the next level (yet).

    I haven’t actually tried Wii Fit – it just seems less interesting (and I don’t want to spend the money to find out!). (And about the repetition on DDR, well, I’d rather hop around on the DDR mat than actually jog/run/treadmill, so it still works better than nothing.)

  17. Amy, I love DDR too! But I haven’t played it all that much this summer(it’s too hot in our house!). I think it will be a much better activity in the winter.

  18. Kate says:

    Trent, have you tried goat cheese? It is much lower in fat and thus easier to justify the indulgence.

    My sister is in the process of starting a goat dairy and is experimenting in her own kitchen with various goat cheese recipes.
    She is planning to do this for a “retirement career” on a larger scale once she leaves the job she has had for almost 30 years.

  19. Todd says:

    This morning, I received an interesting offer from my credit card company. They will issue me a debit card with a rewards program that would be linked to my current checking account. It seems like a pretty good offer, but I’m always leery of opening anything that will deliver a new card to my mailbox. What are your thoughts on having a debit card issued by a third party provider to enroll in a seemingly nice points program with no fees?

  20. John F says:

    Not sure if you’ve tried this before, I just sort of did it today randomly at the grocery store with a more frivolous purchase.

    To ward off impulse buying, attempt to think of a price you’d be willing to pay for it before looking at the price tag. It worked really well tonight and might work for others, though would likely become really laborious if done a lot. It’s also likely unnecessary for items that you purchase very often – you already should have a strong sense of their market value without stopping to think.

  21. Maria says:

    Hi Trent,

    Longtime reader, first time commenter! Great blog
    I have two questions,

    If you ever became very wealthy–say a multimillionaire earlier than you project–would you forgo frugality or do you think there is something intrinsically good about it, even for the wealthy. If you wouldn’t completely forgo frugality, are there any areas in your life where you would spend to your heart’s content?

    Do you ever thinking about posting to The Simple Dollar just once per day? That might give you more time for your other writing projects and not cost you too much in readers or quality.

    Thanks for sharing all your knowledge and experience.



  22. Shevy says:

    K’s and Doug’s answers to Lola were good and I think a bit more to the point than yours Trent.

    She’s been saving 50% of her income since age 21 and is now 41, but does not see her way clear to saving $2 million in total within another 24 years. However, she wants reassurance that, if she continues to save 50% of her income until retirement, she’ll be okay *even if she has only 1/4 of the amount you recommended*.

    She makes the valid point that saving that much right from the beginning is highly unusual. Surely anyone who can save half their income must be okay in the end. And I think she’s right, even without the valid aspects that you, K and Doug touch on.

    Anybody who can save that much money is obviously focused, disciplined and not overly materialistic. Those qualities will help Lola manage on whatever amount she manages to save.

    But it’s also true that she will probably continue to receive small increases in pay along the way, so that 50% of her income 24 years from now will probably be significantly larger than than 50% of her current pay. And if there is a significant degree of inflation over time, there will likely be increases in interest too.

    So she probably will have more money than she thinks she will, but her expenses may also be larger. The impact increases in the cost of living will have on Lola in retirement depend on how dependent she is on gas, utilities, grocery stores, etc. The more self sufficient she is (cycling, growing a vegetable garden, etc.) the less she’ll be affected. If, on the other hand, she plans to travel extensively or lives in an area with very hot summers and cold winters she might find it very difficult.

    Doug’s point about Social Security and other benefits is extremely important. If she truly only needs $24,000 to live on in retirement and makes $18,000 in Social Security she’ll be fine with around a half million in retirement funds. Yes, this depends on whether Social Security continues to be funded 20 odd years down the road, but people have been proclaiming its imminent demise for probably 30 years and it’s still around.

    I just don’t see the point in continuing to present her with that $2 million figure, which she sees as unattainable based on what she has been able to do to date.

  23. Mark Fitz says:

    Fad diets don’t work!!

    And in case that wasn’t clear, let me put it another way: FAD DIETS DON’T WORK!

    Coming from a (reforming) fatty, take my advice: focusing on certain food groups to the detriment of others won’t solve weight problems. Moderation in all things is key. And I’m not some ‘always-thin-can-eat-whatever-I-want-and-not-gain-weight’ person, I’m a bona fide fat guy. Not morbidly obese, but with a BMI of over 30.

    Since the middle of July (42 days ago), I’ve dropped nearly 18 pounds. Sure, I used to eat pizza once a week and I’ve only had it once in the last month and a half, but you can’t have weight loss without some restrictions.

    The point is to be sensible. At first, I took a mathematical approach (with the help of the free site fitday.com) – I literally counted every calorie that entered my body (holy cow, alcohol carries a lot of calories) and how much I burned daily (which fitday helps with). Take in less than you burn and voila! You lose weight.

    Counting calories, though, can be tedious (at best). About two weeks ago I decided to take a less extreme approach, and am happily on the “No S Diet” now. Check it out at nosdiet.com.

    Note I’m not affiliated with either of these sites, they helped me in my goal.

    And I had some GREAT aged Irish Cheddar last night. And probably more often than we should, my wife and I split a bottle of wine with dinner.

    I’m not suffering. Sure, sometimes I get hungry between meals. So what? You can live with being hungry. Drink more water.

    Sorry to rant, but weight loss is SIMPLE if you take the time to think before ordering that Big Mac and fries. Just eat reasonably! Don’t snack, and don’t go back for seconds.

    I don’t mean to lecture, and didn’t at all mean to go off like that, but it sounded like Sara has the same problem a lot of us do – she focuses on the latest ‘fad’ diets, which inevitably lead to failure. Failure will lead to self-loathing, which (for me) has always led to ‘giving up’.

    Create new habits! Just like being frugal with money is a challenge that pays off, so is being frugal with food. (incidentally, being frugal with food is much easier for me than being frugal with money, so if you feel like ranting back at me, feel free!).

    Thanks for the soapbox. Keep up the mailbag, Trent!

  24. Trent Hamm Trent says:

    Shevy: she was attempting to “reset” her goal to $480,000, which isn’t a safe thing to do.

  25. John says:

    What three main goals would you try to accomplish in one term as the President of the United States?

  26. Mol says:

    My best friend is considering moving and her husbands was given advice to purchase a small home that isn’t a dream home and build equity then sell it and use the profit to purchase a more expensive dream home; she is thinking why don’t we save for a big enough downpayment and just purchase our dream home. Which situation would make more sense financially and personally?

  27. Lola says:

    Thanks, everybody! Especially you, Shevy.

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