Reader Mailbag #25

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 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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