Reader Mailbag #31

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. One reader asked about books on parenting and money, so here are three reviews on such books I’ve done in the past.
My review of Make Your Kid a Millionaire
My review of The First National Bank of Dad
My review of Young Bucks

And now for some great reader questions!

I am buying my first home this month and will qualify for the $7500 tax credit/interest-free loan. Even though I don’t need it, would it be a good idea to take it anyway and invest the money? Or is there some catch I haven’t realized?
– Sara

If nothing else, it’s not a bad idea to take it and just sit on it. You could in theory take the loan, park it in a 3% savings account, and pay back the $750 each year. At the end of ten years, you’d have $1,481 in the account in interest – free money. Of course, this requires willpower – you have to just let the money sit and not touch it.

It can also be a very convenient way to have a nice emergency fund. If you do it that way, you only have to replace $750 a year – about $15 a week – and you’ll have a $7,500 emergency fund. Of course, you’ll also have to pay back any emergency expenses, too.

The purpose of it, of course, is to allow you to “fix up” a house without any interest or tax penalty – it’s an encouragement to buy a home. If you have a specific home improvement, particularly one that fixes a glaring problem, that can also be worthwhile.

The problem with taking such a “loan” without any purpose is you often wind up feeling compelled to spend it without any real reason. If you have willpower, then you might as well do something like the above, since there’s no penalty for doing so.

Were you frugal when you met your wife? Or is it something you became interested in after….and how did you meet!?
– Crystal

I met my wife in grade school, actually. I actually wasn’t close to my wife until high school. In grade school, I used to fight with my future wife’s best friend on a fairly regular basis, though.

Since my interest in frugality mostly took off in the last three years (as I talked about in my mini-biography, it was well after I met her.

Is there a way to tell an employer, “No, I don’t want that promotion – I’m happy with the position I’m in now” without coming across as an apathetic slacker?
– Johanna

Candor rarely hurts you. Go to your boss and flat-out say that you love your current job just as it is. It makes you fulfilled, and the risk of losing that fulfillment even for higher pay isn’t a trade you want to make.

If you’re really wanted in that other position, you’ll likely receive an even better offer. But that decision is up to you.

Question for the next mailbag: What is your proudest Simple Dollar moment? You’ve received a lot of media mentions, surpassed some pretty big subscriber/traffic goals, etc. I’m curious which Simple Dollar “moment” you are most proud of.
– Frugal Dad

My best moment, for my own enjoyment, was my interview with Amy Dacyczyn, the author of the 300,000+ subscriber Tightwad Gazette in the 1990s. That newsletter, in a lot of ways, broke the ground that The Simple Dollar walks in now.

It was special for me because it turned out that there was a ton of overlap in our writing experiences, even though she wrote a print newsletter and I write mostly online. I probably felt more of a kindred spirit with her than with anyone I’ve ever talked to about anything related to what I do.

my husband has his own service-based business with no employees and very little capital involved, netting $20-30K/year. As he has been starting up over the last couple of years, we have had no trouble keeping careful track of his income and expenses from this business separately from our other income and expenses. But he doesn’t have a separate bank account or credit card for his business. Last week his father expressed shock that we were “mingling” our funds in this way. Do you have separate accounts for the Simple Dollar vs. your personal accounts? What are the pros and cons of starting separate accounts for a small business?
– Elizabeth

The reason that such sole proprietorships and small businesses often have separate accounts is for the accounting you’ll have to do to keep things straight and to file your taxes correctly. If you actually form a LLC or something like that, you’ll keep your business income completely separate from your personal finances simply to keep the accounts of the LLC straight – you’ll just pay yourself out of the accounts of that LLC.

I think if you’re running anything more than a very simple sole proprietorship, it’s useful to have a separate business account. I think the business you describe is definitely large enough for that.

How often do you weed your garden and yard?
– Anne K.

During the summer, we did both on Saturdays, providing that the weather was clear. As fall has started to come in, we’ve not had to mow our yard in a few weeks and the garden is largely dead (except for the oddly thriving marigolds, which are utterly enormous and dominate about a third of the garden). In a week or two, we’ll winterize the garden – pull most of the stuff, spread compost, and till it in.

I will be getting a bonus of about $2500 (maybe more) for Christmas/End of year. I could use this to pay off debt or contibute to my IRA. I haven’t contributed to my IRA all year and feel like maybe I should do that, but would love to use it for my debt too. What to do, what to do? What would YOU do?
– Bobbi

If my normal retirement savings was in place without the bonus, I’d use it to pay off debt. So, the decision depends entirely on your other retirement savings. Are you saving a significant amount for retirement in a 401(k)? You should be saving at least 10% of your income for retirement.

If you’re not otherwise saving for retirement, fund the IRA. Otherwise, pay off the debt.

Have you ever considered hiring an assistant to help with The Simple Dollar and other endeavors? Just to deal with small matters?
– Fred

I’ve thought about this quite a bit and I even attempted to train someone to filter my email and moderate comments, but it ended up being more work to train the person and they were approving some very suspect spam comments.

Part of the reason that good discussions go forward on here is because I quietly moderate them with some care. I’m at least somewhat concerned that these conversations would fail if I farmed out moderation.

So, I’ve considered it, but I basically decided against it.

I have a question – Now that Wachovia has been bought, should I keep my checking account there? Is there any way to know how things will change with the purchase?
– Robin

It looks as though your Wachovia account will eventually just become a Wells Fargo account. You’ll have to decide for yourself if Wells Fargo is the bank you want. Does it provide the services you need without fees? That’s your own personal call, but if you don’t like Wells Fargo, now’s the time to change.

If you were back in college right now at age eighteen, no children, no anything, what would you do? What would you major in?
– Andy

I’d be involved in politics. I was much more apathetic about politics when I was originally in college. Since then, I’ve gradually grown more and more passionate about public policy, the process of government, and the mechanics of polling.

All of that would likely push me into a career of political science. Not only does participating excite me, so does studying government and evaluating better ways to run government. If I were to start over, I think that’s the path I would follow – I’d major in political science and get involved in political groups.

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