Reader Mailbag #35

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. I’ve received quite a bit of chatter about video games lately (probably because winter is coming on), so here are some of my best posts about smart shopping on video games.
A general plan for cutting video game spending
How some video games are actually very thrifty purchases
A Wii buyer’s guide

And now for some great reader questions!

Between my husband and I, we have 3 cars (2 SUVs that get roughly 19MPG and a small 2 door car that gets about 35 MPG). All three are completely paid off. I’ve been thinking for a while about whether it would make a big difference financially to go down to 2 cars. The question has become, which car would we get rid of? Or, do we trade in 2 and get one new one? We live in Wisconsin and both commute (my husband’s drive is roughly 35 miles round trip and mine is roughly 50 miles round trip…unfortunately we travel in opposite directions, so carpooling is out of the question), so having vehicles that handle well in snow/ice is vital. I have the longer commute and currently drive the 35MPG car for as long as weather permits….
– Cathy

You probably don’t need three cars. You’re paying for insurance and license on all three cars, after all, so you’re paying good money for one car to just sit there.

I’d probably stick a “for sale” sign in the window of one of the two SUVs and see if you get an offer. If you don’t, wait until one of the three vehicles begins to show problems, then trade two of the vehicles in on a replacement.

Who are you going to vote for tomorrow?
– Levi

I believe I could actually get in trouble for saying, because I’m going to be a poll worker tomorrow. I like to volunteer to do that, because it’s a great opportunity to meet a ton of people in the community, shake some hands, and ethically support the voting process. I’m about as non-partisan as a person can be, as I’ve caucused for both parties at different points in the past. I’m one of those theoretical “swing voters,” I guess.

I will say I’ve already made up my mind on who I’ll vote for for President. I’ll also say I’m voting a mixed-party ticket, and there’s one vote that I haven’t made up my mind about – the state representative from my district. In that election, both candidates have come in person to my house and answered several questions that I’ve asked, plus they both have strong points that they’re in favor for. I’d like to vote for both of them, actually.

Please, go vote. Take some time today to learn about the candidates (most of you have probably already made up your mind about the President question, but look at your Senate race and House race). Don’t just vote party lines, either – actually look at what the candidates stand for. And tomorrow, vote! I’ll see you there (at least if you’re in my precinct)!

I’d like to start a home daycare. Home-based business books advise consulting an accountant, but I’ve never done so–I’ve always done my own taxes and checkbook-balancing. I’m unclear when I should contact one, and the best uses of an accountant going forward. What can I do myself, and what should I leave to the professionals?
– therov

I asked a friend who runs a small business and he said that his business hires an accountant for about five hours a week to help keep the books straight – you honestly probably wouldn’t need that much. He suggested just calling around to a few accountants and ask them how they could help you. They should be heavily involved at first, helping you set up a system, then back off and let you do most of the grunt work, only stepping in to audit, help you with problems, and help you with taxes.

That makes quite a bit of sense, actually. You’ll likely wind up using an accounting package like Peachtree or QuickBooks to help you keep track of this stuff, with an accountant only stepping in when there are problems. Good luck with your business!

Have you always posted 2 articles a day (1 on weekends) or when you first started was it more erratic?
– Nate

I used to post quite a bit more, but the articles were usually shorter. I decided to slow down so I could write articles of higher quality.

I’ve always stuck with a schedule, though. I find that sticking with a tight posting schedule keeps me from slacking off. I know I have to get articles finished and up by a certain time, and that keeps my nose to the grindstone.

I highly recommend that new bloggers try coming up with a schedule. Try a “three posts a week” schedule – one every Monday, Wednesday, and Friday. Make that schedule paramount, and you’ll find yourself working to make it and becoming more consistent, too.

I graduated from college with a bachelor’s in May of 2006 and I will be graduating this fall with a Masters’ degree. I find myself in the hunt for a job and as I’ve been searching, it occurred to me that I never took any time off. I’ve been in school continuously since kindergarten without any breaks.

I’m considering taking some time (maybe a month?) to travel. I live at home so I have no rent payments. My only debt is a monthly car payment and a relatively small credit card balance. I have some money saved up (a few thousand), but it’s not a huge amount and it makes me feel comfortable to have it in the bank.

I’m trying to decide if taking the time off before throwing myself into a career is worth it. I fear I may not have this opportunity again for a long time! What do you think?
– Lauren

Absolutely. One month? Don’t question it. Go and do something deeply personally fulfilling.

I start to question it when people suggest traveling for a year or so after college, but a trip for as short as a month, especially if you can afford it, can be a valuable break before you get started on your career.

Work hard before you leave to get a job lined up, though, so that when you get back, you can walk right in the door and get started. That means spend a chunk of your last semester really pounding the pavement for work.

I live in Egypt and I just can’t get it why in the US there is always ads saying “retire early”? why would a person want to retire as long as he still have the ability to work and produce?
– Reem

I think the biggest reason for ads like that is that many people aren’t particularly happy with their jobs. I know many people who chose to do something they really didn’t like in order to earn a little bit more money.

The end result is that people often have plenty of money, but are left unhappy with their career, and that’s a perfect target for an ad that talks about retiring early. It translates that extra money into a wish to be free of that career they don’t like.

The fact that such ads exist are evidence of this phenomenon, and it’s why I encourage people to choose a career they actually like or are passionate about right off the bat.

When they say “Americans are saving x% of their disposable income” where x=depressing, does this include contributions to a 401k (or similar)? Does this include employer matches to a 401k(orsimilar)? Since most definitions of ‘disposable income’ are roughly equivalent to ‘what you take home in your paycheck,’ how do you factor pre-tax savings into this? How can one calculate their own savings rate to see how they compare to the rest of America?
– waldo

There are a lot of different ways to calculate that savings rate, and there’s no “standard,” really. Quite often, when you see negative savings rates quoted, they’re using a method where they take the total amount of money saved in a year by a person, then subtract the acquired debt from it.

I don’t put a whole lot of weight into that number. I’d rather see, honestly, the average change in net worth adjusted for changes in the stock market each year. For example, I’d bet that 2008 (after adjusting for the stock market dip) would be a pretty good year for net worth increases, since people are buckling down.

Are you ever afraid of revealing too much personal information on The Simple Dollar?
– Ginny

In terms of just me, I don’t mind that much. I’ve revealed a ton about myself on The Simple Dollar and a lot of my friends and relatives have read it. I’m quite sure that most of my friends and relatives know far more about me at this point – and I don’t really mind, to tell the truth.

I am much more nervous about revealing information about others. I usually tend to do lots of little things to blur exactly who I’m talking about when I talk about friends and family members so I don’t “out” anyone on The Simple Dollar. It’s not fair to them for me to write about their money issues on a blog with several hundred thousand readers a month. So I usually change names and change some ancillary details to protect their privacy. This does include my wife and children and issues relating to them.

My privacy? No big deal. The privacy of others? It’s not fair of me to violate it, so I balance the need to relate good personal finance advice with their specific privacy.

What individual stocks would you buy right now?
– Annie

I don’t believe in market timing, especially in terms of buying individual stocks. I would buy individual stocks if I believed in the company, and I’d hold those stocks until I either needed to sell them or I stopped believing in that company. The state of the market doesn’t matter, really. If I’ve chosen good companies to believe in, they’ll be fine in the long run.

I usually encourage people to buy broad-based index funds, which basically allow you to buy a tiny sliver of tons and tons of different stocks all at once, and then effectively ride the market as a whole instead of an individual company.

Do you actually tithe 10% of your income?
– Fred

I don’t automatically give 10% of my income to the church I attend. My wife and I give to a variety of charities and among those charities is the local church, which does a lot of great work in our community. I view supporting the local food pantry or Habitat for Humanity or the public library as tithing, since they’re in line with helping the poor and disadvantaged.

We also view giving our time as a part of tithing. I view it as my personal obligation to donate my time to different groups. I voluntarily serve on committees and often give my time freely to other community efforts. That, to me, has as much value (or more) than tithing a few dollars.

I don’t believe that an automatic 10% tithe without thought or careful consideration is even a good idea. Instead, I believe each person should give what he or she has decided in their heart to give, not reluctantly or under compulsion. Don’t give because you think you have to – give because you want to see a good deed done.

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