Reader Mailbag #36

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. Since Thanksgiving is coming up, several people have asked for Thanksgiving tips. Here are a couple of articles to help with the holiday (and I’ll have another new one or two in the coming weeks).
Don’t Let Thanksgiving Dinner Go To Waste!
Seven Quick Tips To Make Your Thanksigiving Dinner Cheaper, Tastier, and Faster

And now for some great reader questions!

I live in Spain and, in a matter of one year and a half, I will buy an appartment (still under construction) with my boyfriend. My question is: if we empty our accounts (leaving just a safety nest of 2 months-expenses), we can pay the appartment in cash. Should we do that or take a mortgage (in which case we would have the money growing in the bank but we should have to pay the interests)?
– Artemidoros

Given that you’ll still have two months’ worth of an emergency fund in the bank, I’d pay for it all in cash. Then, as soon as the deed is done, replenish that emergency fund, getting it back up to a nice healthy multi-month cushion.

There’s almost no reason to go into debt if you have the cash to pay for a real asset like that. Even if something did go desperately wrong, you still have a big asset there, one that’s completely paid off, and one that can be borrowed against in a major time of need.

I realize that US and Canadian deposits are insured up to the amounts required federally in both countries, but if ING were to have difficulties in Europe what impact (if any) would that be likely to have here in North America?
– Shevy

It would be felt like just another bank failure. Your assets would be moved swiftly and quickly to another bank, as was the case with the recent WaMu failure. Likely, your banking functions would continue to work just like they always had after a day or two, and gradually you’d be moved to services at your new bank.

The greater worry would be the economic impact of the failure of another top-tier bank. Thankfully, I don’t believe any more big failures are in the pipeline (though I think several more small- to medium-sized banks will fail over the next few years). I think that the governments in such nations will do all they can to keep big banks from failing, because that hurts everyone – many smaller businesses rely on those big banks to keep credit available so they can conduct business.

I observed something very unethical at work. For now, I’ve been keeping my mouth shut about it, but the fact that such behavior is going on is really gnawing at me. What should I do?
– Shanda

If it’s something severe enough that it’s causing additional workplace issues – distracting you, making you distrust people you need to rely on – you need to talk to someone about it. Find out if there is a way to blow the whistle anonymously within your organization.

If there isn’t, seek out an upper management person that you trust deeply – even if they’re not connected to the situation at all – and request a meeting with them. Request that what you tell them does not leave the room and then let them know what’s going on. Tell them why you felt the need to report it, too, so that it’s clear you’re not blabbing for the sake of blabbing.

That’s the course of action that I would follow, anyway.

This year is the first year that I’ve earned a strong income in my life. I want to buy my parents something very nice for Christmas this year (a large flat panel television for their living room – Dad’s a sports fan and Mom watches a lot of movies) but your advice seems to argue against that. What do you think I should do?
– Charlie

I do not feel that a one-time gift like this, particularly to someone who has obviously had a great deal of positive impact on your life, is a bad thing.

However, there are a few things I’d want to be sure of before moving forward with a gift like this. First, it needs to be clear that this is a one-time gift, that such extravagance is not a pattern. Second, you need to be sure that such a gift would actually be welcome. Third, be sure that such a gift does not derail your own financial plans – I can certainly say that as a parent, I’d prefer that my own children keep their financial plans in good shape rather than giving me an expensive gift.

If you’re sure all three are covered, then it seems appropriate to me to give such a one-time gift to people who have done so much for you in life.

Now that the election is over, how do you feel about what happened?
– William

I’ll keep this short and sweet. The election of Barack Obama and a heavily Democratic Congress was clearly a mandate from the people. It is now their responsibility to use that mandate to bring forth the changes they’ve claimed. Having seen how Obama ran his campaign – and his very smart choice of Rahm Emanuel as chief of staff – I think he’s enough of a leader to get things done. I think his biggest challenge will be herding cats in Congress.

Will the changes be good? I honestly don’t know, but I think we’re definitely at a point where some experimentation is needed. We’re involved in two lengthy and costly foreign wars, in debt up to our ears, and facing a nasty economic crisis. Clearly, something needs to change, and I think now is the time to try out some new ideas.

I’m wiling to give President-Elect Obama the benefit of the doubt for the time being. I see no reason not to.

Now that you’re a full-time writer, do you treat this blog as a small business? Is it registered as a business (sole proprietorship, LLC, etc.)? Do you plan on expanding the Simple Dollar as a brand into other areas besides blogging?
– Your Friendly Neighborhood Computer Guy

I treat all of my writing activities as a small business with accounting kept separate from my personal finances. I regularly pay myself from my business accounts – aside from that, the finances of my writing endeavors (of which The Simple Dollar is a part) and my personal life do not touch.

Right now, I have a ton of different opportunities on my plate with regards to The Simple Dollar, many of which do involve expanding the brand to new media. I am pretty picky about what I want to do, so I’m taking my time with these choices and trying to make sure I’m making a good choice with regards to my real mission here, which is helping people talk about their money and make better personal finance choices.

You’ve talked about how you manage your time during an individual day, but how does a typical week work?
– Billy

I usually spend Mondays and Tuesdays focusing more intently on research and fleshing out ideas, Wednesday and Thursday more on actually writing, and Friday is almost entirely brainstorming.

Ideally, by Wednesday morning, I have a rough outline of at least a week’s worth of posts with all of the needed facts contained within that outline. I then usually write all of those posts on Wednesday and Thursday. I usually try to write “a week plus two” worth of articles so that I eventually build up enough to allow me to take time off without leaving you all out in the cold. Sometimes, of course, I interrupt this to run more timely articles.

On Fridays, I tend to brainstorm and work on special projects if I managed to get all my writing done on Thursday.

What does your wife think about how you manage your time?
– Sarah

For the most part, she’s very supportive of my time management. Our only conflicts really come about when my work week is interrupted in a difficult fashion.

Take, for example, this past week. On Wednesday, our home lost power for several hours during a horrible thunderstorm, then just as the power came back on, my daughter fell ill and I had to spend the remainder of the day tending to her. On Thursday, my wife stayed home with our daughter and on Friday, I spent the day focusing on her, too.

This left me with a lot of writing during the week left unfinished, and I had to make it up during the weekend. This left my wife feeling somewhat grumpy, because this took away from some of the time we usually spend together on weekends, particularly during our children’s nap time when we usually play games together.

Most weeks, though, she’s not home when I work, so my personal time management doesn’t impact her in the least. That makes things very easy when we’re all at home spending family time together.

I’ve been trying to get a grip on understanding how the economy works, but I confess to not really understanding what’s going on. Where would you suggest that I start?
– Annie

The best education you can get on economics and how the world works in a broader sense is by reading. My suggestion? Start with a subscription to The Economist and set aside a half hour a day to reading it intensely at first.

What do I mean by “intensely”? I suggest reading an article in there (Economist articles are very brief, but each issue has a lot of them) and marking down anything you don’t fully understand, then turning to Wikipedia and looking these terms up.

Hop around the magazine and pick out articles at random. I suggest picking one article from each section of the magazine for starters. Read each article you tackle intensely, though, and eventually you’ll start assembling some pieces.

My biggest regret with my time is that I don’t have more hours to spend in focused intense reading like this. There are many, many areas that I’d like to study with such vigor, but there are only so many hours in the day. In a given week, I try to get through the current issues of The Economist, BusinessWeek, and The New Yorker in this fashion, along with the current issue of one of several monthly magazines.

I spend roughly three hours a day reading, believe it or not, and I wish I could read more than that.

Do you have any video game picks for the DS or Wii this Christmas? My “son” wants to know what games to ask for.
– James

Your “son,” eh?

Sticking strictly to new releases, here are four games I’d suggest for gifts for the Nintendo DS this year: Castlevania: Order of Ecclesia (side-scrolling adventure), Chrono Trigger (remake of the best console RPG ever made), N+ (side-scrolling button-smashing action), and Disgaea DS (strategy).

For the Wii, I’d do one thing above anything else: get that console hooked up to a Wi-Fi connection (you can do this if you have a PC with broadband quite easily) and get a couple Wii Points cards. The best new games for the Wii are ones you can download via their online service. Check out World of Goo (the best puzzle game I’ve played in years), Alien Crush (a gorgeous and very fun pinball game), Tetris Party (Tetris which you can play online against others), and several others are all worthwhile.

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

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