Updated on 12.29.08

Reader Mailbag #44

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. Here are some articles that include tips for new homeowners, quite a few of whom have written to me recently with questions.
Reflections On Being A New Homeowner
18 Things a New Homeowner Should Do Immediately to Save Money
Six Maintenance Lessons I’ve Learned During My First Month As A Homeowner

And now for some reader questions!

My question is about savings bonds. Friends and family have purchased federal savings bonds for our little one. Once mature, is it better to “let them ride” and continue earning interest or is it better to cash them in and invest either in more bonds or elsewhere?
– Courtney

It depends really on how little your little ones are – and also depends on how conservatively you wish to invest for your child’s education. If you’re not expecting to spend the money for fifteen years or more, the stock market will quite likely provide you better growth than savings bonds will, and you can invest in stocks easily by cashing in those bonds and putting the cash into a 529 college savings plan (Google for more details on the 529 plan for your state).

The drawback with stock investments is that they’re inherently risky. Over longer periods, stocks are usually a positive investment and regularly have returns substantially better than savings bonds – but there’s no guarantee of that positive return. If the idea of putting that money at risk bothers you, then you should stick with the savings bonds.

For our children, we have the pedal to the floor – our one and three year old have their entire 529 savings in stocks.

How does someone learn more about politics?
– Nate

A big part of the answer revolves around what exactly you want to learn. Usually, people who ask such a question are trying to gain a greater understanding of how government really works and, at the same time, figure out for themselves where they stand on most of the issues of the day.

If you’re just generally lost when it comes to any aspect of politics (or any other topic), you should never be afraid to pick up a “Dummies” book on the topic to help you get a basic grounding. Politics for Dummies is a solid introduction to the topic from a heavily American perspective, for example.

If you’re trying to figure out where you stand on the issues, look for well-written arguments on both sides of the issue. There is no issue that is wholly one-sided – always be open to other perspectives and competing facts.

My favorite book on American politics, actually, is Hunter Thompson’s Fear and Loathing on the Campaign Trail ’72. I’ve actually read that one several times.

I have recently started looking into couponing. My question is this. I have always shopped at discount stores (WalMart, Sams, etc.) and bought generic brands to save money. Do coupons really save that much money over doing that since you typically have to go to the more expensive stores to get the deals that are advertised (double coupons) and buy brand name things? Thanks!
– Tiffany

Couponing just for the sake of couponing rarely saves you that much when you’re comparing warehouse stores to other stores. Most coupons really don’t save you all that much unless it’s coupled with a truly effective shopping strategy – and that strategy varies from person to person.

What it really comes down to is whether or not it’s a cost-effective use of your time to use coupons. Can you earn minimum wage ($8 an hour in savings) during the time you spend hunting down coupons? If not, you might want to seek a different strategy.

What I’ve found that works best for me is simply sticking with leafing through the coupon sections during breakfast on Sunday mornings and clipping the ones that seem to pretty clearly be a good deal. There’s usually one or two in each flyer that stand out to me. The rest? I don’t worry about them. Given that it only takes a few minutes to do this, if I end up saving a dollar or two, it’s a cost-effective time investment for me.

When did you know that your wife was “the one”?
– Alvin

I knew pretty quickly after we started dating that I wanted her to be a part of my life for a very long time. I even told her this pretty early on.

Given that, though, I still was hesitant about things even up until a month or two before our wedding. I intended our marriage to last a lifetime, and I wanted to be sure about things before I made that commitment. I spent quite a lot of time soul searching in the months leading up to the event.

I made the right decision in the end, though.

Gas prices are so low right now but there is talk of them eventually going back up. Have you heard of any way to buy a large supply at today’s prices that you can use later after the price goes up? (Sort of a gasoline version of what we do at the grocery store when an item is on sale)
– Lois

There are no nationwide solutions for this that I’m aware of, though there are some startup companies that are attempting this, like MyGallons.

My feeling is that there’s a lot of room for success in this market if a company plans things correctly. I think MyGallons‘ model – treating it like a “membership club” with an annual fee – really can work, but I think it requires an organization that already has strong inroads at gas stations across the company. Voyager, are you listening?

Do you cut your hair differently in different seasons, or does it largely stay the same year round?
– Frannie

I keep it largely the same all year, with just a few little exceptions. I tend to let it get a bit longer during the winter to help keep my head warm, and I usually get a very short cut in late spring because my body’s adjusting to the substantially warmer temperatures that Iowa has in the summer as compared to the winter (an 80 to 100 degree shift).

I’ve used the same barber for more than a decade. Whenever I attempt to cut my own hair, I think it looks horrible and find myself returning to using him afterwards. I’m simply not very adept at cutting my own hair.

Hi! My son is 2.5 and we set up a 529 for him when he was born. I just had my second child and I want to know if I have to set up a second 529 for her, or can they share the same one?
– Shelly

You need to set up a second one for your second child, with that second child as the beneficiary. If you want to set one up before the child is born, set it up with you as the beneficiary, then change the beneficiary after the child is born. I did this with my second child and it was quite simple – it also allowed me to start contributing during the prenatal months.

If you simply put all contributions for both children into one 529, only one child will be named as the beneficiary and only that child will actually have any rights to the money.

You’re an RPG fan. What’s the best entry in the Final Fantasy series?
– “Sephiroth”

During my high school years, I played through Final Fantasy VI on the Super Nintendo roughly a dozen times, so I’d have to claim that one as my favorite.

Having said that, though, my favorite Square/Enix RPG is Chrono Trigger. It is everything I’ve ever wanted in a console RPG – great story, tons of replay value, a consistent challenge all the way along, deeply memorable characters – and it really stands out in terms of the uniqueness of the gameplay.

How much cash do you consider to be a reasonable amount to hold at home?
– Walter

I try to avoid keeping more than a few hundred dollars in cash in my home at any given time. The majority of that is spread about in a number of hiding places throughout my home.

Remember, any time you keep cash at home, not only is it not earning a return in some sort of investment vehicle (even a savings account), it’s also at risk from theft and house fire. Because of those risks, and because my local bank is literally within walking distance of my home, I don’t feel comfortable keeping a big wad of cash in my house.

Do you have any phobias?
– Sally

I have a few minor phobias that I can get past with some concentration (closing my eyes and counting works well for me). My worst phobia is flying, especially during takeoff – the first few moments of an airline flight are terrible for me.

However, I don’t have any severe phobias – nothing that would cause me to faint or anything like that.

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

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  1. Trevor - 14 Year Old Money Blogger says:

    Awesome mailbag! I certainly learned a lot and know more about you =)

  2. Mol says:

    What instruments do you play? =)

  3. David says:

    Regarding 529 plans, you shouldn’t have to set them up under the name of any children. (In Virginia at least) You can set them up in your own name and then dole out the funds when the kids need them. This is a suggested method because you can use 529 funds for anyone directly related to you, and this way if one of the children chooses not to further his/her education, then you have more funds available for another child.

  4. Adrienne says:

    David – You control 529 funds not the beneficiary so even if your kid chooses not to use education you still have control over the money.

    That said even though you could have just one account for both kids you should have separate ones becuase of age based investing. Many 529s are set to get more conservative as you child gets closer to school. If you have both in one account it will mess up the allocation.

  5. This reader mailbag was particularly interesting to me, as I am an RPG fan and am training to be a private pilot. :)

    I used to have a fear of flying. I don’t know how much of an adventurer you are, but when it is financially feasible, you should consider taking some private flying lessons. It will really help you understand how reliable planes and pilots are, and should help your phobia. After you’ve been up in a small plane a few times, commercial jets are a piece of cake.

  6. Todd says:

    I think a good way to learn about politics is through an introductory economics book. For a good introductory book – maybe check out New Ideas from Dead Economists or a similar introduction.

  7. thank you for the comments on coupons. I buy generic and coupons are rarely better than what I’m already familiar with. Some people close to me brag about saving $20 on coupons, but they spend twice as much at the grocery store than I do to feed themselves.

    It’s fine to use the coupons, just don’t brag to ME about how you’re saving money when I spend a lot less.

  8. sophia says:

    I have a question- are you worried about the volcano in Yellowstone erupting? It’s been all over the science blogs I visit. If anyone hasn’t read/heard about it, it’s an interesting read.

  9. Sunshine says:

    I have to say that my FAVORITE part of flying is the takeoff. So much so, that I always sit near the engines (my philosophy is if I’m gonna “go”, I’d rather “go” quick) so I can feel the vibration and hear the drone. It’s probably because I don’t fly much, but I get all giddy inside right before takeoff. I shut off all distractions (tv, music), stop conversations, roll up the windows and just enjoy.

  10. KC says:

    I knew my husband was “the one” about 3 months after we started dating. We were seniors in college and wouldn’t get married for another 6 years. But the whole time we just knew – there was never any doubt or lack of trust. I’ve heard someone say “Don’t marry the person you can live with the rest of your life, marry the person you can’t live without.” I think that pretty much sums it up.

    Walter – concerning cash kept in the house I keep about $120 in small bills ($1, $5, $10) in a fireproof box. The reason is when you have widespread power outages most stores can’t make change (and ATMs don’t work) so you’ll need to make transactions and you don’t want to do it with $20 bills knowing you’ll not get any change back. I also keep about $200 in twenties in an envelope on the shelf above my desk. This keeps us from running to the ATM every few days – we just take what we need and replenish it every few weeks.

    I don’t keep it in plain sight, but I don’t go to any great lengths to hide it either. I figure if someone breaks in my house and finds the $200 they’ll be satisfied and leave without ransacking the house. I used to live in a high crime city and, eventhough I was in a wonderful neighborhood, crime was always a possibility. Most crooks are opportunists and want to get out of your house ASAP. They’ll take the money and run which is better than finding the silver, jewelry, electronics, plasma tv, etc…

  11. Anne KD says:

    Thanks for the links to the homeowners articles- we’re getting a little more settled in and I can concentrate more on ways to cut down on the utility bills. Our house is all electric, and we just got a whopper of an electric bill. We have a heat pump turning on when the temps get lower than 35 degrees, the ceiling fans are spinning in the correct direction for mixing the air, bought insulating curtains and/or blinds for a couple of rooms. I think the house may not be well insulated. My husband prefers a higher temperature in the house than I do, and so far I haven’t been able to make him budge to a lower temp. Our electric bill has a section about a budget plan- my husband is leery of that idea and says it doesn’t work, while I say it does based on prior experience in apartment living. We’ve been in the house for 4 months now so the budget plan can’t really be based on a year’s worth of electric bills like it would have been in an apartment situation. We had a cold snap in December, and January/February will be most likely colder overall than December. What are your thoughts on using the utility company’s budget plan? Usually we try to pay off utility bills in full each month.

  12. K says:

    About coupons, just to make you aware, WalMart does double coupons. Also, I have found them to be useful on certain products that we use regularly and can stock up one, since many of them are “Save $1 on 2.” I make a habit of clipping the ones for products I use, and keep them until I see a sale. I only use them on brand names that we always use or if the deal is better than a generic.

    About 529’s: Our (on the way) child’s grandparents would like to help set something up for college. Both of them are very knowledgeable about investing and would prefer to do something other than a 529 plan since they find those to be a bad choice. They cite the lack of options on which funds you invest in and the relatively high fees as the major drawbacks, in addition to the ability to use them only for college expenses without a penalty. They have found that in many cases, paying taxes on a regular account is favorable to the high fees of 529’s. It seems to me as though 529’s are for people who want to save money for college “the easy way” without getting too involved with making specific investment decisions.

    Other options are:
    Coverdell: can be used for private high school, preschool, computers, and other educational expenses, although there is a relatively low contribution limit.

    Taxable accounts in your name or your child’s (UGMA): can be used for anything, ideal for people who would encourage their children to pursue an entrepreneurial venture or other alternatives to college if they were so inclined.

    Roth IRA: as long as you were careful to still save enough for your own retirement, these funds will not count against the parent or child in financial aid calculations.

    Have you done a comparison between a variety of college savings methods and determined that 529’s are the best?

  13. RJ says:

    Glad to see other’s appreciate Chrono Trigger, I still have the original SNES system + game, pop it in once in a while to remember what a good game it is.

  14. Brandon says:

    I just got a $183 dollar gas bill. My jaw dropped. Previous high bill was 78. I thought I kept my house cold. I’m going to try shutting off the heat when I’m not at home completely instead of just turning it down several degrees.

  15. jared says:

    i used to work at a gas station when i was in highschool. Small town and everything, so people had personal relationships with all their business relationships. BUT, some of the truckers would set up contracts with our branches for diesel. The agreement was that they promised to buy a certain amount (a very large amount) of fuel at a certain price, when that amount ran out, they paid whatever price it was. The major benefit to both parties was that they knew exactly how much would be spent/earned for that relationship. The trucker company could benefit further if prices went up, we’d benefit further if prices went down — but we’d benefit from having a solid relationship with that client as well. A good idea over-all — don’t know if this would work just anywhere or for anyone — looks like you’d have to have a lot of money up front to buy gas in bulk like this — but it is possible.

  16. Anastasia says:

    Chrono Trigger just got re-released for the DS! I have not played the re-release, but it’s said to have some additional content.


  17. mark says:

    you mentioned voyager and their gas card. Priceline, many years ago, had a deal where you could bid on gas. They issued you a voyager card, so it worked almost everywhere. You picked a station near you, and how much per gallon you wanted to pay, and how many gallons. You were allocated that much, if your bid was accepted, and you had 90 days to “take delivery” They gave you a “trip number” to punch into the pump after sliding your card. I made a killing on this, as it was when price started jumping the first time.

    Priceline discontinued it, unfortunately. It has been done before and I’d love to see it again :)

  18. Molly says:

    I started couponing about a year ago. Before that, we were spending between $120 and $160 at Walmart, plus at least $100 on crap. Now we spend under $150 on everything every week, but usually under $100. I think its really because I started planning our shopping lists around the sales and then making dinner based on that, instead of trying to figure out what to make without a list at all. I think its a lot easier this way too. It cuts down on our options.

    I love Chrono Trigger, and we named our cat Chocobo from Final Fantasy.

  19. Michael says:

    Your political advice makes me nervous because you aspire to a political office. I don’t want anyone who recommends a political Dummies book above me.

    Also, it’s interesting to see the Kiyosaki book advertised here. I guess I’d rather you have the money than him, since your readers probably won’t buy it.

  20. luvleftovers says:

    Sophia – If Yellowstone blows, the whole country (and probably parts of Canada and Mexico) is doomed.

    Don’t worry about something you can’t do anything about!

  21. George says:

    Savings Bonds:

    Interest earnings may be excluded from Federal income tax when bonds are used to finance education (see education tax exclusions). Restrictions apply. See http://www.treasurydirect.gov/forms/savpdp0051.pdf

    Also, savings bonds are exempt from state/local taxes, whether or not you use them for education.

    So basically, my advice is to cash them when the child has become college-aged and use them appropriately. Don’t bother moving them to a 529 after the 5-year early redemption penalty expires. Definitely cash them before they quit earning interest (30-years).

  22. Mike says:

    Hey Trent, in reply to the coupons, at BJS Warehouse you can combine both manufacturer coupons and BJS coupons they send out in lil fliers, which sometimes add up to additional savings.

    I am not sure if Costco and Sams Club do this as well.

  23. Eve says:

    If you’re worried about fees on 529 plans, see if your state offers a direct-sold plan. A direct-sold plan allows you to choose the investments, and, unlike a broker-sold plan, does not charge sales fees. This info comes from the SEC’s website: http://www.sec.gov/investor/pubs/intro529.htm

    You can find a link to your state’s plan here: http://www.collegesavings.org/index.aspx

    In my state, the minimum initial investment to start a new 529 is much larger than the minimum you can add at one time to an existing 529. If that’s the case in your state, the initial investment for the second child might be a hurdle. Especially if your children might both end up in college at the same time, I think it would be a lot simpler to keep their 529s separate. It just wouldn’t make sense to have to keep changing the beneficiary back and forth between them as they each need to withdraw from the fund. Just use a savings account until you have enough for the initial investment in the second 529.

  24. Angela says:

    Someone else may have commented on this but I don’t feel that you really answered Courtney’s federal bond question. Now I’m not 100% sure about what kind of federal bonds she’s speaking of but US Savings Bonds mature after 30 years and once they reach maturity “letting them ride” isn’t necessarily the best thing to do…if you have a $25 bond with a 2.9% interest rate that was purchased in 1978 (this is factual) it is mature now. Cashing it in today will give you $108.27….waiting till June 2009, Jan 2010, or beyond isn’t going to change that cash in value. So that said, wouldn’t it be better to cash out on that 1978 bond and invest that $108.27 in a different type of account (CD, stocks, another bond at a higher rate) than to just let that $108.27 sit there and not work for you or your kids for the future? I’m of the belief that my investments should be working for me…letting a mature bond sit idle is not working for me.

  25. The Personal Finance Playbook says:

    That looks primed to be the most useless Kiyosaki book yet.

  26. Mark Fitz says:

    Again on the 529:

    I do believe it’s possible to transfer funds from one account to another (eligible 529) without penalty – much as if you set an account up in your name and transferred to another child based on their needs.

    My wife and I just had a long discussion regarding this, as we’re planning for a second child. We decided to contribute what we could to the 529 for child #1, and plan for now on keeping that contribution the same through child number 2 (and 3?), to divvy up later. That being because while we can afford $x/month now, we can’t afford $3x/month in the future (or, at the very least, we couldn’t do that today), which would mean that child 1 gets a larger share of funds than 2 and 3 by virtue of being first.

    However, Adrienne makes a good point with regard to age-based investing. Seems we have more to discuss before child #2 makes their eventual appearance.

  27. sophia says:

    Oh, I’m not worried one bit- like I said, I think it’s interesting to read about. It’s likely if it blows- well, when it blows- the entire globe will be affected due to all the ash in the atmosphere, so we’re all going down together, right? ;)

  28. The Other Michael says:

    The Dummies books are a great place to start for many subjects, including politics. Certainly they are superior to your own suggestion, which was nothing.

  29. Lynn says:

    Walmart does NOT double coupons. If your Walmart does it’s a local thing.

    As far as couponing goes – if you line up coupons and sales right, you can get things for free to close to it. That is MUCH better than generic. I paid pennies for rice crispie cereal (brand name) when I was going to buy the store brand anyway…and got free marshmallows on top of that. I have free shampoo, the “good stuff”, sitting in my bathroom closet for when my current bottle runs out.

    Coupons, when used incorrectly, can cost you money…but when used cleverly, can net you quite a savings (and at times, overage!).

    Anyone interested should check out thecouponworld.com. I must say, I’m kind of disappointed in your reply Trent…couponing can be an amazing resource. I don’t work, therefore what I can do to *save* money is also valuable to me.

  30. Lynn says:

    Er, hotcouponworld.com!

  31. Michael says:

    @The Other Michael, I’ve posted my reading suggestions too many times in these comments. People have heard them already.

  32. Robin Crickman says:

    Got a question about small time speculating in
    gasoline “futures”. We live on a farm and, like
    most farmers, have a fuel barrel which holds a
    few hundred gallons of gasoline. I can call the
    local coop and have them fill the barrel now while
    the price is lower than it was last summer. But
    I will have to borrow the money to pay for that
    gasoline. Should I get the tank filled now? Try
    to buy as soon as we have the money to pay for the
    gasoline and hope the price stays low until then?
    Forget the whole idea and just keep buying our
    tractor gasoline as we need it? We will need to
    use the amount the barrel holds within the next
    6-12 months if the next year is like previous ones. It is hard to decide what is the best way
    to proceed here.

  33. Jennifer says:

    I like the way you included more personal questions (like about your haircut or your wife) in this mailbag. It makes things a little more interesting and lighthearted. Keep up the great work Trent!

  34. Ruth says:

    I agree with Lynn about couponing. It does take some time to organize, but considering all of the on-line resources that help point out the best deals, it is definitely worth your time. Think of it as an investment. Compare how much time you spend vs. how much money saved (especially when you get free items). Typically, I don’t spend anything on toothpaste, deodorant or shampoo and I’m using good quality products. Make it a game with your kids and you can have some fun. If you put your savings into a special account, you could use it for purchase of a family item or towards your family vacation.

  35. With respect to the gasoline prices, why not just buy a long Oil ETF or Double Long Oil ETF?
    Oil and gasoline are positively correlated and there are several low-cost options for Oil ETF’s out there.
    Personally, if you are thinking long-term (+10 years) I’d go with one of the leveraged double-long Oil ETFs. There is simply no way that oil will stay in the $45.00 range given the long term worldwide demand.
    Just my $0.02

  36. We have multiple 529 plans for our children, some in their names, some in ours. You can change the beneficiary once per year, so it really doesn’t matter as long as you are comfortable with the overall investment allocation.

    We plan to consolidate all the plans once the first one goes to college and determine how much each child will get at that point, not now.

  37. reulte says:

    I don’t think you really answered the question about saving bonds. You’re suggesting they invest in the market rather than in savings bond, but it appears that the bonds have already been purchased and given to them. Isn’t there a time limit on cashing in bonds early (i.e. a ‘penalty’ for early cash-in)? Shouldn’t they keep the bonds for at least some amount of time before cashing in? Doesn’t it depend on what kind of bonds (EE or I) they are? I am interested in the question but was disappointed with the answer which seemed a bit glib (‘cash ’em in and buy stocks’).

    I have a variety of bonds – both Series EE and Series I – dating back 10 years or so and would be interested in a slightly more comprehensive answer.

    Not to say I haven’t been investing in the stock market at this time . . .

  38. Griffin says:

    Do you have any suggestions on how to find a good attorney, and how to save on attorney services?

  39. K says:

    About Walmart doubling coupons – it is not advertized so you may want to try it sometime to see if yours does as well.

    About savings bonds… I would also like to see a more comprehensive explanation of the EE and I series bonds. I understand they are guaranteed to double in 17 years (~4.2%) but you can also buy them half price. Does that increase the rate of return or is that what they mean by doubling?

  40. Spoodles says:

    I’ve been reading this blog for a while now, but I somehow missed that you’re an RPG fan. Awesome! Now I trust your money advice even more! I disagree about Final Fantasy. It’s vii that’s the best! You’re right about Chrono Trigger, though. Best. Game. Ever.

  41. Katie says:

    Is anyone considering joining my gallons? It sounds great but I’m skeptical because it’s just starting.

  42. Erin says:

    Regarding K’s comments above – my understanding is that 529s vary widely as far as fees and the amount of control you have over the funds chosen. Utah, Iowa, and New York, for instance, are known for having very low fees in their plans. Others are known for giving more investment choices than others. Were your parents looking at just the 529 for the state they live in? Your own state’s plan might offer a state tax benefit, but not all do, and you can invest in any state’s plan. I’m not saying that there aren’t better options for some people, but I don’t think the blanket statement that all 529s have high fees and low control is totally accurate. I would be interested in other’s opinions on this as well.

  43. T says:

    Hi Trent,
    Long time reader, first time writer, and I’d like to say, you do an excellent job! My question is what if you have been married for a while, are very much in love with that person and vice versa, but the one thing that has changed about that person is her spending habits? I find myself having to be the bad guy all of the time about vacations and material things. I’ve tried various ideas such as making her write down everything she spends money on every day and the spending decreases, but after a month or so, it’s back to the same old same old. A common disagreement for example may be, I want to go on a week long Carribean vacation and she does as well, but when it comes time to finalize the trip, our savings does not allow it. So we go back to see where the plan derailed and it often ends with an average of $300 a month of unneeded items such as clothes, shoes, etc. Another example is she may go and grab lunch at a restaurant, whereas I’m brownbagging my lunch every day and even if the cafeteria at work has something that I really enjoy, I pass on it to save the money, only to come home to hear how wonderful her lunch was, which often causes me some resentment, feeling like I’m the one making all of the financial compromises, etc. I approach her on it, and her take on life is we could go at any time, so we should live life now. I should also add, we do have 401k, an emergency fund to last us about 6 months, and additional money invested in stocks and savings. Any opinions on this type of relationship or her view on life?

  44. K says:

    Erin – I live in PA so I can deduct it from my state taxes no matter which 529 plan we choose.

  45. Brad says:

    A Chrono Trigger fan…. now I REALLY need a hug. That is my all time favorite game. It’s just always struck a warm spot when I hear the name. I miss days of games like these.

  46. Lynn says:

    K – no WM I’ve been to has. =(

  47. steve says:

    @ Brandon:

    I wouldn’t recommend turning the heating system completely off during the winter. If for some reason you can’t make it back and the inside temperature drops enough, you can freeze a pipe, which will cost you about 20 times your $178 gas bill. Just knock the thermostats down to 50F (or as low as they will go–electronic ones will go down to 42F) while you are out of the house. That’s what I do. Keep bringing them lower but be aware of the position of your water pipes and make sure there isn’t an uninsulated gap in the foundation (or whatever) blowing cold air right on one–I’ve seen that in a friend’s (rental) home.

    It takes about an hour for the temperature to recover once I get home and put the heat back, but that’s alright with me.

    I also turn it down to 50 at night at bedtime until the morning. No need to heat the entire house when I can (and do) just throw another sleeping bag (or comforter) on the bed.

  48. heather says:

    I have a 14 year old step daughter who appears to be obsessed with her concept of rich and poor. She frequently makes statements about how when she’s out of school, she’s going to be “rich” and not have to worry about anything. Of course, when asked, she doesn’t have a plan in mind on how she’s going to get rich.

    She also frequently comments about how we are poor, her mother is poor and her friends’ parents are all rich. Her father and I try to gently explain that while her friends’ parents may be “rich”, they could also be in debt up to their ears, but no one would know unless they told. Of course, she insists this is not the case. Her mother does not manage money well, and before my stepdaughter moved in with us, we heard stories of her mother not having money for groceries, gas, etc. Her father and I are definitely not wealthy, yet we manage to always pay our bills on time, put a little in savings, and we are trying to eliminate our credit card debt and feel we have a decent plan in place to do so. Without giving her all those details (I don’t think a 14 year old needs all that detail) we will mention to her that we need to save up for certain things (she wants another pug dog) and we can’t just go out and buy things on a whim. She of course, has said we could “just use credit cards”, which I have to counter with an explanation as to why that isn’t a good idea. And that just brings it back full circle, and she’ll say, “When I’m out of school, I’ll be rich so I can buy whatever I want.”

    How do we get through to a 14 year old about the differences between rich, poor, and all that is in between? It’s not just black and white. And also, how do I encourage her to come up with a plan for being “rich” (I prefer having her come up with a plan for success, not just being “rich”), without coming straight out and saying becoming “rich” doesn’t just happen overnight? Which, I have said, but I need something to translate to her young language.

    I asked her how much money she thought one needed to be “rich”, and she didn’t have an idea.


  49. Brad says:

    Regarding gasoline, ETFs have really become an easy way to hedge for the public. The US Gasoline Fund, symbol UGA, directly tracks gas prices. Worried about gasoline prices this summer, but the ETF and hold it until the summer before selling it and buying physical.

    Same thing with your mortgage rates. Worried about rates going up? But TBT, and ultrashort ETF hedging against rising interest rates and the subsequent fall in long bond prices.

  50. Mol says:

    I know this has been asked before, but I can’t find the article. How do you give an index fund to your child when they’re all grown up without having them spend it unwisely?

  51. K says:

    Mol – pretty much, you can’t. You can set up a UGMA account for them, or a Roth IRA if they have earned income, but once they turn 18 or 21 the money is theirs to do whatever they want with. Even though a Roth is designed for retirement, they can withdrawl the contributions any time without penalty. You could set up a 529 or coverdell which can only be used for college without a penalty, but it stays in your name. What you’re asking is how to give a gift with strings attached. Either you give them money and trust your children to do the right thing (because you’ve taught them), or you give it to them with the knowledge they may waste it, or you don’t give it to them at all, or at least buy them something specific.

    Another alternative is to set it up in their name and not tell them about it until they are mature enough to be responsible with it. But unless you are doing their taxes for them, then that’s a little hard.

  52. Eve says:

    Mol – Put it in a trust. You’ll need a lawyer’s help.

  53. Jessica says:

    Couponing – I would love to but have to follow a special diet (gluten free) and find that most coupons for food items to not meet the standard. Our food bill is on the higher end since we need to buy alot of unprocessed food, but we eat alot healthier and one from scratch meal will usually feed us all week.

    Question – I’m in my mid thirties, and it seems that only in the last several (5 or so)years have I even heard the term emergency fund. Too bad I had not been introduced to the term earlier, or I might have one.

    I’m in the process of paying off credit card debt and starting an emergency fund.

    If a whole house humidifer would be a asset to the home and our health, should we invest now? I really do not have the cash for it, but according to my debt payoff spreadsheet, it would only add about a month or two extension to the payoff….thoughts?

  54. KTK says:

    Trent: the Simple Dollar arrives in my email-box every day, and I love reading it. I have a question: how do you start getting solvent if you are starting from nothing? We’re talking extreme paycheck-to-paycheck here! I graduated at an advanced age (38) from college last May, and haven’t been able to find a good job- I currently work for the university I graduated from, but do not have a full-time position (they’re hard to come by and it’s very competitive). I work full-time hours in my part-time position. I bring home between 1200 and 1400 a month. Right now, I’m working with no benefits, a vague promise of a full-time position with benefits in the future (not in my field, of course), and with the cloud of a massive student loan payment hanging over my head- I just got married, have a ten-year-old son, don’t own a house, own a 1991 beater, and have been trying to eliminate unnecessary expenses- but to no avail. There’s always a bill to be paid and hardly enough for groceries. My husband is a construction laborer who is laid off for days or weeks at a time with no notice, and he brought his own debts to the marriage. I am at my wits’ end and don’t know where to start. Sell the car and take the bus? Disconnect the internet and the cell phones? (We don’t have cable!) These are the only things I can think of to eliminate. We live frugally already out of necessity. I just got a forbearance on my loan tonight, after calling Direct Loan out of desperation. Please help- if you can’t, maybe you can direct me to someone who can?

  55. ontguy says:

    Have you tried the board(card) game Race for the Galaxy, if you have what are your thoughts? Its in the Puerto Rico genre of games.

  56. Christine says:

    My question: While growing up (I am 37), I learned about money, managing expenses, and saving through, for lack of a better term, observations of the “real world” – my parents always explained to me what was going on when they went to the bank, used a credit card, or sat down to pay bills every month. Now that so much of banking and bill paying is done on-line (making money far less tangible), what would be your strategies for teaching children everyday concepts about money?

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