Reader Mailbag #44

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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