Reader Mailbag #49

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 me what I thought of Dave Ramsey’s books, so here are my reviews of most of them.
Review: The Total Money Makeover
Review: More Than Enough
Review: Financial Peace Revisited

And now for some reader questions!

What are your thoughts on using a utility company’s budget plan?
– Anne KD

Most utility companies offer a “budget plan” where you are charged a specific bill amount every month throughout the year, regardless of the actual usage. At the end of the year, you receive an “adjustment” bill that makes up the difference between the amount you’ve actually paid in and the cost of the energy you’ve used over the course of the past year.

For the most part, these plans are just fine, particularly for people who like their bills nice and regular most of the time. The only problem comes with that adjustment period – quite often, it can be a nasty adjustment, causing you to pay in substantially more than your normal bill just to make up the difference.

If you sign up for such a budget plan, either be sure you have plenty in your savings account to cover any unexpected adjustment at the end of the year or ask for a slightly higher monthly bill. That way, you won’t have to worry about a nasty surprise at the end of the year while still getting the regularity of a budget plan.

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.
– sophia

To me, the Yellowstone caldera (read all about it!) is one of those things that’s simply so far out of my control – and the consequences of a bad event so devastating – that it’s not worth my time to worry about it one iota. The same goes for the possibility of a cataclysmic asteroid hitting the earth – it would be incredibly devastating and far beyond any one person’s ability to plan for it (unless you’re Bill Gates and can build a bunker in a mountain or something).

When I was a kid, there were a lot of predictions about a major devastating earthquake along the New Madrid fault line which, if they happened, would have pretty much leveled my hometown. My father basically took the same approach: why worry about it at all? It has a very minute chance of happening, it’s out of our control, and there’s not much we could do to really prepare anyway besides having earthquake insurance (which was just a few dollars in our area).

I think that’s the reasonable (and healthy) way to go.

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

I would hit my social network before doing anything else. Ask some of your friends, particularly those you trust and those that have good standing in the community. The advice you get from these people will almost always be the best advice you can get in your local area.

In terms of saving money, your best bet is always to be as prepared as you can before you begin using the services. Know exactly what you want, have as much information ready as you can, and have the questions you want to know ready to go before you visit. Attorneys typically charge by the hour and if you don’t have your information together, you’ll eat into that time simply due to your lack of preparation.

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.
– T

A change in spending habits is often tied to other life changes – new friends, a new career, changes in health, and so on. Has anything else changed in your partner’s life over the last few years?

The best tactic for digging through difficulties in a relationship is always rational communication. Don’t yell. Never yell. It will get you nowhere. You should also realize that if you begin to question someone’s bad behavior or flaws, they’ll often try hard to reverse it – and if they do that, admit to your flaws and say that these are things you need to work through together.

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.
– Michael

I’m assuming you’ve never heard the phrase “don’t judge a book by its cover”?

Most of the books in the “Dummies” series are actually excellent simple introductions to the topics in question and almost always point the reader towards more sophisticated and detailed works in that area. The “Dummies” books on political topics are no exception to this – they lay out the basics of civic government in America and also provide suggestions for continuing on a journey of learning.

I would far rather have someone read a “Dummies” book on a topic that they didn’t know well than read something overly complex – or even worse, read nothing at all. A “Dummies” book is a completely reasonable place to start.

Did you ever finish reading Neal Stephenson’s book Anathem? What did you think of it?
– Adam

I’m nearly finished with it – and I loved it. You have to give it time, though – Stephenson spends most of the first half of the book setting up the characters and situation and much of that can seem complex and tiring because Stephenson is fleshing out a rather complex world.

For those unaware, Anathem is a giant 900 page work of fiction by Neal Stephenson. The book is set in something of an inversion of our world – the theoretical scientists in the world lock themselves into what amounts to monasteries and live very isolated and spartan lives, and outside of these monasteries, both religion and purely secular lives thrive. What happens when the scientists are basically forced to come out of the monastery because of a global situation that affects everyone? It’s a wonderful novel.

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.
– heather

Don’t translate it at all. This is a perfect opportunity to use the Socratic method for teaching. You should lead by asking questions to determine what she is actually thinking about the topic.

If she talks about “rich,” ask her what she means by that. The same for “poor.” Ask her why she wants to be “rich” and not “poor” by her definition. Ask her why she thinks people are “poor” – is it by choice?

Let her lead and show you what she knows. Quite often, teenagers have very fresh and coherent views of the world that are largely correct but simply haven’t been aged by experience – much like a wine freshly fermented. You can provide a bit of that aging by making them consider their views a bit more.

What’s the most frustrating part of writing a blog like The Simple Dollar, with such a big audience?
– El

The biggest problem (from my perspective) is the difficulty that I have remaining part of the conversation.

In the earlier days on the site, I could post an article and then engage further with readers in the comments. This works well if you have a limited number of commenters.

However, most discussions on the site now reach into the hundreds of comments with fifty different strong and intelligent voices and, quite often, there are multiple strong perspectives being voiced. I love that. However, if I ever jump into that mix, it is impossible for it to end well. If I attempt to offer an alternate explanation for something I said in the post, I’m seen as being defensive. If I admit to being wrong and offer to change the post, I’m said to be spineless and caving and attempting to cover the tracks of my “flaws.” Even worse, no matter which path things follow, I’ve destroyed the nice ongoing conversation.

Thus, I simply don’t participate in discussions much any more. With so many vibrant voices commenting, most of the angles I can think of are well covered in most of the discussions, so I don’t really have a role to fill other than “disruptor,” which is something I don’t like to do at all.

I miss the interaction, though. I miss it a lot.

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?
– Christine

My plan with my own children is to show them how I pay the bills and keep the money balanced no matter how I do it – on paper, on the computer, on my iPod Touch, or anything. The principles behind it still remain the same – I strive to spend less than I earn, keep my bills paid, and build up personal wealth over time.

That’s really what I want to teach them. They’ll be able to figure out the technology of the moment – what’s most important is that they understand why it’s being used.

What do you and your wife plan to do on Valentine’s Day?
– Lily

My parents are coming to visit that weekend and are insisting on watching the kids while we go out somewhere, so that’s what we’re going to do. We’re going to go out for a simple dinner somewhere in Des Moines, then likely out to a movie (Milk looks like our tentative pick).

For many people, this will seem boring and uneventful, but trust me – there are virtually no evenings where we have the opportunity to leave the kids with babysitters we 100% trust (my parents) and simply spend some time out and about alone together.

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