Reader Mailbag #50

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.
Investing in Yourself: Mental and Spiritual Health
Is Success a Choice?
The Five Ps: Breaking Down Big Dreams Into Little Steps

And now for some great reader questions!

When shopping for a used car do you think it is better to focus on a younger car with higher mileage or a older car with lower mileage?
– Elizabeth

Older car with lower mileage every single time. The age of the car isn’t really that important – what’s more important is how much wear and tear the car has faced over time.

I’d far rather own a 1970s model car with 20,000 miles on it than a 1990s model car with 80,000 miles on it.

Lost has been crazy so far this season. What’s going to happen next?
– Locke

First, I’m pretty confident now that every significant question ever raised on the show is going to be answered. They’ve been doing this pretty effectively this season so far, even addressing how Danielle got to the island (something I thought would be never mentioned again). I think this will continue. Beyond that, here are three predictions:

+ The time skipping is finished after Locke turned the wheel. Whatever “time” the people on the island are at now is where they’ll stay. I think it’s going to be in the 1980s when the Dharma Initiative is in full swing (which is why the season opened with Daniel working with Dr. Candle).

+ Locke will come back to “life” when his casket reaches the island, but it’ll be a strange sort of “alive,” much like how Christian Shepard is now.

+ This very next episode will feature a plane from Ajira Airlines landing on the island with at least some of the Oceanic Six on it.

I’ve been calculating my networth, and I was wondering. Is there a rule of thumb for guesstimating how much your cars value depreciates each month?
– Mol

I use a really simple formula for doing this. First, I find out what the car was worth when it was new. Then, I take the mileage of the car, subtract it from 125,000, and divide that by 125,000. I then subtract $5,000 from the new car cost and multiply it by the mileage number. If that’s less than $1,000, I mark it up to $1,000.

What does this do? It basically says that the car immediately goes down $5,000 in value when it is bought, then decreases in value steadily until it reaches 125,000 miles.

Here’s an example. Let’s say I have a car that’s worth $25,000 new and has 75,000 miles on it. (125,000 – 75,000) / 125,000 = 0.4. ($25,000 – $5,000) * 0.4 = $8,000. So, I’d figure the car is worth $8,000. It works as a thumbnail, at least.

What is your opinion on engagement rings? I plan on proposing to my gf very soon – I am in my mid 20s, have no debt, a substantial emergency fund and a monthly income (after tax) of over $5,500. Do I really need to spend the 3 months of salary (ie over $16,000!) that most people/websites seem to be recommend??
– Jason

My opinion is that you should talk to the lady you’re going to be engaged to and find out what she wants. Some women LOVE the big ring. Other women would prefer you saved most of that money for a house or another major purchase in your married life.

My wife wanted a very simple ring. She saw no reason at all for anything complex. Another friend of mine is so proud of her ring that she almost obsesses over it. Neither perspective is right, but you need to know what perspective your partner has before making such a huge purchase.

What is your advise when one spouse wants to take control of a huge debt and work at paying it off (by the snowball method) and the other doesn’t agree and has no other plan? We are drowning in debt and my husband will not help me–he just pays the minimum payment and sometimes sends a little extra. We are also in our fifties and I worry about the future.
– Lara

Again, communication is the big key here. You need to sit down with your husband and talk through some things. When do you plan to retire? At what level of lifestyle do you plan to retire?

Don’t worry about the actual debt snowball. Just sit down and figure out what your real shared goals are. Then, go through your financial state and figure out how you’re going to get from here to there. Again, don’t push the snowball. You need to gently – very gently – lead the horse to water here.

Don’t put it in context of money. Put it in context of your big goals and dreams together. Running up the credit card begins to seem silly if you’ve started envisioning things together.

I always seem to overrun when doing errands and hence end up really hungry in town. Aside from taking a packed lunch, what is the best way to eat something for cheap? Our town has supermarkets as well as Subway, McDonalds and the chippie (I’m in England) but getting bread & cheese or meat plus juice works out almost as expensive as just going to Subway and spending £6! I am reluctant to buy just crisps or a chocolate bar for about 50p because they won’t be filling for more than 20 minutes, if that, and have no nutrition at all. Any suggestions?
– princess_peas

Don’t buy crisps and chocolate. Instead, look for foods that are easily transportable, relatively healthy, and provide a sustained nutritional and energy boost. Dried fruit is a good option. Granola bars are another option, as is beef jerky or other, similar dried meats.

What’s nice about things like these is that you only need to eat a little to sustain you, they go well with water, and most of all, they preserve very well in the car or in a pocket until you need them.

I usually keep a few granola bars in my glove compartment for just this purpose, actually.

When figuring your net worth percent change, how can you handle the switch from a negative net worth (or net debt as you say) to a positive net worth?
– Nate

During the period where that transition occurs, you can’t really calculate a worthwhile percentage change in your net worth.

Another approach worth considering is to simply figure the percent changes in your assets and the percent changes in your debts and not worry about the actual percent change in your net worth.

I actually do all three numbers. I find that the change in assets and the change in debts together provide at least as good a picture of one’s personal finance health as the change in net worth.

If you could go back in time and watch any historical event, what would you want to go back and watch?
– Mitch

If you’re looking at all of time, I’d go back to the start of the universe and see what’s there. Where did this all start? Was there a “big bang” or has this universe just always existed?

If you’re looking at just human history, I’d want to go back and observe the last year or so of the life of Jesus, as well as the year or so afterward. I’d like to see what really happened, rather than relying on the retellings of retellings that we rely upon for knowledge of what happened. The events in that area at that time have had an incalculable impact on our world.

How many credit cards do you carry when you leave the house? Given identity theft risks, I’m wondering whether you have a wallet full or not.
– Eliot

Most of the time, I just carry two card, my Citi Driver’s Edge card and my Target Visa card. I also have an Amazon.com Visa, but it stays at home since I only use it for purchasing things off of Amazon.

I do consider having credit cards in your wallet to be an identity theft risk. I often make a conscious effort to keep tabs on my wallet all the time when we’re out and about, just to make sure it hasn’t been lifted, and I carry it in my front pocket whenever I’m somewhere that makes me cautious.

What is your greatest fear?
– Sammy

My greatest fear is not being able to be there for my kids as they grow up. It fills me with more concern than anything else in my life.

I have always had this deep fear that I’m not going to live until I’m very old. I think it started when I was young, when I had a ton of medical problems all throughout my childhood. I believed through most of my late childhood that I probably wouldn’t live to be as old as I am now. Now that I’m thirty, I often am filled with a sense that I’m not going to live or be fully healthy for much longer.

I really have no reason for this. I eat pretty well (especially recently), I’m active and productive enough to do a ton of writing each day, and I’ve always been there for my kids and my wife. But the worry is still there. In fact, it’s been so bad at times that I’ve recorded videos for my kids to watch later in life if they grow up without me.

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

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