Reader Mailbag #52

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.
I’m 20 Years Old and Have No Debt: When Can I Retire and Live off My Investments?
Seven Ways To Save Money While Cooperating With Your Neighbors – And How To Get Started
Is Not Spending Money Bad For The Economy?

And now for some great reader questions!

Why is growth so important? Every company is always talking about ways to grow their business, looking for new investors so they can grow into new markets, etc. Why do they need to grow? If they’re in the black, why can’t they just keep doing what they’re doing?
– imelda

It’s pretty simple, actually. Publicly-traded companies – those that have issued stocks to the public – are beholden to their stockholders. The stockholders have purchased those stocks with the intent to earn a profit, after all.

There are two ways to provide value to stockholders: paying out dividends or driving up the price of the stock so that it can be sold as a profit. Typically, very stable companies pay out dividends, but, quite frankly, a stable quiet company that pays stable quiet dividends are fairly boring. They don’t get the headlines. They don’t get the attention.

The other route – the one that gets the press – is the growth strategy. If you make the company grow rapidly, the stock value will grow rapidly as well. That’s because a share of stock has a direct relationship to the overall value of the company – if the value of the company goes up, the share usually follows. Thus, many companies shout loudly about their growth strategies in order to drive up that stock value, making the shareholders happy and giving the talking heads on CNBC something to chirp about.

We’ve all absorbed your advice on how to spread the word about our respective blogs when getting started. As a more “established” blog, do you have any other methods you employ to market your blog?
– the weakonomist

To be honest, I’ve never really actively marketed The Simple Dollar aside from occasionally submitting articles to social bookmarking sites.

Instead, I focus hard on writing content and little else. Every time I post an article, I’ve not only thought carefully about what the point of the article is (what sort of useful idea is this conveying), but also who might read it. Is this article one that regular readers will really enjoy? Or is this one that will appeal more to people on social bookmarking sites? Maybe it’s one that will just show up well in Google search results, bringing in readers that way.

It’s all about good content that people want to read. A good product is the best marketing you can have.

Back in my high school classes I learned that the energy needed to start up something is more than what is required to keep it running. Following this logic, is it cheaper to turn lights on and off as I enter and leave the room or to leave them on?
– Jessica

The amount of energy needed to fire up a light bulb is negligible. In simplest form, the light you see is a reaction to the presence of electricity, not a process that starts because you flip the light switch.

It is always worthwhile to flip off the lights when you leave the room for more than a minute or so. The only reason why it’s not useful to flip the switch every time is that each on and off degrades the bulb a bit, leading eventually to the bulb “blowing” and requiring a replacement.

How do you find the books you review?
– Lily

I do a lot of things. I look at the Amazon pages for books I’ve liked and look carefully at the books that are described as “similar.” I use the bibliographies of books I like. I listen to suggestions from readers. I also accept books that publishers send me spontaneously, though I often don’t review them (mostly because they tend to be repetitive).

What I really look for is a book that offers an angle that I really haven’t addressed before. I’m intrigued by books that teach me something new or give me some ideas I haven’t considered before. If I read a book that really does nothing for me, I usually don’t bother to review it.

What should I look for in a condo or townhouse that will make a significant difference in deadening neighbor noise? Or are condos basically the same as apartments, in which case I’m out of luck until I can afford a house? I’d really like to hear others’ experiences and advice before I take on a 15- to 30-year debt!
– Dru

For the most part, you’re out of luck. If the noise is excessive and a public nuisance, you can obviously follow up with law enforcement, but most apartment noise is completely reasonable, even if it is annoying.

Your best bet is to look for thick-walled condos. Test the noise level that comes through the walls, if you can. Take a friend with you, have them tour one condo while you tour another, and have them shout loudly. See if it bothers you – or if you can even hear it. If you’re annoyed by a single person shouting, then the walls are too thin and you’re going to be annoyed by pretty much any neighbor.

I am planning on buying a Nintendo DS soon and was wondering if you think the DSi is worth the wait or higher price? I’ve heard the web browser will be improved dramatically.
– Sarah

For those unaware, the DSi is the upcoming replacement for the Nintendo DS Lite that has been on the market for a few years. The DSi costs $40 more and loses the ability to play old Game Boy Advance games, but it offers quite a few new features: a built in web browser, a digital camera, a larger screen, a built in mp3 player, and the ability to download games wirelessly, none of which were included in the original DS.

To put it simply, if those features are worth $40 to you, then wait. If they’re not, get the DS Lite.

I will say that I’ve played with my DS Lite for hundreds of hours and it’s quite beat up. It also has pretty poor battery life at this point (an hour, maybe less), so I may upgrade to a DSi in the future simply because of battery issues and a very scratched-up touchscreen. Having said that, I will wait until the DSi has been out for a while before upgrading so I can see if there is any compelling DSi-only software.

If you are participating in 401(k) with your employer, and if you are not maxing it out at $15500, can you open an IRA or a Roth IRA by yourself. My employer doesnt offer Roth options and I am more interested in that.
– Saagar

You can participate in a Roth IRA regardless of what you’re doing with a 401(k). You can max out the 401(k) and, if you’re eligible for a Roth IRA, max that out as well.

My suggestion is to only invest in the 401(k) up to the point where you’re getting all of your employer’s match, then fund a Roth IRA. If you still want to save more for retirement, you can put more in the 401(k), but in most situations, a 10% contribution to a 401(k) plus a fully funded Roth IRA should be more than adequate for retirement.

What software do you use for computer backups? I am currently doing automated backups nightly using EMC Retrospect (it came free with my external drive) but would rather use an open source program if a good one is available. I’ve looked through your excellent lists of open source software but didn’t see anything for backups.
– Cynthia Grant

I use a Mac, so I use Time Machine for all my backups. It’s included as a part of Mac OS X. Basically, all you have to do is plug in an external hard drive and it works like a charm.

A friend of mine who uses PCs exclusively swears by Carbonite. I have never used the service – or any PC backup service – so I can’t comment either way on it other than to pass along my friend’s recommendation.

When I used a PC exclusively (a few years ago), I used to just back up my Documents directory to a memory stick at the end of every work session. It was clumsy and manual, but it did the trick.

I am in Canada and Capital One credit card just informed me of a new service that they offer. For $15 a month, they can keep track of our credit card as well as our financial situation with the help of Equifax and Trans Canada ( i think ) bureaus. As well as identity theft. We had it for 3 month but I hated paying $30 a month for this service. Would you recommend it? Or is there something else better that I have not seen? I have it for free with my CIBC bank account, but I would have to look into the identity theft part. Is this a ploy for more money to the cc people?
– Lynn

I generally do not think that credit monitoring services offer enough benefit for the fee that you’re paying, but if you’re strongly worried about identity theft, they can be a worthwhile investment solely to put your mind at ease.

In the United States, at least, I usually encourage people to visit the FTC’s credit reporting service, where you can request a copy of your credit report from each bureau each year. If you do these on a four month cycle – one from Experian in January, one from TransUnion in May, and one from Equifax in September, say – you can keep strong tabs on your credit status.

I think a good way to learn skills around the house is to volunteer with Habitat for Humanity. There are projects around the country and you can help out throughout the building process. Not only do you develop the skills, but you help a great cause as well!
– Seth Rowland

This wasn’t really a question, but instead a brilliant comment that I felt was well worth repeating.

Habitat for Humanity is an incredible charity. Not only does it directly benefit people in your local community that actually need housing help, it doesn’t involve just throwing money at the problem. You’re actually building something tangible that can actually be used for the purpose intended.

Not only that, volunteering for Habitat for Humanity can teach you a ton of carpentry, plumbing, and home repair skills. You can easily learn how to install a toilet, how to hang a door, and countless other little useful skills that you can take home with you and apply in your own life, saving you the cost of having to hire a repairman for those tasks.

It’s a great way to volunteer your time – and you learn something valuable in the process. That’s a great way to spend a Saturday, in my opinion.

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

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