Reader Mailbag #54

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.
Ten Steps To Financial Success For A Minimum Wage Earner
Seven Tips For Avoiding Boredom During A Financial Turnaround
How to Create A Nifty Visual Savings Goal Reminder

And now for some great reader questions!

Would it be a wise investment to put away cash in a stock that yields 6.6% currently? We have 6 months of cash in a savings account but would this be a smart move with all cash above and beyond the emergency and retirement and bills?
– JayJay

I can’t simply give a “yes” or “no” answer to this question, because it depends heavily on the stock. Clearly, if the stock is paying that large of a dividend, it’s positioned as a value stock, so you need to evaluate it as such.

Is the company stable right now, meaning there’s no big changes in growth, major company crises, or significant shifts in the businesses that the company is engaged in? Does it have a lot of competitors (if they do, that’s bad)? Does it have a long history of paying dividends? Are those dividends steady?

If the company seems quite stable and likely to continue paying a good dividend, then it’s a reasonable place to put your money. But you need to do your homework on the company before you invest.

Do you believe in spirituality?
– Trevor

I spend a lot of my spare time reading and contemplating religion and spirituality. I was really spurred into this by reading Mere Christianity more than a decade ago, and ever since then, I’ve been studying these topics in depth.

I self-identify as a Christian and spend a lot of time participating in a Christian church that does a lot of good in the local community. However, most of my spiritual exploration is done on my own, and I often come to conclusions that are at odds with what one might call mainstream Christianity.

I don’t think the answers are easy. I tend to believe that many people who absolutely subscribe to a particular religion aren’t thinking about things critically and figuring out their own answers – they just accept the answers given to them by others.

It’s a journey, one that has fulfilled me for a long time.

A year ago you recommended TurboTax. Do you still recommend that suite? I have recently entered the work-force and will be grappling with a few issues (I no longer qualify to use the 1040EZ, I have to file in two states, I made several student loan interest payments…) Which version of TurboTax do you recommend?
– ub

I use TurboTax. I have for almost a decade. It’s worked like a charm

I’ll just point out that if JD at Get Rich Slowly (a far bigger blog with consistently more comments) or Leo at Zenhabits can participate in the discussions on their blogs, so can you.
– Jimbo

It would be very easy for me to “participate” in discussions by popping in and saying things like “Good point!” and “I hadn’t considered that!” and the like. To me, though, that contributes nothing to the discussion. I know that there are reasons for doing it – it can encourage people to participate and the like – but it’s just not me. It feels like soulless marketing. Again, that’s my perspective – it’s cool with me if others choose to do it.

I put a lot of consideration into everything I write. If I put up a post or a comment, I want it to add some authentic value to the world. I’ve written entire articles and simply deleted them because I didn’t think they added enough value. To me, most comments I could make add little or no value.

As I’ve mentioned before, I typically don’t dive into the comments with valuable responses because I just disrupt the discussion going on there. Instead, I save them for future posts or mailbags – if you’ll notice, my reader mailbag each week is a direct response to ten comments or questions from the past week.

I still write The Simple Dollar for the same reason that I started writing it: I want to help people figure out their personal finance problems, nothing more, nothing less. That’s why the only book deal – out of several offers – that I agreed to was one where the book sold for only $7.95, so that people could easily afford it – if I write another book, it’s going to be done not to mine money from my readers, but to explicitly reach people who don’t even read The Simple Dollar. That’s why I run the minimum number of ads I have to run in order to pay the bills and keep food on the table – compare the number of ads here to virtually any other site. That’s why I put my content in the public domain, so that resources like community newspapers and the like can reprint my articles without concern.

Every choice I make for this site is in the interest of reaching as many people as possible with good personal finance advice and concepts. I don’t feel that trolling my own comments accomplishes that – I used to invest a lot of energy in doing it, and all it seemed to do was alienate readers and create arguments that weren’t there before.

That doesn’t mean I don’t read the comments and that I don’t participate on occasion – I still do. I just don’t fill comment threads with disruptive material or pointless material – I’m very careful with what I contribute.

what are your thoughts on the Discover credit card? Especially that deal with the cash back at the end of the year?
– Margaret

My wife had a Discover card for a long time, lured in by the same “cash back” offer that interested you. However, she gradually stopped using it and now almost exclusively uses a Visa with a good reward program.

Why did she stop using it? First, the cash back reward wasn’t all that great – it was usually substantially lower than the rewards she could get on other cards. Second, it wasn’t as widely accepted as other cards. Third, they were really intrusive with their calling, often calling us with “courtesy calls” squarely in the middle of family time in order to promote some new deal that they had.

She got fed up with it after a while and switched.

What do you do when your best is not good enough?
– Chris

Many people who find themselves saying things like this are aiming for the stars. They’re expecting to rise to the very top of their field, when the truth is that they’re often lacking the many years of training and experience that the people at the top of the field have.

One easy solution is to aim a little lower. Don’t immediately aim for the very top. Instead, set goals that are more reachable. Maybe this means adopting a new career path. Maybe this means taking on jobs or tasks that you have told yourself are “beneath” you.

Another thing that everyone should do is practice their basic skills. Work on your communication skills deliberately. Learn a new language and practice it daily. Polish your skills in your spare time in any way you can find. In other words, get better at your craft by practicing the fundamentals. Michael Jordan didn’t become Michael Jordan by playing scrimmages over and over – he would practice little details obsessively until they became natural for him.

A younger member of our extended family is facing foreclosure (as are many these days, it seems). They have consulted a lawyer (helps to have one in the family) and all possible contacts have been made with the lender. Giving the bank a Deed in Lieu of Foreclosure versus hanging on to the bitter end – which is the lesser of two evils? Having a foreclosure and deficiency judgment against their credit either way, it seems to make sense to me to stay in their house as long as possible. What do you think?
– Gayle

Is the person upside down (or close to it) in the house? That’s the real question. If the person in question owes less than what the house could sell for, then they should hang on to the bitter end. If the person owes more than what the house could sell for (or it’s close), they should try to get the bank to accept a deed in lieu of foreclosure.

Here’s the scoop: a deed in lieu of foreclosure basically means that you’re asking the bank to accept the deed to the house in exchange for letting you out of the mortgage. The bank may or may not accept it, depending on their current business state and their policies, too. They’re more likely to accept it if the person has no significant additional assets – if the person has a lot of assets, the bank almost always won’t accept the deed, since they can go after the person’s assets during foreclosure.

Do you play fantasy baseball? How much?
– FM

I usually am involved in two or three fantasy leagues a season. One of them is usually competitive and eats up most of my focus – the others are ones with old friends where we mostly goof off and shoot the breeze. In those “other” leagues, I usually just attempt to acquire the starting lineup of the Cubs with a few ridiculous All Stars added in (last season in one league, I had basically the Cubs starting lineup with A-Rod).

I also play fantasy football as well, but I find fantasy basketball to be really inaccurate, since the players that really make a team good in basketball tend not to have gaudy stats (take Shane Battier, for instance – I’d love to have him on my team, but his stat line looks awful). I enjoy fantasy baseball the most, though, mostly because I’ve been a big fan of baseball all my life.

I didn’t do this before the advent of the internet – using tools like Yahoo! Sports makes it easy and quite fun to get involved in such games.

I am considering a Target Retirement fund, but i have a few questions/concerns. I have a Roth IRA: American Century Investments Equity Income. It has recently won some awards for funds that are doing well despite the current economic situation. Do you think i should transfer it into a Target account? Should i wait? Should i just gradually move it to something more conservative as my ret. age approaches (skip the Target fund altogether)? Any help would be appreciated.
– hb

If you’re happy with your current investment and are willing to manage the transition into more conservative investments yourself, then by all means, do it.

Target Retirement funds are convenient for people who would never dig into specific investments enough to discover things like the American Century Investments Equity Income fund. Instead, Target Retirement funds are merely there to allow people to just toss their money in and not worry about the minutiae of managing the money – it automatically transitions from stocks to bonds as you approach retirement.

If you’re in tune enough that you prefer to manage it yourself with your own funds, then do it. My recommendation would be to use the Target Retirement funds as good guidelines as to what your proportions of stocks, bonds, cash, and real estate should be.

After last week’s question about vegetables, I’m wondering what you feed your kids for breakfast. Most breakfast options that kids want are really unhealthy.
– Mindy

My kids’ favorite breakfast food is oatmeal. They love the stuff, though the younger one usually makes a big mess because she insists on feeding herself (she’s seventeen months old).

If I have time, I like to make steel cut oatmeal for them because it’s more nutritious, but instant oatmeal is substantially better for the kids than most sugary cereals.

My advice, if they’re hesitant, is to jazz it up a bit. Add fresh fruit to it – blueberries, chopped up strawberries, and so on. Add cinnamon. Add a bit of brown sugar.

Most important, eat it yourself. Eat it in front of your kids and make it clear you like it. Kids are almost always more willing to try things if they see you eating them on a regular basis.

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

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