Reader Mailbag #56

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.
The Value of Cultural Literacy
My Favorite Bargain: The Free Newspaper
Wallet Hacking: Six Tactics for Modifying Your Wallet to Minimize Your Spending and Maximize Your Time

And now for some great reader questions!

I’ve heard one should have at least two months worth of salary in an emergency account. I have 6 weeks worth of vacation time that I could cash out if I was terminated in the near future. Can I count this towards my emergency fund? Or must I have the actual cash in the account? Thank you very much.
– Kathie

Think about this: what happens if your company suddenly goes the Lehman Brothers route? You likely would not be able to touch that promised vacation pay – you’d just be out on the street holding a pink slip.

Promises from your employer are only as strong as your employer is. If you’re with an extremely stable company or with the government, this might be pretty reliable, but even the most seemingly reliable of companies can go under when you least expect it.

Personally, i would view that vacation time as icing on the cake, not as part of my emergency fund.

Trent- How bout a new look to the It’s been this format for quite a while and maybe could use a change/facelift…….just a thought. I’m sure regular viewers will offer up suggestions. Peace!
– Frugal Cubicle

I’ve been tinkering with redesigns for a long time, but I’m hesitant to do one until it contributes something useful to the site. A redesign should actually improve the site in some capacity – simply moving around elements and changing colors doesn’t really serve much of a purpose except to gently annoy people who are quite familiar with the current site layout.

That being said, I do have a couple upcoming things that will make a redesign worthwhile. In other words, expect that, in a month or two, there will be some degree of a redesign around here.

Hey Trent, i was looking at some online accounts and was just wondering how come some banks and their online accounts are able to offer a higher interest rates than others do? Or is it that the banks offering a higher interest rate are doing so to lure new customers and is a such a “to good to be true” deal that you should stay away from. I’m just trying to understand how it all works. Thanks!
– Marlon

Banks, particularly online banks that are competing for attention, offer widely varying rates in order to get new customers. In effect, a higher interest rate for a few months (so that it appears high up in the rankings at and other similar sites) functions as advertising for that particular bank, helping them pick up customers.

If you’re shopping around for a bank, the biggest things you need to look for are FDIC insurance (do not put your money into a bank that isn’t FDIC insured) and a good history of customer service (which you can find out by Googling for the bank and reading what others have written about it).

I wouldn’t get obsessed about the rate of the moment, though. You’re better off looking for a healthy bank with good customer service, because rates change all the time.

What’s your comfort food?
– Char

Anything with a lot of cheese in it, actually. Lasagna. Pizza with extra cheese. Anything with a good blue cheese in it. Croque madames.

I don’t like sweets much at all and I’m not into steaks or other such things. For me, it comes back to the cheese. It’s really my weakness, and it’s probably largely responsible for every single pound I shouldn’t be carrying.

A good chunk of cheese is sublime for me.

I have a question I have been thinking about for over six months! How does a newly married couple deal with debt (even if it is the “good debt” of a student loan) that came from only one partner?
– Jamie

The answer here is communication. There is no ready made answer that’s appropriate for all couples. Instead, you need to sit down with your partner and talk about your financial situation in detail.

When you get married, most of the time your finances are more or less fused in some way or another. That debt will affect the choices that both of you make, even if only one of you is actually paying the bill out of that person’s paycheck. The person saddled with the debt will have less money to contribute to other things, so the other person will have to pick up the pace.

You guys need to sit down and come together with your financial plans. Figure out where you want to be in the future and get a strong grip where you’re at now. Talk it through. You might just find that you’re in this together more than you think.

Where do you want to be with your writing in five years?
– Cho

I’d love to have a big handful of short stories published. I hope to have another book or two published, too, culminating together in actually getting a novel published, which has really been my dream.

The big question, obviously, is what I’m doing now to get there. I’m attempting to write a short story every day at the moment. Some days I fail – other days I succeed. I save them, then reread them a few weeks later, then work on polishing the ones that still seem good. When I get a small collection of polished ones that I actually like together (ten or fifteen of them), I’m going to hand the collection to my wife and a few friends to read and shred. If there’s anything left standing after that, I’ll see about getting them published.

I have found that making myself write fiction every day is making it easier not only to develop ideas, but also to express them in an interesting fashion. It’s much easier than it used to be to develop characters, maximize word use, and so on.

What do you do when you’re tired of living cheap and want to splurge?
– Lemon

My wife and I both have a certain amount of money that we’re allowed to spend on whatever we wish each month. Whenever we want to splurge, we just dip into this money. We keep this pretty informal, though, since we’re both pretty good about not splurging much.

Give this a try. Each time you get paid, set aside a certain amount of money ($25 or $50 or so) solely for splurging. You’re free to spend it however you like, except that when it runs out, you can’t go for more. You can let that amount build up for big splurges or use it to go out a few times for drinks with your pals – however you want to use it.

Our real key for beating splurging, though, was simply discovering things we enjoy doing that don’t involve spending a lot of money. There are so many inexpensive and free things to do that are a lot of fun for us that we don’t really feel compelled to splurge on expensive experiences.

Do you believe in UFOs?
– Lucy

I certainly believe that people spy things flying in the sky that they can’t identify. UFO means Unidentified Flying Object, after all.

Usually, though, when people ask that question, they want to know if someone else believes extraterrestrials are visiting Earth. I don’t know if I believe that or not – honestly, I don’t have enough information either way to say absolutely “no” or absolutely “yes,” but I don’t rule it out as possible.

Having said that, I did witness an extremely memorable flying object when I was about ten years old. My father and I were fishing after dark on a cloudless night. Suddenly there was a round disc-shaped thing in the sky (no, it was not the moon, which was also visible). It was yellow colored and seemed to be very still, perhaps wavering just a bit. My father noticed it, too. We watched it for a long while, then it began to barely inch to the right, then suddenly it accelerated out of sight. If it were a cloudy night, I would have suspected a spotlight of some sort, but the night was clear, so to this day, I really have no idea what it was that I saw.

The strange part? My future wife was hosting a sleepover one night when she was about nine with several other girls – this sleepover would have been about four to five miles from where my father and I were at. Several of the people at that party reported seeing almost the exact same thing. It is quite likely that we all did see the same thing.

When traveling, do you think it’s better to stay at the cheapest hotel you can find or pay more for a better place?
– Lynn

To me, the “cheap” hotel is almost always out of the question. The rooms are often not cleaned well, which leaves me feeling very uncomfortable when I sleep.

If I’m on vacation with my family, I’d vastly prefer to pitch a tent and camp in a state park or a campground somewhere. It’s less expensive than a low-end hotel and I find sleeping outdoors makes me feel refreshed like nothing else.

Having said that, if I’m traveling for professional purposes, I will spend more for a nicer hotel. A good night of sleep is essential for me, and I simply won’t sleep well in a hotel where I’m unsure how clean the sheets are and the air conditioner sounds like a freight train. The risk of a bad experience isn’t worth it for me.

I have insomnia. Any suggestions?
– Lindsay

I used to have insomnia problems in high school and college, but I haven’t had such problems in many years other than an occasional night here or there when something is on my mind.

The thing that used to work well for me was a large coffee cup of warm milk with a bit of nutmeg on top. Some nights, I’d drink one cup fairly quickly and make the second one, then retire to bed with that second cup and sip it as I read something. That would usually do the trick for me.

Another thing that I found worked well was getting exercise in the morning. Seriously – it works far better than evening exercise in terms of making you tired.

If it’s actually disrupting your life significantly, though, see a doctor. There may be a larger issue at work.

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

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