Reader Mailbag #80

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.

I have a question about savings and student loans. I am in graduate school and working on an emergency savings fund while paying off a student loan (deferred but accruing interest). Presently I am putting only a minimal amount towards the loan ($50/mo) and the bulk to my emergency savings ($950/mo). My plan is to get to the $6000 mark in the emergency fund, then apply the full $1000/mo to the student loan until its gone, then to start investing in an IRA. The catch is that due to funding I will take a pay hit in September 2010 and will only have ~$200/mo. to save.

Is my plan sound? Should I try to put money towards all three at once or is in sequential order best?
– Christina

I think doing things sequentially like you’re doing is sound. It’s better to work towards one goal than to split your efforts among a bunch of goals – you’ll have to wait a LOT longer to get to success if you split your efforts.

Having said that, though, I would actually go ahead and start that IRA now. Since you’re a student, a Roth IRA is probably the best option for you. I’d contribute $100 a week towards that, then put the other $600 a month toward the emergency fund and not even worry about the student loan. Once the e-fund is funded, take that $600 monthly and channel it toward the loan.

My only question is the reason for the $6,000 emergency fund. I assume it’s calculated based on how you spend money. Is it intended to provide a certain number of months of living expenses? My guess is that it’s for two or three months, depending on how you live.

Have you read the South Beach Diet book? It’s a good read even if you are not ‘dieting’. With your interest in food and nutrition (and reading) I’d highly recommend it.
– Mol

I’ve read a lot of diet books, many of them having conflicting advice.

In the end, the only pieces of human nutrition advice that seem to be consistent is that you should simply eat more vegetables than meat and to eat in moderation. Once you get much beyond that, the advice is heavily contradictory and confusing at times.

Lately, my interest in books about food tends more toward the art of preparing it (like Ratio) or where it comes from (like The Omnivore’s Dilemma). I don’t tend to bother much with books that provide a “plan” for losing weight, especially one supported by a lot of frozen foods sold in supermarkets.

How did you teach yourself how to cook? Do you watch Food Network?
– Adam

I don’t watch Food Network much at all, to tell the truth.

Most of my education in the kitchen was from books and a few YouTube videos for specific techniques. I’d read about it, then go give it a shot.

I’m not ashamed to admit that many kitchen skills are still quite challenging for me. I tend to over-butter things. I am slower than molasses chopping most vegetables – and it’s not because of the knife. I sometimes overcook meats.

Here’s the thing, though. It’s all fun for me. I love spending time in the kitchen. Best of all, I sometimes stun people with the things I make, like my potatoes and onions au gratin from scratch that takes about forty minutes of prep time and almost two hours to bake.

That’s my motivation – and that’s enough to get me in the kitchen, try things, occasionally fail, and sometimes succeed.

My husband and I have been noticing for awhile now that we’re outgrowing our friends. We are married and own our home, and are thinking about having kids in the next few years. Most of our friends still live with their parents, and are more focused on buying expensive toys (new vehicles, electronics, etc.) than they are about focusing on their future.

Is there a way we can politely bow out of these relationships, without causing many hurt feelings? Also, are there any relatively safe online communities that we could use to find people in our area that share our same interests? I know we can make new friends easily, but we don’t know where to start looking for them…
– Jessica

Just gradually slow down the interactions over time. Instead of doing something with them every week, scale it back to every two weeks or every month. That will leave you with the free time you need to build up new friends and new interests.

As for looking for people in your area, start with your interests. Visit businesses that sell products connected to your interests and see if they facilitate any groups. Get involved in any community groups and organizations connected to your interests.

Some of your friends will just drift away. Other ones – the better ones, actually – will want to know what’s going on. Be honest. Tell them you feel like there’s a gulf between what’s happening in your life and what’s happening in their life.

You’ll be surprised how flexible truly good friends can be. My best friend became my best friend when I was single. He stuck around while I seriously dated Sarah, married her, and had two young kids – he’s still single and he still stops in all the time. My kids think he’s the cat’s banana.

As for the rest? If they drift away, it’s not that big of a deal. Some friends exit stage left to make room for the new ones entering stage right.

I know you watch baseball. What other sports do you actively follow? Who are your favorite teams or players?
– Edward

I follow baseball faithfully. The only other sport I follow with anything approaching that kind of consistency is golf.

I also follow – on a somewhat more subdued basis – college and pro basketball, tennis, and soccer.

I follow football and NASCAR enough that I can talk about it in conversation with people, because I know many fans of both sports.

By following, though, I should say that I don’t slavishly watch them on television. I’ll usually watch the Sunday afternoon of a golf major and I’ll often watch the baseball playoffs. I’ll occasionally watch an NBA game or an NCAA tournament game or an English Premier League match or a semifinal or final match at a tennis major. I’ll listen to either sport whenever I find it on the radio. I also carefully read game and tournament highlights for both sports.

In the end, though, if you gave me a choice between watching a sport or playing it in the yard with my son, I’ll head outside any day. Most of my sports watching happens on days where the weather doesn’t mesh well with going outside.

You recently wrote about how your net worth is negative if you don’t count your home as an asset. When do you think your net worth will be positive again?
– Sandra

I was intrigued by Sandra’s question, so I ran some models in a spreadsheet. According to my math, I’ll be able to cross back over to a positive net worth sometime in 2011. Yes, that’s with the full crunch of my mortgage over my head and not counting my home as an asset.

My path for getting there is mostly based around whacking away at my remaining debt – my student loan and then our mortgage. I have plenty in savings to sustain us through almost any emergency.

Why is this important? In a strict way, it’s not. It’s mostly a way for me to look at the realities of my life – if I were to liquidate everything that’s easily liquidatable, where would I be?

I’ll certainly feel a lot better when that number’s in the positive, I’ll tell you that!

I am wondering if the real answer for why we never get in contact with you is that you in reality do not have time for all of us readers?

I am reading this blog and commenting because I want to have that human touch to the discussion. I want to have a discussion with people. I do not want to feel that I am force-fed news from some some corporate giant. If I want that I can just go out an buy any newspaper or magazine or watch TV. When you watch TV there is no comment or reply button.

Now we also have the following facts:
-You are just 1 person with 24 hours a day. (You might have moderators that we do not know of).
-You are on Facebook, Twitter, FriendFeed.
-You are pumping out an enormous amount of posts (63 posts in July alone).
-Each of these posts generate from 0 to over 100 comments with the average being around 30-50.
-You are writing books in addition to this blog.
-You have over 60,000 subscribers on RSS and countless more browsing by and on twitter.
-You get loads of email that we as readers know nothing about.
-You have a life and a family to take care of away from the computer.

So is it not time to scale back, get more involved in the comments and with each reader instead of turning into one of those sites just pumps out information?
– Tordr

All of that stuff you list is for direct contact with readers. I interact with readers directly on Facebook, Twitter, and FriendFeed – and email, for that matter. I do reader mailbags specifically to respond to reader questions. I write articles in response to specific reader questions. And I comment, too, on occasion.

In the end, when I think about how to spend my time, I try to imagine the person I want to reach with my writing. For me, it’s that person who’s near their financial bottom. They’re scared. They’re typing search terms into Google, hoping that someone can provide them with the cool words they need to help them get a grasp on the problems around them. Maybe they hate their job. Maybe they’re scared about their debt. Maybe they just feel stuck in a serious rut revolving around consumerism. Maybe they’re trying to follow a new career path.

Whatever it is, it’s a big change, one that’s scary to face alone.

My hope is that those people find a page on The Simple Dollar. Much of what I write is with that person in mind, above all else.

We use paper plates for lunch, snacks, etc. I’ve always assumed that the cost of washing our regular plates (plus the time to do it) was probably equal to the cost of the paper plates. Also I assumed the same for paper vs. cloth napkins.

Do you have any thoughts on this?
– Ann

How exactly are you defining “cost”?

If you’re looking strictly at your own dollars and cents, you need to figure in the time you add to the equation due to the extra trash you generate, along with any extra costs you might incur due to putting more trash out by the curb. There’s also the cost of having to go to the store to re-buy those paper plates – some fraction of your grocery store trips are done to buy these plates, something you don’t have to do with normal plates.

Another factor – if you use the cheapest plates, they’re not sturdy and often cause messes (in my experience), which take time to clean up and often waste food. More expensive plates are – well, more expensive.

Beyond that, there’s the environmental factor. Paper plates take a long journey to get to your store shelf, starting with the trees in the forest that are cut to make the plates, the processing done to those trees to make the plates, and the shipping of those plates via ship and truck. With normal plates, you’re not contributing to that cost – and it certainly is a cost in a global sense.

For me, these factors tip the scale towards reusable plates.

Hey Trent, I’m also interested in canning salsa this year. How about sharing your recipe and techniques with us in the future?
– Kim

PickYourOwn (a site I quite like, even if the design is circa 1995) has a great guide for making and canning salsa.

To put it simply, canning salsa (and other tomato-based foods) is really easy because of the acidity of the tomatoes. You don’t need to pressure cook them – a boiling water bath will do the trick. Basically, just make what you want to can, boil the jars and lids for a bit to sterilize them, fill the jars, put lids on them, put the jars in boiling water for a while, and you’re done. Let them cool, check the lids, and put them up for storage.

These actually make great Christmas gifts. Homemade salsa almost always blows away stuff made in a factory.

I’m certainly no expert on libertarianism, but I’ve always had the impression that most libertarians are against taxes. Is this true for you? While it seems clear that you’re all for reallocating taxes to fund education more heavily, I was surprised that you didn’t seem more anti-tax in general.
– Georgia S.

There’s a big difference between being a libertarian and a Libertarian.

A “big-L” Libertarian is a member of the Libertarian Party and subscribes to their beliefs, many of which I view as being self-contradictory.

A “little-l” libertarian refers to a broad swath of people who believe strongly in individual liberty and smaller government. These people are basically outcasts in both major political parties.

A “big-L” Libertarian is basically just one extreme flavor of the broader group that is “little-l” libertarians. I would probably put myself in the latter group, but I’m far from the former group. I believe taxes are needed and I believe that many services are better handled by the government than privately, such as a standing army and roadways – pretty far from “big-L” Libertarians. I’m probably closest to the Republicans in terms of how public dollars should be used, but some of their uses still make me shudder.

I also believe that individual liberties should extend to the point that as long as it doesn’t violate someone else’s individual liberties, it shouldn’t matter at all in terms of the law. That’s close to “big-L” Libertarians, but very far from the Republicans and actually closer to the Democrats.

So, usually, I just vote for whatever candidate seems to match my views the best. Sometimes it’s a Republican, other times it’s a Democrat. Sometimes it’s a third party candidate.

I hope that clears things up a bit.

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

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