Reader Mailbag #90

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.

What kind of Thanksgiving traditions does your family celebrate?
– Fran

My wife and I usually participate in three Thanksgiving celebrations each year: one with my parents and siblings, one with my wife’s parents and my wife’s siblings, and one with my wife’s extended family (my own extended family does a single giant holiday thing in December).

With my parents, we do things almost exactly the same each year, down to the meal plan. Each year is almost identical to the year before it. I am slowly usurping this by introducing single dishes that are different than what we had before – this year, for example, I’m making an unusual dressing. However, it will be served alongside all of the usual things.

The other celebrations are more laissez-faire – they change quite a bit from year to year.

The only “tradition” we really cling to is simply spending time with family at Thanksgiving.

Hi, recently my wife made the decision to return to school for her teaching certificate. We made the decision to take out a Stafford loan (unsubsidized) at a fixed rate of 6.8%, the duration of this portion of her schooling is 4 semesters.

This semester (the first), we had an excess of $3500 that was returned to us by the school she’s attending. Her school advised her to keep the money in an separate account for her final semester, as she won’t be able to work during it.

It seems to me that paying interest on money that’s just sitting in an account for 1-1/2 years is kinda crazy. There’s no way I could safely invest the money and get a return of 6.8%, so we’re effectively losing money each month by going this route.

My thought is to keep this money, refuse the next dispersion of funds (for semester #2) and use the $3500 to pay for the next semester of school. The only problem is that we’ll eventually run into the issue of her not having an income for several months. That said, we’ve got a comfortable emergency fund and no debt other than 1 vehicle and a mortgage. Any thoughts/suggestions/ideas?
– Gary

You need to directly contact the school’s financial aid office and speak to a financial aid officer, first of all. Explain your situation and state that you do not wish to ever have excess disbursements.

Many schools do this as a matter of course because that extra money is often used by the students as a stipend. This overpayment is often standard operating procedure.

Work with your school to get this fixed. Likely, there will be little problem using that money for a payment during a future semester.

I prefer to hunt and fish for most of my meat. This way, I know exactly where the animals came from, you could argue they lived a free and wild life, and I know that I personally harvested them as humanely as possible. Plus, they taste great and the meat from wild game is generally healthier for you than other sources!
– Josh

As a rule of thumb, I agree with you: the more control you have over where your food comes from, the better. If you’re actually the person who kills, dresses, packs, and cooks your meat, you know exactly whether or not preservatives are added and you know exactly where they come from. That’s a big positve step.

On the other hand, catching your own isn’t always the cleanest source for your food. For example, I’d far rather eat a farm-raised catfish than a fish caught by me in the Citarum River.

It’s all about knowing where your food is coming from. The more you know, and the more control you have over it, the better off you usually are. That’s why, for example, the USDA Organic label has such value – it improves consumer control over the source of their food.

I just recently finished my first historical novel (The First Man In Rome). I have to admit, it blew away my expectations. Do you ever read historical novels and if so, do you have any recommendations? I can’t wait to get my hands on another one.
– Andy

If you liked that one, you should undoubtedly continue McCollough’s “Roman Empire” saga with Grass Crown. There are three others after that one.

Historical fiction, like any genre, has great books and awful books – and one man’s trash can often be another man’s treasure. One good way to dig in is to look for some of the best examples of writing set in a time period that interests you. Here’s a list of great novels set in twenty different periods of history.

Myself, I absolutely love the novels of E.L. Doctorow. He mostly focuses on specific periods of American history, but he reviews them thoroughly and weaves them wonderfully into a great story.

The usefulness of automating your finances is well-documented on this site and others, but it strikes me that that same principle would be incredibly helpful if it could be applied in other areas as well, for instance automating shopping, doctor/dentist’s appointments, personal fitness, eating/cooking, and an infinite many other ways. Do you have any tips/websites that would be helpful to automate your life?
– Alex

If you truly learn how to use an online calendar – and I highly recommend Google Calendar for this purpose – it can do all of these things for you. You can carefully plan out almost anything with an online calendar.

It’s important to note, though, that you have to have the commitment yourself. Without the commitment, no tool will ever transform you into a success. All a good tool does is make the job you’re committed to doing that much easier, freeing you to do other things.

I live by Google Calendar, though.

Being such a cost-sensitive person (that even uses home-made laundry detergent) why do you use a dryer?! I really don’t get it, I only use mine a few times per year (a dozen or less, and only if I have tons of laundry at a time that I want to take care quickly), all the other times I hang the clothes outside or in the garage if it is raining, a small opening in each of the garage allow wind to enter and dry the clothes.

Knowing how much electricity a drying machine uses, I simply don’t understand how can you use it on a daily basis.
-Miguel

First of all, I live in northern Iowa. For about four months out of the year, the cold temperatures makes it impossible to hang out clothes.

What about the other months? We live in a neighborhood with a lot of young children. Our back yard is an open space, as is the back yard of several of our neighbors. This yard provides something of a “village green” that all of the children simultaneously use. There’s a shared piece of playground equipment out in the middle, but other than that, it’s just a sea of green.

Putting up a permanent clothesline where there would be any wind at all would pretty much bisect that open area, restricting the play area of our kids and a lot of their friends. It’s not something we want to do – the tradeoff for us is a net negative.

We often do use a temporary clothesline. When we do this, we usually do it when there are no kids out and about. We’ll string a single, enormous, very taut line from our porch to a playground area very far away and hang tons of clothes on it at once. On a windy day, this will dry a ton of clothes in just an hour. One of our neighbors does this sometimes as well.

I have so many ideas of different things to save for, but I’m not sure of the best way to approach it. In the retirement category, I’m maxing out my company match, so that seems right. I’m also putting $25/week into a Roth IRA with Vanguard. How useful is this if I’m hoping to become a stay-at-home-mom? Beyond retirement, I’ve got 2 months of bare-bones emergency fund in a Vanguard mutual fund (that I put $25/week into). With my credit union, I’ve got another 1.5 months of bare-bones E.F. in a money market. I recently read your post about doing a CD ladder for an EF, but do I transition to that & ditch the money market & mutual fund, or somehow do all of it?

After all that, there are liquid-but-not-definite plans for the future that will cost money. Saving for a wedding, saving to upgrade to a house from a condo (extra mortgage payments vs. saving??), saving for kids, saving for private schooling, saving for a boost toward college… Not so far in the future is the long wishlist of projects for around my condo for home improvement, which includes the junk heating/cooling system…

What’s the best way to save for all these ideas with different & undetermined lengths? Do you have a “bucket” for each one, just lump them all together, or only separate it as “emergency fund” & “other?”
– Kate

If your plans are liquid, I wouldn’t set up separate savings accounts for non-retirement goals that you’re not even sure are goals yet. Focus instead on the things that you’re pretty confident about and get those knocked out of the way first. Make sure your wedding is fully covered. Once that’s done, make sure you’re debt free. Once that’s done, save for a condo.

You’re far better off focusing entirely on one goal than splitting your focus among many goals.

Another suggestion about your emergency fund: I wouldn’t have it in anything that’s volatile, like that Vanguard fund. Also, the advantage of having a CD ladder for your emergency fund is that the CDs in the ladder will mature before you would ever need them. So, for example, you might buy a CD worth one month’s worth of living expenses that matures in three months, but you should have those three months’ worth of living expenses sitting there while you do it. Then, when there’s two months left to go on that CD and you have three months’ worth of living expenses in your emergency fund, buy a second CD. Then, when there’s one month before the first CD opens and you have two months’ worth of cash left in your emergency fund, buy a third CD.

For birthdays, it’s expected that everyone chip in a significant amount on a nice lunch for a person’s birthday in the department. There is really no option to decline – most recently, I got an e-mail at 8 p.m. the night before saying what food was already ordered for lunch the next day (food I don’t even normally eat) and that everyone had to pay $12 each. When I said I brought my own lunch and that I wouldn’t be eating, but that I would chip in a few dollars for the colleague who was celebrating the birthday and partake in the celebration, the person wasn’t willing to change the food order and didn’t understand why I felt “forced” to give. I suggested that if we clear the food selections with everyone first, that might help. And that as a department we should agree on a comfortable and affordable process for everyone. (There are many new people, including myself.) So far, this suggestion has been ignored. I’m afraid this can get out of control – in the six months I’ve been there, I’ve been “mandated” to give $20 for another birthday and $20 for a baby shower. There are 8 people in the department, so this is a nice chunk of money every year and I can’t afford it. Unfortunately, no envelope is passed around, so my most recent act was very much noticed. Do you have any suggestions for still making this a nice good will gesture without seeming like I don’t want to participate?
– Sandy

If you’re the only one who doesn’t want to participate in this, you’re going to have to buck office culture to make it happen. That usually won’t win you friends, especially when you’re new. I often view such things as simply an extra cost of working in an office, unfortunately.

However, if you’ve got a large group of new people, talk to all of them about it. See how they feel. If you all band together to opt out of this thing, it will go much easier.

Myself, I don’t view such “mandated” gifts as having any value at all. If someone wishes to give someone else a gift, that’s fantastic. When someone is “required” to give someone a gift, that gift doesn’t really have any value.

If you really insist on going through with this, your best avenue to get the ball rolling without starting a war is to make it bluntly clear that you do not want a gift on your birthday or for any similar event. Nothing special at all. If they want to celebrate, bring in a cake you make yourself. Then, suggest that everyone is happier with $20 in their pocket and suggest that this become a new tradition that helps everyone out – we keep our money, but we all get to celebrate.

After spending three month unemployed, and getting hired in a tough economy, I feel as though I’ve entered a sort of “AA” for spendthrifts. I making headway on my balances, and have plans outlined for saving, investing, etc. I’ve also noticed that the stress of going from unemployed to new employment has left it’s effects on my waistline. This got me to thinking about how control of personal finances has a lot of parallels to healthy diet and excercise, such as impusle purchases/treats, planning ahead, etc. What are you’re thoughts on this?
– Rachel

Personal finance, dieting, exercising – they’re all exercises in self-control in a society that seems to have forgotten what self-control is.

That’s a big reason why, quite often, people who succeed in this area often seem like a “AA” or other support group. They all know that they’re doing something that not only requires self-control, but it bucks a societal trend as well. They know that it’s a hard choice and they tend to have a lot of respect for others on that journey.

People will often encourage others to succeed in areas of personal success. Most people out there are genuinely good and supportive people. The negative ones – the ones who constantly criticize success and claim that you’ll fail – are the ones to avoid, because they’re often projecting their own personal failures rather than trying to help others succeed.

You picked very good topics w/ the public vs. private vs. homeschool education. I don’t know all of the particulars of this discussion. I am the product of a public education. I graduated in a class of twenty-two students, twenty-plus years ago.
I am now a returning graduate of a junior college completing an elementary education degree so I can go to a four-year college and be a teacher.
I have known several classmates there who were homeschooled with the majority public school graduates. I think the difference in the quality of student is mostly dependent on the student and their support system(parents). I do know that of the homeschooled students I know the schedule, meaning the education dense time, is more difficult to adjust to than the curriculum.

– Daniel

I agree strongly with this. I think educational success and failure is more related to the student and to the general environment provided by the parent (are they active readers? do they engage in intellectually challenging discussions and activities?) than any choice between homeschooling, public school, or private school. I think each of those three options works well for certain people in certain situations.

More importantly, I think the broad stereotypes of each of the three are wrong. Homeschoolers don’t sit at home all day getting browbeat by a Bible. Private schools aren’t a group of identically-dressed people hazing each other in horrible ways. Public schools aren’t gang-filled wastelands of intellectual emptiness. You can find exmaples of each that reinforce the stereotypes, but you can find enormously successful situations in all three.

There is no “best” solution for every child – anyone who claims otherwise (by shamelessly promoting one or constantly demeaning another one) is a charlatan or a fraud. Each parent is best served if they look seriously at all of the opportunities available to them (along with what they’re providing at home) and choose the best one for their situation.

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

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