Updated on 11.30.09

Reader Mailbag #91

Trent Hamm

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’m 30 years old and my wife and I are in the market for a new car. Combined, we earn roughly $150K a year and have about the same in savings. Both of our current cars are paid off, worth about $15K each, and we would be selling one of them. We are also completely debt free other than a mortgage on a rental property. A friend of mine recently starting talking about the Time Value of Money and says that it is better in the long run to take out a loan for the ~$30K car instead of paying cash for it up front. What is best in my situation? Pay cash or take out a loan?
– Jon

Let’s back up a minute to clarify what Jon is talking about. The “time value of money” idea is an argument that money today is worth an equal amount to a higher sum of money tomorrow. So, for example, let’s say you have an account that earns a 5% return. $1,000 in that account today is exactly the same as $1,050 in that account tomorrow.

The friend is basically arguing that your $30,000 in savings will earn more over the next few years than the interest on your car loan. Now, if you can get a 0% interest loan or an extremely low interest loan, that’s probably true. We did this on our own car loan for our Prius and chose to keep the money in the bank because, after four years, we would have more money by just sitting on our savings than we would by paying the entire bill up front.

The problems with this are twofold. One, savings accounts aren’t earning much interest right now, nor are freshly-bought CDs. We were able to do well because we had a lot of our money in longer-term CDs that did carry a higher interest rate. Two, even if it’s close, there’s a psychological risk in keeping the cash because you become tempted to spend it. When you’re in debt without the money in hand to pay it off, that’s a risk (one that a lot of people underestimate).

Unless you can get full 0% financing, I would pay cash for the car. If you can get full 0% financing, it makes sense to me to hold onto the money and just make payments out of that savings account, because you’ll likely earn $100 in interest (or so) for your efforts.

Have you ever felt like just walking away from everything in your life and starting over? The cover story in the December issue of Wired is really making me think about doing it.
– Sarah

I can fully understand the temptation for doing this. Once a person’s life hits a certain threshold of trouble (particularly when it seems that the positives outweigh the negatives), it’s often very tempting to walk away from it.

What I’ve found, though, is that often the negative things are temporary, while the positive things last much longer. Bad jobs, bad relationships, bad debts, and so on can be eliminated with time and effort. Loved ones, on the other hand, are often there for the very long haul.

Instead of running away, try to tackle some of the negative things in your life head-on. You might be surprised at what you can solve.

I am trying to decide which is the better option in terms of what to do with $200 extra dollars a month that I have. Currently, I am putting that extra money towards my mortgage to work on getting it paid off. However, I don’t currently have any type of retirement plan. Would I be better off starting an IRA and putting the extra money towards that? As a note, I am 24 years old.
– jtenman

I would definitely put that extra $200 a month towards retirement. As young as you are, a dollar put away for retirement today will have an enormous value later on.

I would probably encourage you to open a Roth IRA. A Roth IRA lets you put in post-tax money (the money in your paycheck), but if you wait until you’re 59 1/2 to touch the interest, you can withdraw the interest tax-free. Not only that, you can take your contributions back out at any time without penalty.

Thus, if you do make the decision to do something differently in the future, you can access your contributions without penalty, but you don’t lose the interest you’ve accumulated in any way.

I would like to know how you are able to sit in on a class at the university? Do you just go to the class you’d like visit or do you make arrangements with the professor?
– Maranda

For the large lectures (100+ people), I’ve just gone in, sat down, and listened to the lecture. No one has ever said a word to me.

For smaller ones, I have asked the professor whether he/she minded if I sat in on their class. None of them minded in the least, though a few asked that I give up my seat to actual students if there was an overflow.

I think most college professors believe that students are mostly paying the fees to earn the credits and the feedback on their work, but that their lectures are essentially free to everyone. This may not be universally true, but it has been true in my own experience.

Have you ever tried to make your own lotion and chapstick? I find I go through a ton of the stuff during the winter, and good lotion is kind of expensive.
– Chelsea

I’ve never had any success making either one of these items with any level of quality.

There are just simply some things that are difficult to make in a home environment. Truly moisturizing hand lotion is one of them (I believe). I think lip moisturizer would be possible to make, but compared to the cost of just buying a tube of it, I don’t believe it’s worth it.

If I actually use something a lot and it provides a lot of value to my life (as hand lotion seems to add to yours), I don’t mind paying for the good stuff.

I know you keep notes on lots of different areas of your life, but I’m interested in a particular area: Work-related ideas. I take so many notes at work (in meetings, requests from my boss, things to follow up on, etc.) and sometimes, I have ideas for things to pursue that I can’t necessarily work on right now, but want to keep in mind for the future.

Do you keep notes on “big ideas” for your blog, and if so, how do you keep those ideas from getting lost in the day-to-day shuffle? Do you have any suggestions on how to budget “big idea cultivation” into work time?
– Jenny

I keep a “work notebook” in Microsoft OneNote 2007. In that, I have a lot of different things and, yes, one of them is a “big ideas” list. Mostly, these are the large-scale projects that I want to accomplish with The Simple Dollar.

Each day, I set aside two hours to work on such projects. Sometimes, if I’m well ahead on my writing, I’ll set aside full days to work on such projects.

The big challenge for me is separating the “urgent but not important” and putting them aside, something I’m going to write about in detail soon.

One of the problems I’m facing these days in trying to restart my own career is reading overload. This is made worse because my reading speed has decreased over the years, due to a couple of medical issues.

What’s your approximate reading speed? How long (in hours) would it take you to finish reading a three hundred page novel? A New York Times editorial?

And if you ever feel overwhelmed by the reading load, how do you triage for selecting which things to read?
– Kate

I read at different speeds depending on my purpose. I can read extremely quickly, but it doesn’t provide a whole lot of enjoyment for me. Such speedreading feels like work, not pleasure. So, when I need to absorb something quickly, I can. I can blow through a 300 page book in a couple hours.

When I read for enjoyment, I tend to read much more slowly. It can take me several hours to get through a 300 page book if I’m reading it for personal enrichment.

I never feel overwhelmed by reading. I enjoy reading quite a bit and I take time for it. Sometimes, my allowance for reading time makes me feel overloaded in other areas, though.

Trent does have some trolls as well as some others who verge on trollish behavior. But I’m pretty sure he can tell the difference between a troll and someone who disagrees with him.
– Shevy

Actually, I often can’t tell the difference between a well-meaning person with a somewhat aggressive tone and a clever troll.

The big problem is that many trolls do what is called “concern trolling.” They go onto comment fields or messageboards, try to find some area where they can possibly stir up disagreement, then make an effort to write something that seems like a legitimate concern but is there to do nothing more than to stir people up because they enjoy conflict and disharmony. It happens a lot. Several regular commenters on The Simple Dollar are concern trolls – they only post “concerns” about what I’m writing, then they sit back and try to encourage a feeding frenzy.

The problem with concern trolls is that sometimes their concerns are legitimate – but quite often they’re not. It’s often impossible for me to tell which is which, and I’ve guessed wrong in the past. It’s one of many reasons where I don’t like participating in comments, because I’ll see a concern troll at work and I know it’s a “no win” battle to get involved. Of course, clever concern trolls often demand that I get involved in the discussion and use my non-involvement as “proof” that I’m not paying attention – but why would I want to be involved?

I usually filter out the blatant trolling – the people who issue very personal and specific threats towards me and my children (yes, I get these kinds of things regularly), the foul language, obvious hate speech, name-calling, and so on. It gets much more difficult to filter it out in the grey areas – “concern trolling” and the like.

Hopefully, now you see one of the very un-fun parts of doing The Simple Dollar.

Do you and your wife have any differences of opionion on finances/frugality/etc. where you’ve had to compromise? I know my husband and I both have different things we wish the other was more and less frugal about.
– Chelsea

Yes, we often disagree on some areas. My wife tends to be a big “saver” of things, because she sees that items often have a potential second use and it’s wasteful to throw them out. On the other hand, I’d prefer to be a minimalist and get rid of lots of stuff. We often clash over this and the end result has been days where I do nothing but get rid of things while my wife is at work (with her knowing fully that I’m going to spend the day doing it, of course).

Most of the time, though, we’re in agreement on frugal choices. We both like to eat at home. We both are willing to try generics, but abandon them if they don’t do the job well enough. We both like making homemade solutions – like laundry detergent.

If there’s something we disagree on – for example, if one of us thinks the generic is “good enough” while the other is frustrated – we usually talk it out and reach some sort of compromise. Often, with such situations above, we’ll either buy a higher quality brand or leave one of us responsible for “incidents” with the generics (like a ripped bag).

I have about $5k in self employed income for 2009. Through income earned from my regular job I have already maxed out my Roth IRA and will max out my 401k by the end of the year. Am I eligible to contribute a portion of my self-employed income to a SEP IRA?
– Jo

Yes. The only requirements are that you’re at least 21 years old, that you’ve been involved in that type of self-employment for three years or more, and that you’ve earned more than $500. I’d contact Vanguard (they’re who I use) and get one set up.

I’m wondering, though, why you would want to contribute more toward retirement if you’ve already maxed out a Roth IRA and a 401(k). I guess this would be okay if you’re trying to make up for a lot of lost time, but if you’re in a solid place with your retirement savings, you might want to take that money and use it elsewhere in your life – paying off debts and so on.

One way I would strongly consider investing that $5,000 is in energy efficiency improvements for your home. Installing better windows, improving your insulation, installing a programmable thermostat, and maybe even putting solar panels on your roof are all well within the $5,000 you have. That investment reduces your energy bills, improves the resale value of your home, and might even make you eligible for tax breaks.

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

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  1. leslie says:

    That is extremely interesting about sitting-in on classes. I always thought you had to pay to audit a class, albeit a smaller fee.

    I do have a question though, how do you find out which classes are at which times? Or does the school have that information publicly accessible online?

  2. Brian says:

    On reading:
    Has anyone else read “How to read a book” by Mortimer Adler? This is one of those books I wish I had read BEFORE I went to college!!

  3. Josh says:

    In regards to the 0% car loan offers, you usually have the choice between a 0% loan or $2,000-$4,000 in a rebate off the purchase price, so you need to figure out if the 0% loan is worth giving up the rebate for.

    If you are paying in cash, this is usually not worth it.

    If you need to finance anyways, giving up the rebate usually amounts to approximately a 3% loan.

    I’m not sure if this is true with every make and model, but it has been my experience whenever I have seen a promotional APR offered.

  4. Gabriel says:

    As far as lip moisturizer, I often just use petroleum jelly. It works great for healing chapped lips and keeping moisture in. If I want a colored lip gloss, I might add just a little bit of makeup to some petroleum jelly and have instant moisturizing lip gloss. Just some suggestions.

  5. Jo says:

    Thanks for answering my question. I’m putting tons of money into my retirement accounts since my mba program won’t count them against my financial aid, but they count nearly everything else. I figure this way I can contribute less after graduation and instead focus on paying off any student loans I may have. (I don’t have any debt now and rent). Thanks!

  6. Adam says:

    0% financing just means they add the interest into the sales price of the car, and its usually a hefty % compared to the cheaper price of just paying cash. It does not mean you get the car at the same price with/without a loan.

  7. Sophia says:

    Personally, if the “positives were outweighing the negatives”, I wouldn’t feel like starting my life over. Might be a misprint; proofread, proofread, proofread!!!

  8. Joanna says:

    To the reader who was looking for replacements for lotions, I’m not sure what type you’ve been buying in the past, but I used to have a preference for the high end body butters from The Body Shop. These guys go for about $20 a jar. Vaseline, however, makes a cocoa butter body butter of the same size & quality that is $5.99 a jar (and even less if you use a coupon, which often rotate through the Sunday papers). Of course even $6 is still a little pricey, esp. if you use a lot, but just thought I’d put it out there in case you’re still in the $20 price range.

    Good luck!

  9. Mike says:

    I am so jealous of your reading speed. A 300 page book would take me a week (or more), mostly I think because I can’t seem to read more than 45 minutes at a time without my mind getting distracted, or getting eye strain and having to quit.

  10. Ben says:

    The other thing to consider with the time value of money is inflation/deflation. Of course, this is another factor that’s hard to predict in addition to being able to predict with some degree of accuracy the performance of your investments.

  11. ashley says:

    Shortening (like Crisco) makes a great lip moisterizer.
    I think a can of that might last a while!

  12. Maranda says:

    @leslie – The classes are public. You can go to the school’s website to find out about the classes and when they are. If you know what class you’d like to watch but cant find the time info you can call to find out when it is.

    @Trent – Thank you for answering my question. :)

  13. Saagar says:

    I had this debate when I had the car loan. One thing to consider is the tax on the interest you earn in savings or CDs too. Here was my take on this from earlier http://cognitivecache.blogspot.com/2008/03/pay-autocar-loan-or-invest-in-cd-or.html

  14. bethany says:

    about reading:
    I’m a grad student, so I always have reading overload, but there are a few strategies to help “triage.”
    For one, if you are reading nonfiction, it is often not necessary to read the entire book. The end of an introduction usually provides a summary for all the chapters and explains how they fit into the whole. If only one or two of those chapters are especially relevant to you, you can often get the value from the book reading the intro, conclusion and those chapters, or just those chapters.
    Also, as Trent has suggested before, there are often overview types of books that will help you find your way in the rest of the literature on a topic.

  15. kristine says:

    Aquaphor, and the CVS generic of it, is the best lotion I have ever used. It is what the hospital reccommended when I got a skin graft. It is also quite similar to what they use to literally “grease the udders” of cows. Amazing stuff- good for the lips too.

    Time/ Value of money: Which is the better scenario if you hold onto the money-inflation or deflation? I would guess deflation, as then the money you held onto would be worth more. But then again, then wouldn’t it be better,if the terms were sealed, to have had it paid off? Deflation scenarios seem scarier than inflation. Hmmm.

  16. Gena says:

    @Sara, re: walking away and starting over. While I don’t know anything about your situation or why the idea appeals to you (and it appeals to all of us at some time in our lives), I will say that whatever problems you have will follow you into whatever next life you choose. Pulling “a geographic” rarely solves the big problems. If I took anything from the Wired article, it’s that the author spent an awful lot of time and energy looking over his shoulder. That doesn’t sound like freedom; it sounds like trading one prison for another. Just my opinion.

  17. Sarah says:

    I have a question. In your last Time Machine post I was following a few links and came to your post of 101 goals in 1001 days. I was very inspired and started my own list. I noticed that the end of your 1001 days is coming up in January. Are you going to give us an update?

  18. duddes02 says:

    @Sara, I agree with Trent. It might just be one problem that affecting every aspect of your life. (A bad living situation, for example). Perhaps you can narrow down what you are unhappy with?

  19. Faculties says:

    Universities usually allow you to register to audit classes. They are becoming increasingly wary of people who just walk in off the street to sit in classes, after the gunmen opening fire at various universities. Those gunmen happened to be students, but you can imagine the security risk if any random person felt free to walk into class. So professors are becoming more vigilant about unregistered people in classes. There’s also sometimes a problem with a student who has a stalker, who follows her to class — another reason professor want classes restricted to those registered to attend.

  20. Melissa says:

    Does anyone (or Trent) have any links to great articles about SEP IRA’s? My Dad recently became self-employed (but 3+ years ago) and isn’t eligible for a Roth, so it would be great to have something a little more step-by-step/pros-cons about SEP IRA’s to show him. Thanks!

  21. LisaB says:

    @Brian (#2)

    Yes! I have read “How to Read a Book” and also highly recommend it.

  22. Troy says:

    A couple of thoughts regarding the extra $200 question.

    Trent “definately” recomments starting and IRA. The reason being “a dollar put away for retirement today will have an enormous value later on.”

    While true, the same principle exists for paying down the debt. Applying funds toward the debt will have an equal, and likely greater return value later on.

    The interest rate on the mortgage was not revealed, however it is likely it is higher than a current fixed rate vehicles return of 1-3%

    All interested money compunds, whether it be an asset or a liability. Positive interest compunds. So does debt’s negative interest.

    So the inference that putting money away in a retirement vehicle because the effects of compounding interest at such a young age are irreplaceable is false. The mortgage debt has a compounding interest rate as well…and likely a higher rate at that.

    I would pay off the mortgage first. Then contribute to a retirement plan.

  23. Steven says:

    Lectures and classes are not public unless explicitly stated, which is what auditing is for. Granted, in a large lecture hall, they don’t really know who’s who.

    The University just wants the money, but the professor doesn’t get any more money for more students, so they don’t normally care if you are officially auditing. As long as you are upfront, and don’t cause problems, they are generally understanding.

    MIT is a good, free, online alternative for those interested in engineering. They post their course material and some lectures online. http://ocw.mit.edu/OcwWeb/web/home/home/index.htm

    Basically, auditing is for non-degree seekers because you don’t get any credits for the class audited. I had a fine arts buddy audit a few upper-level physics and engineering classes he was interested in. He was a genius in the maths and sciences, but wanted to be an artist…

  24. Johanna says:

    “My wife tends to be a big “saver” of things, because she sees that items often have a potential second use and it’s wasteful to throw them out. On the other hand, I’d prefer to be a minimalist and get rid of lots of stuff. We often clash over this and the end result has been days where I do nothing but get rid of things while my wife is at work (with her knowing fully that I’m going to spend the day doing it, of course).”

    Just based on this, it *sounds* like you’re saying that you win these clashes by default – that because you spend more time at home than she does, you can get rid of stuff whether she likes it or not, and that even though she “knows” you’ll be getting rid of the stuff (in the sense that she won’t be totally shocked to come home from work and find that the stuff’s not there), she doesn’t necessarily consent to it.

    Based on things you’ve said elsewhere, we know that your relationship is better than that, and that you have more respect for her than that. But that’s very much how this paragraph comes across.

  25. Margaret says:

    Uh.. NO, you are not allowed to just sit in on classes. You might not get caught if it is a big class, but you are not supposed to do it. You are supposed to register and pay to audit a class, which means you attend the lectures but do not do the assignments or receive a grade. Do you think it would be okay to walk into a high school and sit in on some classes without clearing it with the admin? Or to walk into a business and sit in on some meetings because you are interested in business? Your university will probably have some lectures open to the public, which by and large would be arranged by student groups — e.g. a political science group bringing in a guest lecturer on health care reform or something. The students are paying thousands of dollars in tuition, and I’m pretty sure they aren’t doing it to subsidize your “free” lectures.

  26. almost there says:

    Yes, I wish sometimes that I can just up and leave and start over in a tropical place. My wife and I are retired with most all debt paid off and the only thing stopping us is dog and family. With ailing parents and an old dog with health problems my life is on hold. I am at the beck and call of my parents to help my dad as he cannot be left by himself. But they were there for me as a child (their choice). Perhaps once they pass and the dog dies we can start the next chapter.

    IRT time value of money, I had a loan at 2% and elected to pay it off because I realized that the funds in savings were going to be worth way less in future when inflation is taken into account. Google shadow stats to see what one author thinks the actural inflation is.

  27. Bobby says:

    Solid advice here. BTW, you can also make your own (very effective) sunblock much cheaper than you can find in drugstores. Look around online and you should be able to find a recipe for zinc oxide sunblock.

  28. Jen says:

    Thanks for the Wired link–interesting stuff. Makes me think of my brief internship at a domestic violence shelter. I’m going to e-mail Wired and ask if they’ve considered using their knowledge from this experience to help DV survivors who need to go underground.

  29. KC says:

    I’ve contemplated Jon’s car issue recently. My husband and I are in a similar position as him and his wife – similar income, similar savings. My car is aging a bit (but not really in need of replacement). It’s worth about $7k. I looked at purchasing several different cars between $30k-$35k. I couldn’t make the numbers work. Financing drove up the price of the car. Basically the numbers were about the same either way – the real issue being whether I wanted to pay now and have less money in the bank or have a car payment over the next 3 years. I’m not sure there is a good answer here – you’ll pay one way or the other. Unless you can work a really good price for financing I think its a wash. But don’t forget the sales tax on a new vehicle purchase is deductible on your fed income tax this year. That coupled with the nice price of new cars makes it inciting to buy.

    So what was my decision…I got tired of it all and kept my old car. I’ve taken the money I didn’t spend and divided it among 5 stocks that pay nice dividends and have potential for growth. I’m happy with my decision. I’ll buy a new car when I need one, but not now.

  30. Scott says:

    I think you missed the true point on the car loan question. If they really want to save money don’t buy a car. They have cars that are worth $15,000, they don’t need a new car.

  31. Courtney says:

    “I had a loan at 2% and elected to pay it off because I realized that the funds in savings were going to be worth way less in future when inflation is taken into account.”

    I think inflation is a moot point because it applies equally to the inflated dollars you would use to make the loan payments in the future as well. If you can obtain a rate of return higher than your interest rate, and have the discipline to pay it off, it’s the correct thing to do mathematically.

    I have a student loan that, after the interest deduction, has an effective interest rate of 1.32% fixed for 10 years. You can bet I won’t be paying that puppy off one second early.

  32. Dave says:

    For paying cash for a car or holding your cash is a matter of liquidity also, and inflation, if Jon has the money for the car, the interest rate is low enough, get a loan, but get it before getting the car. then set the money aside in it’s own account/sub-account.
    #16 Troy Think house rich/cash poor, but I just ran the #s if his Mortgage is say 200,000 at 6%, $1200/month for 30 years and he pays an extra $200/month he will pay it off in about 20 years, then paid himself $1400/month for 10 years, he would probibly make out better, $200/month for 30 years at 7.5% is $187,000, $1400/month for 10 years at 3% is $188,000. If he can get better then 7.5% saving may be better, now if it is in a 401K with a match, your return gets better.

  33. Susan says:

    My husband is a ‘pack rat’. I say it, our kids say it and he agrees that he has difficulty getting rid of things. In my experience, as a family grows in number the volume of material belongings (including food) needs to be culled on a regular basis otherwise it will all take over your home. I did not perceive Trent’s throwing out food while his wife was at work as being disrespectful.

    In my marriage, I joke about ‘tragic laundry accidents’ where any clothing that belongs to my husband that is stained, ripped, too small/big, thread bare goes into the laundry room only to fall victim to a ‘tragic laundry accident’ and never sees the light of day again.

  34. Nicole says:

    Here’s probably the relevant site on auditing classes:

    So technically you should be paying full dollar. That said, if you’re not taking the full course and you’re not adding any additional work to the class, most people will not mind. (To the extent that people fit in a lecture hall and you don’t smell bad, the lecture is essentially a public good.) I have sometimes encouraged students having trouble in one class to unofficially audit a lecture or an earlier course to pick up on the part of the prerequisite they need work on.

    RE: Roth vs. early mortgage payment. I would add an additional point. The Roth IRA is an additional form of diversification. It saves you taxes in the future. You don’t know what your income is going to be like in the future or what the future tax rates are going to be. The Roth IRA works as a hedge against high income/high tax rates in the future. Since you’re already paying down your mortgage, you’re getting some amount of benefit from the future benefits that owning a home/real estate gives. The Roth provides a different kind of benefit.

    If you make too much for a Roth IRA, then you would need to take into account how much tax benefit you get from the regular IRA based on your income this year and the effective interest rate of your mortgage projected on future earnings given the special tax situation of mortgages. Everything gets more complicated when you make too much for a Roth IRA, not that a person has to optimize anything.

  35. Henry says:

    Trent doesn’t seem to be to clear with his description of a ‘concern troll.’ I had to go look it up on Wikipedia, and it’s a totally different thing from what Trent says! A concern troll is someone that posts under a different name from their sockpuppet or real identiy. If three comments were made here all from the same person but labeled with different names, there could be a ‘concern troll.’
    But if someone consistently uses the same identity here to post, they’re not a troll, just someone pointing out Trent’s numerous flaws.
    I’d like to see Trent point out an example from the comments of these ‘concern trolls.’ He seems confused on what they actually are and I don’t think the condition actually consists on this site.

  36. Shevy says:

    I’m honoured to have yet another comment featured in your weekly mailbag. I have to snicker though at “clever trolls”. I’m afraid I tend to classify them with such items as “jumbo shrimp”. Concern trolling wasn’t even on my radar as I’m not a big follower of political sites (where it’s apparently quite common).

    There were a few really interesting questions today. I have to jump in on the issue of you throwing out things while your wife is at work. It is not okay to throw out a family member’s stuff without their express permission. I hope you’re not doing that. Just because you don’t care about a particular item doesn’t mean it’s insignificant to your wife. (Also, I think Susan misunderstood. Trent talked about throwing things out and differing opinions of generics but I don’t think he was talking about throwing out food. Actually, I think he was talking about using garbage bags, which he prefers to buy by brand. Perhaps Sarah thinks the generic ones are “good enough”.)

    The Wired article was fascinating and shows me just how far behind I have fallen in the past 15 years or so on the tech end of things. I’m still current enough to be the one all the other non-profits seem to come to when they can’t figure something out but I am sadly lacking in the ability to track IP addresses, create applications that will run on Facebook, turn up every video ever recorded of someone, ferret out ATM transactions, etc. Just as well I’m not planning a new career as a Private Eye. The one thing I will say about this particular situation is that it was skewed against the writer from the start. I’m sure you could “go to ground” more thoroughly and successfully if thousands of people all across the country weren’t trying to win $5k for finding you and if you could do it without having to be on the net all the time or take part in specific challenges. Really, in the end, I think the fact that he has to eat gluten free was what sealed it. If he hadn’t checked out that special pizza place and then gone to do the bookstore challenge he probably would have lasted the rest of the week (which would have finished out the month). Staying hidden probably depends on how much of your former life you are willing to lose.

  37. Johanna says:

    Actually, I think Wikipedia’s definition of “concern troll” is confused, too – or else I am. As I understand it, concern trolling is less about the name you use and more about what you say and where and why you say it: A concern troll is someone who joins a community of people united for a common cause, claiming to be an ally, but actually being an opponent. The troll then proceeds to derail/disrupt serious conversations or activities by raising legitimate-sounding (but fake) concerns.

    By that definition, I’m not sure we can really have concern trolls here, since personal finance is not a social or political movement. Most of us are here for our own benefit (at least, I think we are), rather than to “spread the word,” so there’s not really very much to disrupt in that respect.

    I suppose that “Minimum Wage,” who used to post here, might have been a concern troll of sorts, but only if he/she was not really a fifty-something underemployed minimum-wage worker with a pile of student debt, but was only pretending to be one in order to rile us up.

  38. From the first question:

    “let’s say you have an account that earns a 5% return. $1,000 in that account today is exactly the same as $1,050 in that account tomorrow.”

    Just to clarify, in your example, “tomorrow” is actually “in a year’s time”. Unless you’re quoting a 5% return _per day_ which is unlikely and most rates are quoted per annum.

    This might be obvious to you and me but not necessarily to someone unfamiliar with the concept :-)

  39. Henry says:

    Trolls of any sort would be good for Trent if it was getting you all riled up. More argument –> More page views –> More ad revenue. A reader is more likely to come back tomorrow if there’s a nasty argument going on in the comments section rather than a bunch of shoulder patting.

  40. Courtney says:

    No idea what a concern troll is, but I get a kick out of the commenters who are so easily offended by every little thing – like Trent’s grammar or writing style or the warehouse club he shops at or the lightbulbs that he buys or how many kids he has, etc., etc. I can’t imagine jumping down someone’s throat over things like that.

  41. nicole says:

    How creepy… I wonder if I’ve been labeled a troll. My comments always seem to be awaiting moderation for days at a time, while comments posted hours afterwards get accepted on by. Or maybe I’m just generally offensive.

  42. LiveCheap says:

    On the car question, I think there is a bigger question. If your cars are worth $15K and they are paid off, why do you want to buy a new one? Sounds like it is still pretty new. Living for a couple years without a payment is a great thing. Bank the $500 a month. If you have $1MM in assets, maybe its time to buy that new car, but if you don’t, you have a long way to go before you should be trading in nearly new cars for new ones.

    At this point if you have the income and really want a new car, you should be paying for it in cash. No low risk investment is going to return 5% now and if you pay cash, you are going to have lots of leverage right now. Cash for Clunkers is over and dealers are starting to deal with the reality of no government subsidizing. Negotiate hard but you’ll never get a better deal than just keeping your cars for a few more years.

  43. Do you typically think up a post idea and then just publish it right away or do you let it marinate for a while and then maybe schedule out the post to publish at a predetermined time?

  44. Shevy says:

    If you usually post comments from one computer and then use another (say, usually from home but occasionally from work or a friend’s house) then you may go to moderation both when you post from work and then again your next post from home. If you post as Anonymous it goes to moderation. If you include links, it goes to moderation. And so on.

    I’ve only had a comment stuck in terminal moderation once. I’d included a link. I won’t make that mistake again. I stopped checking to see if it had been approved after about a week.

  45. Alice27 says:

    Chelsea, I make my own lotion regularly as buying lotions without mineral oil/petroleum does get expensive. I haven’t done the maths properly but I think it works out at around AUD$5-10 per 200ml (shea butter is usually my most expensive ingredient but can be substituted for cheaper butters or left out entirely), but it can get quite messy and I only make small batches so that it keeps well without added preservative. There are heaps of great recipes online but it does take a while to find the mixture that you like. I put mine through a blender to help it emulsify.

    Try buying small quantities of ingredients to start with. You can use regular cooking oil (canola, rapeseed, olive) as well. Alternatively, you can buy a cheap cream and melt shea butter into it to make it more nourishing.

    I haven’t found a satisfactory recipe for chapstick though but YMMV.

  46. Lisa says:

    Like Margaret (#18) said, very (very) few classes are just open to willy-nilly passers-by. The copyright varies by school and the logistics of offering the course for free to some who don’t even pay fees (much less tuition) could get messy.

    Look into schools that do distribute course video/audio (eg: MIT) for no charge.

  47. Jeroen says:

    Maybe someone else has brought this up, but I think Trent has misunderstood the Timevalue of Money thing in the first question. Trent’s advice is still good, I’m just adding some background.

    I think what the friend is saying is that a monthly fixed payment of (say) 100$ will become less and less because of inflation. Or course, this assumes that you’re income keeps up with (or does better than) inflation. So getting a car loan with a percentage below inflation might turn out better than paying cash. Of, course it is difficult to predict what inflation will be. (If the lenders would know, you wouldn’t find this kind of financing anyway.)

    While this is an important element in buying, e.g, a house, it’s not really a factor in buying a car, in my opinion. Simply because the time you are repaying the car loan is too short. (If you are paying of a car loan on 10 years, maybe you should reconsider buying that car)

  48. Kate says:

    It’s amazing to me that people will even consider plunking down $30-$35,000 for a car. Why not take the $15,000 and buy a new car that can be purchased with that amount?

  49. Steffie says:

    There is a difference between Hoarders who can’t throw anything away and people who are classified as ‘pack rats’. Personally, if someone ‘threw away’ my personal things that I was saving for whatever reason, I would be sick. I’ve been raised as a ‘pack rat’ by my mother and grandmother who both lived through the Depression. It was ingrained from birth that most things have more than one use and you never know when you might need something. That said, I have in the past few years made great strides in unlearning this mindset. Mainly because I want my children to not be attached to so many material things, not able to locate ‘important’ papers quickly or unable to have visitors etc. Recycling through the city trash pickup has helped immensely, plastic containers are one example. Also the thrift store has work-friendly hours for donations, open late and on Saturdays. We have a box in the hall, when we fold the laundry things that are too small or won’t get worn are put in the box. When it gets full it goes out the door. I have started the 15 minute cleaning system. One drawer at a time or one shelf at a time then move to the next room. I try to do about an hour a day. Also I’ve read about taking pictures of the item, this brings the memory back without the actual item taking up space. And a lot of what looks like ‘clutter’ is items that are unorganized. Picture albums/scrapbooks can help with this. If you feel completely overwhelmed, slow down and start small.

  50. Ha, I’m with Nicole. (#31) I can be argumentative by nature, but I’m not here to rile anyone up or cause trouble. I just happen to have a really weird approach to finance, and I like chatting about it. o_O; I really don’t mean any harm, but I like posing questions and having another person or two answer me or give advice. It helps since I read a lot about PF but I don’t write about it anymore, and my husband hates talking about it heh.

    Kate (#36) — Because $15k doesn’t buy you much of a new car that’ll be worth anything in seven years… Any Kia or Hyundai’s going to be falling apart and just about worthless. (In general, and there are always exceptions.) My friend has a Hyundai that’s was bought for the same price as my Mazda — Her Hyundai is eight years old, my Mazda is twelve, and definitely holding up better to the abuse I put her through. (Well, she likes racing, so is that really abuse then?) Depreciation on the cheaper cars take a much bigger hit than taking $35k and buying a new C-Class Mercedes, which will be MUCH better than a top of the line Kia or Hyundai. As much as many would like to think otherwise.

  51. Jonathan says:

    @ Katie (#36) – I completely agree with you on this. Before I would be willing to blow $30k on a car I would have to have enough money that I didn’t need to wonder which approach was more cost effective. Since I never plan to purchase a new car, however, this isn’t likely to ever be an issue for me.

  52. GayleRN says:

    I highly recommend the Open University system or concept. Many universities around the world make available entire courses on video and/or audio formats along with course materials. It makes knowledge freely available to the masses and is a wonderful thing. I am currently viewing an economics course from a world famous economist at Yale that I would never be able to access otherwise. I just download it through itunes (not the only way to do so) and view it at my convenience. The quality can be somewhat variable, but I can always drop out and move on to the next subject of interest. Just browsing through what is available is so exciting. I hardly know what to do next. Probably the short list for me is art history, music overview, or something in theology or philosophy.

  53. Sunshine says:

    A comment about lotions and the like:

    Switch to oils, as you’ll get more bang for your buck. You don’t need to use near the amount of oil as you would lotion. I use coconut oil as my moisturizer and it works wonders and last for a while. I use it on my face and body.

    I live in FL where it is very humid. I still have to moisturize after I shave or whatever and using any lotion results in an oil slick on the skin (at least for me) especially if I use it before going out. But, if I use the coconut oil, it gets absorbed right in. I know of people who use Olive oil also.

    If you are on a really tight budget, you could use baby oil. When I was younger and lived in England for a bit (military brat), that’s what we used right out of the shower. I never had any issues with dry skin.

  54. Amber says:

    Re: ideas at work.

    I found my “universal capture” system at work to function very well and keep everything together. My system is based on a notebook – just one – that I take *everywhere* – meetings, home when I work from home, travel. I write down everything I might write down in this notebook – phone numbers, to-do lists, website sketches, etc. When something is important, I put a box around it. When something is an “action item,” I put a big fat star next to it. When I complete the action item, I check off the star. This way I have everything I need to do and most of what I need to know right in one spot. When I fill up the notebook, I go through and highlight everything that is still important (phone numbers, etc.) and copy them down into the new notebook if I need the reference often. This makes it easy to sort through the chaff in the future.

    I find that keeping everything online is really cumbersome if I am traveling or in a meeting. I hate to say “let me check on that.” It’s good to be able to flip to a page in the notebook and tell my supervisor *exactly* when I expect the calendars to come in. With my star-check system, I can normally find in a minute or so if I did something or not. I *never* check something off until it is definitively done. If it comes back to me for whatever reason, it gets a new item and a new star. Unchecked stars are bad news in my book – checking off the stars is a major part of my work life.

  55. Tentaculistic says:

    I liked the post on “concern trolls” – had never heard the term before, but I can see what you mean!

    For keeping track of things, I take notes for work projects in a single leather-bound notebook, and at the back is an on-going master list of action items. As I take notes and write down action items, I star and then circle the star. At the end, I transfer all the action items to the back page. When I complete them, they get crossed off. Et voila! Old-fashioned organization!

  56. @jtenman – definitely a good idea to invest the $200 in a Roth IRA for retirement. You want your retirement savings to grow for as long as possible in order take advantage of compound interest. At 24, time is on your side. It won’t always be.

    But your mortgage? You can always pay that off later, and inflation is sure to make your payments lower and lower over time. So go with the Roth!

  57. Jill says:

    This is a question for a future mailbag. Could you please do an article on IRA contributions and touch on max amounts for one year and when is the cut off for last year? I have heard you can still contribute after Jan 1, but I’d like to know how much and how would I show on my taxes that part of the money was supposed to be for 09, then the rest for ’10? This information would be helpful soon so I could plan where to put my money at the end of this year. Thank you.

  58. Gwen says:


    I recently found out that I am pregnant with my first child. I looked up your past articles on caring for infants inexpensively. You said that you invested in a safe crib and never regretted it. I was wondering what kind of crib that was and what your impressions are of different cribs. For example, my sister just uses a Graco pack’n’play and a friend of mine recently bought a mini crib. These aren’t as solid as the more expensive sold wood cribs though. Is a larger, more solid wood crib worth the mark up?

  59. Ha, I’m with Nicole. (#31) I can be argumentative by nature, but I’m not here to rile anyone up or cause trouble. I just happen to have a really weird approach to finance, and I like chatting about it. o_O; I really don’t mean any harm, but I like posing questions and having another person or two answer me or give advice. It helps since I read a lot about PF but I don’t write about it anymore, and my husband hates talking about it heh.

    Kate (#36) — Because $15k doesn’t buy you much of a new car that’ll be worth anything in seven years… Any Kia or Hyundai’s going to be falling apart and just about worthless. (In general, and there are always exceptions.) My friend has a Hyundai that’s was bought for the same price as my Mazda — Her Hyundai is eight years old, my Mazda is twelve, and definitely holding up better to the abuse I put her through. (Well, she likes racing, so is that really abuse then?) Depreciation on the cheaper cars take a much bigger hit than taking $35k and buying a new C-Class Mercedes, which will be MUCH better than a top of the line Kia or Hyundai. As much as many would like to think otherwise.

  60. Jonathan says:

    @Foxie (#45) – Even if a $15k is completely worthless after 7 years (which I don’t think is true), you would still come out to the good over paying $35k for a luxury car. Right now, it looks like a 2003 Mercedes C-Class goes for $12-$15k, while a 2003 Hyundai Elantra sells for $6-$8k. Based on these numbers, the Mercedes would lose $20k in value, while the Hyundai would only lose $9k.

    Also, paying $15k for a car does not mean you have to settle for a Hyundai or Kia. I purchased a new Scion XA (made by Toyota) a few years ago for under $15k. Of course there is always the option of buying a low mileage used car, often for several thousand dollars less than a new model.

  61. Lynda says:

    Actually, when Trent described “concern trolls” the first person I thought of was Johanna. Some interesting comments from her, but mainly critical comments and slams against Trent.

  62. Elena says:

    With regards to lotions;

    Vasoline or petroleum jelly cannot be absorbed by the skin. It sits on top of the skin and prevents moisture from leaving so if your skin is already dry it won’t help.

    I use Lanolin (found in the baby aisle, is used by nursing mothers) as a lip-balm. It cost about $10 for 2oz (compare to $2-3 for a 0.15oz stick of good lip balm), but the tube has lasted of over two years (still half full) as you use very little at once. It is all natural and works very well; causing no stinging even on severely cracked skin.

    Most body lotions are about the same, what varies is the scent and the amount of alcohol. The more alcohol in the lotion the less it moisturizes.

    I must agree with a previous commenter; the best thing for a general lotion is to apply baby oil immediately after bathing, it keeps skin comfortable even in the winter. Unscented varieties are available from drug store brands.

  63. Caroline says:

    Regarding quality toilettries and cosmetics, check out www dot cosmeticscop dot com, where you can find tons of free info on what to look for and how ingredients work on your skin. Paula Begoun (founder) also has a bunch of books containing reviews of thousands of products from cheapy cheap to ridiculously expensive (you can always find them at the library). She’s also got a website of reviews at www dot beautypedia dot com, though you have to pay $24 a year to access it. A bargain IMO! I save tons of money checking out her info before choosing to buy anything.

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