Reader Mailbag #92

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.

Question re: online banks – How do you put paper money and checks INTO the account?
– Sara A.

It’s simple, Sara: ATMs.

You just go to the ATM and deposit your paper money and paper checks there using the envelopes provided. I actually do this quite often when trying to deposit money into my ING accounts.

The one disadvantage I’ve found with online banking (for my needs) is converting currency. Without a brick-and-mortar bank, it’s very difficult to convert $10 into quarters for my children’s allowance and so on. This is one of the reasons I’ve maintained a local bank.

I love baked enamel (Le Creuset – mmmh!) but don’t find much use for copper cookware. I think cooking with copper is more useful once you have truly mastered (and I do mean cordon blu mastered) cooking. If copper is your desire and you don’t mind the requirements to keep it shining then I would suggest starting slowly; perhaps with a copper lined bowl for whipping eggs or cream and a small sauce pan for sauces that require delicate temperature control. I have a copper sauce pan and haven’t use it in ages, prefering my favorite Calphalon.
– reulte

I actually have two different Le Creuset French ovens and I dearly love them. They’re enameled cast iron, which means that they heat evenly like cast iron but they’re a lot easier to clean. Le Creuset stuff is really expensive, but I’ve never seen it chip on mine or anyone else’s – it’s backed with a 101 year guarantee.

Copper works very well for certain things in the kitchen. I’ve found that copper works best when you’re cooking something slowly under really low heat because it conducts really well. If you don’t know what you’re doing and turn on the full heat, you’re going to have a burnt disaster. Copper requires you to relearn what you know about cooking because it gives you way more temperature control.

Where do you stand on the ‘local’ movement?

Wouldn’t it be more beneficial to your community to move your money to a lcoal credit union or bank?
– Nate

It depends on the bank.

Blindly saying that something is better because it’s local is foolish. You’ve got to stand back and look at the sum of what you receive as a customer of the bank.

Does the bank support community events or do they just pocket the money they earn? Do they have really good customer service or is it usually easier to just go use an ATM?

Most of the benefit of buying local comes from the fact that many local shops are involved with supporting the communities they serve. I’ve often bought games from our local gaming store becasue they serve the community so well. I buy milk from Picket Fence Creamery because I can go there and touch the cows.

If the local bank doesn’t provide any value for being local – meaning they just scoop away money out of the community – I don’t value them any higher than any other bank. It becomes just a pure rate comparison.

Not too long back, The Simple Dollar, Get Rich Slowly and Zen Habits all had around 40-50K readers. Now The Simple Dollar and Get Rich Slowly have approximately 70K readers whereas Zen Habits has close to 140K readers. What do you think explains the tremendous growth of Zen Habits as compared to your and JD’s blog?
– Shannon

The Simple Dollar and Get Rich Slowly inherently focus on money issues. Some people are very interested in financial issues – others would rather watch paint dry. Zen Habits rarely writes about money at all – the theme there, if there is one, is simplification.

Thus, the total potential audience of any personal finance site is smaller than the potential audience of Zen Habits. A lot of people simply don’t care about their money – or at least they’d prefer not to spend their web time reading about it. I know I certainly wouldn’t have a few years ago. I might have been a Zen Habits reader, but I wouldn’t have read Get Rich Slowly or The Simple Dollar.

It’s all about topic. I just chose a fairly narrow one.

Several friends and I are interested in converting to electronic bill paying and on-line banking, but we just don’t know where to start. Can you provide some first steps, tips and advice on how to set up my monthly bills on auto-pay?
– Cindy

Most of the time, online bill pay is offered as a service through your bank. You sign up for an online account with whatever bank you use and they provide an interface that allows you to pay your bills without writing a paper check.

Most online bill pay services allow you to enter the address of a bill you would send along with your account number there. Then, each month you would enter the amount you wish to pay, hit submit, and it’s done.

Many allow you to automatically pay bills that have a regular amount each month, like your rent or your mortgage. Some even automatically retrieve the balances of those bills.

It’s quite easy to get started, and once you do, you’ll never want to go back.

What is the effect on my credit rating if I contact credit card companies to negotiate different terms on my account? For example, does my credit score or credit report change if I negotiate for a lower interest rates? What about if I negotiate for a less-than-100% payoff amount? Thanks in advance!
– jgmillis

For the rate negotiation, it depends on whether they do a “hard pull” on your credit report in making their decision. If they don’t, it will have no impact at all. If they do, it will only have a slight short-term negative impact – about five points on your credit score which will disappear over the next year.

Compared to the benefit of getting one’s rate reduced, it’s a non-factor. Negotiate away.

As for the less-than-100% payoff amount, you’ll have to negotiate the effect on your credit yourself. The company may note that you negotiated the debt amount and paid a smaller amount, which can have a negative effect, or they can simply mark it paid. You’ll have to negotiate that part.

Since it has been a while since your first book came out, what effects (excluding monetary) has it had on your life? Do you ever go back and take a look at it? How do you feel about it now that you are taking on your second one? Hope all is going well with the second book, can’t wait to read it.
– Mol

The only real effect it has had is that it’s made it easier to arrange interviews and the like with mainstream media outlets, and I expect that my second book will help even more.

In terms of my day to day life, it’s not really had any impact at all. I don’t go around talking about “my book” to everyone – doing so would make me completely insufferable.

I do like the slow regularity of the royalty payments. At this point, it feels like free money since I’m not putting in any effort for it. When you’re writing a book, it feels somewhat like you’re writing it for the advance, but once the advance is covered, it feels like gravy.

I don’t feel any different, really.

I have a question about ING’s mortgages since I know you’re a big fan of ING, I thought you might have some insight. I looked into the three types of mortgages they offer and they seem to be similar to an ARM loan just because they don’t lock in a percentage rate for more than 5 or 7 years at a time. My question is this, would you, personally, consider an ING mortgage over a more conventional, home town bank where you can know exactly what your payment will be for 30 years? Currently I have been pre-approved for a 4.75% but the ING is around 3.9 or 4% but can go up by 6% over the course of 30 years (or it could go down or stay the same). Your thoughts?
– Missi

ING’s mortgages are basically ARMs. If you’re intending to live in your home for a period anywhere close to the period before the first ARM adjustment, I recommend avoiding ARMs.

Adjustable rate mortgages are great if you’re just going to live in the area for a few years and you know this in advance. It can basically make the interest on a home loan much cheaper than rent in the area and allow you to also build equity in a house that might build a little bit of value over the next few years.

However, if there’s any chance you will be in that house more than a few years, the ARM isn’t worth the risk. Never bet that you’ll be able to get a different mortgage down the road – it’s just not a safe bet.

I have a question regarding Christmas (holiday) gift giving…

Our income has taken a major hit this year and that combined with a desire to reduce the number of “things” that we have in our home leads us to want to propose to our families (both sides) a significant scaling back of gift giving this holiday season. Essentially what we’d be proposing is that on each “side” of the family we’d go from giving everyone (siblings, nieces, nephews, parents, etc.) a present that each person get matched with a “giver” and a “givee” and that we set a limit on the $ so. So, for example, my sister Jane would be assigned someone (say, my daughter Ann) as the person she would buy for and another person (say my husband Jim) as the person who would buy for her. So, each person, on each side, gives one present and gets one present. That would dramatically reduce the $$ spent, the stress, the running around, and the STUFF.

My sister is already on board as her in laws already practice this on their side but we’re wondering how to approach it with the remainder of our family…particularly my husband’s side who a) we’re not particularly close to but b) we spend oodles of $ on every year and c) tend to read into our most innocent comments.
– Sara

If they read too much into innocent comments, I’d be very blunt about it. Don’t dance around the issue or else you encourage such people to ask and think things that aren’t true.

When everyone’s gathered together, just ask everyone at once. “What would you think about drawing names for a gift exchange next year instead of everyone buying for everyone?” That’s exactly how I would do it – in fact, I’m considering asking a similar question this year.

If you’re not particularly close to them, even better. Don’t worry about what they think. Do what makes sense to you.

What’s the most interesting thing you learned today
– Megan

An old friend asked me this over instant messenger just now and I thought it would be interesting to put in the reader mailbag.

The most interesting thing I learned today is that in nineteenth century England, mail was delivered six times a day to most of London, four times a day in most other large cities, and even twice a day in rural areas. It wasn’t uncommon for a letter to be written in the morning in Bath and be delivered in the evening in the outskirts of London.

That’s an impressive mail service. There would be times where I would be tempted to just throw off a note to someone and drop it in the mail even today if mail could be delivered at that kind of rate.

I actually came across references to this nugget three different times today, as I was doing some research into how money was borrowed and loaned in Victorian England.

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

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