Reader Mailbag #95

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 was the best Christmas gift you received this year?
– Andrew

The most sentimental gift (by far) was a custom-made cookbook prepared by my wife and kids, including pictures of them and a ton of good recipes of many of their favorite foods (chosen by them). Never mind the photos – reading the recipes was fun because of how they connected so well with the person that selected them. For example, I saw the “chicken nuggets” recipe and immediately thought of my daughter, who for some inexplicable reason claims all of her food to be chicken nuggets. Broccoli is chicken nuggets. Scrambled eggs are chicken nuggets.

The most useful gift was probably also food-related. My parents gave me an 8″ Global chef’s knife, which will (aside from our paring knife) pretty much replace every other knife we own. It’s incredible to use.

Almost all of my gifts were excellent this year, though. Perhaps I’m just getting easier for other people to figure out.

Our local power company is offering this interest based savings plan to help pay for future bills when they jack up the rates in a year.

Is this something worth participating in you think? They are offering 7.5%, which seems generous but I feel like if you have the money up front to contribute to this ahead of time, than it’s not really going to help you save.

What I mean is, if you have a lot of extra money to throw at this program, than it’s a great thing but it defeats the purpose of helping those that won’t be able to afford the rate hike (like me).
– John

I’m not sure what you mean that it’s not going to help people save. Essentially, all the program does is give you a somewhat bigger bill now to reduce the size of your bill by even more in 2011 and beyond. I don’t think it’s intended to help those who can’t afford the higher rates.

If you are truly in financial hardship – whether it’s caused by a rate increase or not – you should look into the assistance programs offered by your power company. In this case, you’d be looking at this.

If you’re asking whether or not I would sign up for such a program in general, I would call them and ask to see specific numbers and estimates, but if it is what it appears to be, I would sign up. It would effectively be a 7.5% return on your money in what amounts to a savings account.

What was your favorite book of 2009?
– Jamie

It was easily Let the Great World Spin by Colum McCann. It’s simultaneously a great portrait of 1970s New York, a collection of moving stories, and a thoughtful reflection on the role of chance in human life. I’ll read this one multiple times again in the future.

I’d also be remiss if I didn’t mention The Magicians by Lev Grossman, a wonderful fantasy novel that really draws on the impact that the stories we read as a child can come back and affect us as we grow older. I enjoyed it because it avoids the usual fantasy trap of making the heroes idealized versions of ourselves and instead makes them realistic people. Jonathan Strange and Mr. Norrell might be my favorite fantasy novel of the last decade or so, but this one isn’t too far off the mark.

I am 25, and my boyfriend and I are looking at buying a house in DC. We barely have enough money to scrape together a down payment, but really want to take of low interest rates, the tax credit, and low housing prices in our market. We’re young and are pretty good with saving, and I am sure that we will be able to build up an emergency fund again, but do you think it is foolish to use all of our money like this, even if it is for a great investment and the timing is right?
– Ashley

For one, I don’t believe buying a primary residence is ever a great investment. It’s too illiquid and too subject to local housing market fluctuations to ever be thought of as an investment.

If you “barely have enough money to scrape together a down payment” and are buying in the D.C. area, that means you’re going to be taking on a pretty huge mortgage. Never mind the low interest rate – your monthly payments are going to be enormous no matter how you slice it. Tack on top of that your home ownership costs (maintenance, etc.), the other services you’ll need, and the inevitable emergencies (like the inevitable exploding toilet) where you can’t just call a landlord and instead have to foot the bill yourself and you’ve got an enormous cash outlay that, based on your own comments, sounds like it might be beyond your means.

Live cheap. Build your career into something high-earning and stable. Save up enough so that your life won’t go into high-wire mode as soon as you sign the mortgage. Don’t worry about “taking advantage” of the current housing market.

We’re regulars at a family chain restaurant, and we got a server who had waited on us only once before. I was glad to see her because I remembered she was very friendly, complimenting what I wore and telling us about her music studies at a nearby college.

The first words out of her mouth were, “You stiffed me!” What??? We gaped, stammered and tried to recall if it was true. “I thought we got along great, so I couldn’t believe it when you didn’t leave a tip,” she said.

“No way!” I said. “I know we liked you, and we always tip here anyway.” I was recalling snatches of our conversation and a general warm, fuzzy feeling about her being a humanities major like myself. There was no way we intentionally stiffed her. I even began to wonder if another server stole the tip.

“You must have forgotten,” she said. “I actually cried about it because Mitch (another waiter…and now suspected thief) told me you always tip him well. So then I felt terrible and wondered what I did wrong.”

“Nothing!” I said. “We really do like you. We are SO sorry, and we’ll tip you double this time.”

“No, you don’t have to do that. I shouldn’t have said anything. It was probably my fault for talking so much that I distracted you.”

Maybe she was right. It was our oversight, and we were awful to doubt Mitch for even a moment. When we finished our meal, we left a $7 tip for $16 worth of food and still felt vaguely guilty as we walked out to our car.

Then it hit me. Can you believe the audacity of this woman? The guilt trip she sent us on has soured us against returning. It would be awkward to see her again knowing she expects and keeps tabs on tips and might confront us if we forgot, chose not to leave one or didn’t give enough by her estimation. I have never had this happen before (perhaps because I tip routinely and as generously as I can), and I’m still amazed.

Having worked in a restaurant, I know how hard it is and believe in rewarding decent service. I realize servers are paid hardly anything and depend on tips to get by. But gratuities are still optional, and I think it’s inappropriate to take a customer to task for not leaving one.

Any thoughts, Trent? How do you think most of your readers would have handled the situation?
– Lenore

Regardless of any “stiffing,” that was incredibly rude and unprofessional of the waitress in question. Unless the restaurant is a place that enforces a gratuity on the bill, she has no right to any tip. You give that tip at your own discretion.

Yes, it’s courteous and customary to tip for good service. Yes, many waiters/waitresses rely on tipping for income and need that money. That still doesn’t excuse the behavior.

I would likely have told the manager of the incident. An employee with that little respect for customers (and that little amount of discretion) would likely be a staff liability.

I would also not return to the restaurant for a while, but I would not be opposed to returning after a period of time (and some staff turnover).

Trent you have mentioned your dream of publishing non-fiction. What type? Murder & mayhem? Sci-Fi? Romance? Touchy-feely? Are there any authors you emulate?
– Brenda

Most of my fiction can best be described as “what if” fiction. Usually, I try to change one fundamental piece of information about how the world works, then try to look at ordinary life through the eyes of a normal person in this world.

For example, I wrote a novel-length piece of work a few years ago about the invention of an engine that allowed us to travel between stars, but to do so consumed enormous amounts of pure, salt-free water. Eventually, we no longer had enough water for everyone to drink, there were enormous wars fought over water, and a lot of people had left Earth to visit other stars but were basically out of contact. From there, I tell the story of three brothers (actually pretty closely based on myself and my two brothers) and how they grow up in this world, with outsized dreams of space travel and leaving Earth but with a devastating reality around them.

My last short story that I completed to a reasonable level of satisfaction revolved around a single woman a year after the discovery of a way for people to reproduce asexually with ease and essentially raise clones of themselves from infancy. She chose to become impregnated with her clone, but now feels it was a very poor choice.

That’s just the kind of stuff I like to write.

Is investing in non-hybridized seeds worthwhile?
– Kenny

As with any investment, you have to ask yourself two big things. First, what’s your goal with the investment? Second, what’s the risk of the investment?

Non-hybridized seeds can be really worthwhile – if you’re an avid gardener. The big advantage of non-hybridized seeds is that they allow you to harvest seeds each year, then plant them the following year. You can even do your own plant breeding if you so wish. This is valuable if you’re into gardening or have beliefs that revolve around avoiding hybridized seeds.

There’s a risk, though. You can’t just let seeds sit for a large number of years – they simply won’t grow. You have to grow them regularly to maintain your seed bank.

If you don’t live in a place where you can easily grow your seeds, non-hybridized seeds are a waste of money. You need to be able to replenish your own stores or else the seeds will go bad after a few years.

Have you ever considered starting a “Simple Dollar” fantasy baseball league where you participate with a number of readers? You could set it up on Yahoo! Sports yourself, join the league, then allow people to sign up by giving out a code on the site.
– Allie

That’s actually a pretty good idea. I usually participate in three (yes, three) fantasy baseball leagues in a given year and it looks like at least one of my regular ones is now defunct due to the number of people who are either unable to play or have chosen to resign.

If you would actually be interested in participating in such a thing, leave a comment for this mailbag. If I see a lot of comments, I’ll start one in March. If I don’t see many comments, I’ll just let this sleeping dog lie.

Is there ever a situation where you think it’s appropriate to take out a loan instead of paying cash?
– Bill

I have no problem with home mortgages if you’re in a situation where you can get a low-interest loan and your payments are low compared to the rental costs of something comparable in the area.

I also don’t have a problem with taking out a loan with no interest at all as long as you already have the cash to cover the debt. Keep the cash yourself in a separate savings account, set up automatic payments from that account, then just let it be until the loan is paid off. You’ll have cash left sitting in the account.

In much the same way, I have no problem with credit card use as long as you pay the balance off in full each month.

The real problem with any debt is the interest you have to pay. That interest is basically a huge price for impatience – one of our most dangerous human impulses.

I’m a new dad, my daughter is great. She’s 11 weeks now. I’m fortunate that we have all of the financial stuff in order. I do have a demanding job, but I make it a priority to leave by 5 to spend time with my daughter before she sleeps for the night.

I’m ethnically Chinese although I never learned formally. After my daughter was born I now have this overwhelming desire to teach her Chinese but I will have to learn it too to keep it up (my wife is not Chinese). Otherwise she will fall into the same trap I fell into as a child.

My question is, I firmly believe I can learn Chinese with 2 hours a week private lessons, plus 30 mins homework a night. But, I also cannot bear being late to see my daughter, and the thought of cutting out all this time for me to learn something, no matter how beneficial is driving me insane. What’s your take? Is this a quality investment of time, or shall I just enjoy my daughter and our time together?
– Arthur

Again, this is a question about investment. I think you need to sit down and ask yourself what the reward for this investment of time actually is.

It seems that you want your child to be in touch with his/her heritage, which is a noble goal. The real question is how highly that goal ranks in comparison to the also-important goal of spending a lot of time with your child.

I can’t answer that question for you because each one of us values different things on a personal level. For me, I would value the time I spend with my child. I would probably do something like purchase a copy of Rosetta Stone and spend some time each evening doing the program with my child, learning the language together. While it might not be as enriching as actually taking the classes, it would still teach some of the language and, perhaps more importantly, it would allow you to do it with your child.

Got any questions? Ask them in the comments and I’ll try to include them in a future reader mailbag.

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