What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
2. Job “upgrade”?
3. Refinancing for interest and cash
5. Bicycle advice
6. Checking account requirements
7. Evaluating investment options
8. Card game evening?
9. Meditation and/or prayer
10. Credit question
This article from the New York Times on how to get a job at Google is full of solid professional advice, but the big takeaway is this:
How do you write a good résumé? “The key,” he said, “is to frame your strengths as: ‘I accomplished X, relative to Y, by doing Z.’ Most people would write a résumé like this: ‘Wrote editorials for The New York Times.’ Better would be to say: ‘Had 50 op-eds published compared to average of 6 by most op-ed [writers] as a result of providing deep insight into the following area for three years.’ Most people don’t put the right content on their résumés.”
In other words, your accomplishments are often hard to evaluate if you don’t provide a benchmark for what it means. Think about that if you’re polishing a resume.
A friend of my had been posting about how he’s been making money via “dropshipping”. He sent me a link to the site, and basically, you act as a dropshipper between companyA and companyB. You don’t have to purchase the item from companyA, but instead copy the details from companyA to your listing on companyB, and when it sells, you purchase the item via companyA, but ship it to the purchaser from companyB. And you therefore your profit comes from any markup. I’m not sure if it’s against the TOS of companyA/companyB. I know if I were purchasing via companyB, and the package came branded everywhere w/ companyA, I would be a bit upset, because someone duped me into thinking they were selling this new product, and also knowing that the companyA store is open to the public, instead of open only to dealers. Some may not care, as they got what they purchased. I’ve heard the pro-argument, that it doesn’t matter who/where the products are coming from/through (assuming it’s not against the TOS of either company), because both companyA and companyB are getting their profits, you’re making money as the “dropshipper” and the end customer if getting a product at a price they deem as acceptable (or else they wouldn’t have bought it!). As it may not be technically illegal, it seems to me, this is a grey area, and just wondered what you thought about the whole process.
It’s not illegal.. I’m not sure why you would think so. You can make money doing this, too.
However, you are faced with the task of selling an item at a higher price than they could buy that item elsewhere. Unless you have some sort of niche, this isn’t a route to making a lot of money.
So, a “dropshipping” business has extremely low overhead, but there needs to be some method of attracting irrational customers (ones that don’t go elsewhere for lower prices). If you have a way of attracting customers, you can make money that way!
Q2: Job “upgrade”?
I currently make $31,000 per year as a systems support specialist. My job is really easy – all I do is go to people’s offices and set up computers or swap out components, then I just run a standard piece of software that puts default setups on the computers. It’s really easy and almost no stress.
There’s a position of higher rank than mine that’s available. It pays $44,500 a year, but it has some serious stress involved. I would be required to keep several servers running among other things.
I could really use the money but the stress scares me. What would you do in my shoes?
If I were you, I’d stay where you were and look for a low-stress way to earn more money.
I speak from experience here – highly stressful professional situations end up making your life miserable after a while. You might not know how truly stressful the new situation will be, but it sounds like it’s a definite upgrade.
Is there a side business you could start in your spare time? Perhaps you could create videos or start a blog. Maybe there is a project you could take on at work (documentation or something) that could give you a small pay boost in your current position.
I’m just not a fan of taking a job upgrade if it means a huge increase in stress.
Q3: Refinancing for interest and cash
I visited the credit union and they said that I could refinance my mortgage and drop my interest rate down to about 4.5% and then they said I could also get some cash while refinancing (about $30,000) by raising the balance. Is that a good idea?
This offer essentially combines a refinancing at a lower interest rate (a great idea) with a home equity loan (usually a bad idea).
I’m generally not a fan of home equity loans. Even when you use them to pay off higher interest debt, it still puts your house at risk because you’re using your home as collateral.
There are situations where a home equity loan is okay – for example, if you’re using the money for a home improvement that’s going to drastically raise the home’s value and you’re going to sell the home shortly thereafter – but taking out such a loan on your primary residence raises the risk of foreclosure, something I’m never really comfortable with.
SmartyPig is great if you’re saving for a very specific goal, particularly one you can purchase from an online retailer. In those cases, you can get a very good return on your savings by getting the money in the form of a gift certificate wit a face value bonus which you can then use on the item. (Example: I’m actually saving for a Macbook Pro, as my current laptop is showing some serious age.)
It’s also good if you’re doing some kind of “social” saving, like when a bunch of people get together to save up for a big gift for someone.
As an ordinary savings account – one that you’d use for an emergency fund, for example – it works fine, but it doesn’t offer anything exceptional enough for you to switch from your current bank. The interest rate is very good, but not earth-shattering.
Q5: Bicycle advice
My wife used to go on short bicycling trips with her family (5 to 10 miles) and wants to start doing this with our six year old. I have never owned a bicycle so I am looking for an inexpensive starter bike that won’t be miserable. What would you buy?
Honestly, I’d ask around and see if there are any bike sales in your community. Many communities have bike sales every few months where they sell improperly stored and abandoned bikes and you can usually get a good deal on one there.
I’d start with this kind of cheap bike. Adjust it so that it fits you well, learn basic maintenance (like filling the tires, etc.), then use it for a while.
If you find that you’re using it all the time and have specific problems with the bike, then it’s time to do research and invest in the “best” bike for you.
Q6: Checking account requirements
My local bank has an “upgraded” checking account (I can’t remember what they call it). It has a 2.25% interest rate but you have to maintain a minimum $5,000 balance (and you can only go below that a few days a month) and have 12 debit card transactions a month and three direct deposits a month. If you don’t do those things in a month, you forfeit the interest. What do you think of this offer?
If you do these things already in the normal course of your life, it makes sense to upgrade. If you already do everything but keep a high balance in your checking and you have plenty in savings to cover it, it makes sense to upgrade.
Otherwise, I wouldn’t do it. This is particularly true if your current checking account offers at least some benefits (like a low interest rate or no fees) or if this one has a fee involved.
It’s not worth changing your financial behavior to chase this kind of interest rate.
Q7: Evaluating investment options
I’ve been an avid reader of yours for a while, and I’m trying to figure out the best way to do some investments. I have three possibilities. I couldn’t figure the math out entirely myself, so I asked my brother, who has a masters in mathematics. He normally works in software engineering, and has no experience with finance maths, so he couldn’t figure it out either. I was hoping with your focus on finance you might know more. Here’s the rundown. I want to see how much an investment account will be worth after roughly three years on these three tracks. I’ve also got a plan to get rid of my debts in the next two to six months. None are interest bearing, but the way I invest, and thus the end result of that investment, is affected by the payment of those debts. Assume 7% interest for the investments. Option one is to invest 815.49 for 36 months. Option two is to skip two months and then invest 1105.47 for 34 months. Option three is to invest 815.49 for six months and then to invest 1105.47 for the remaining 30 months. Can you please tell me which is the option that does best? Me and my brother both think the third option is best, but that is not based on math. I do plan on dividend stock investments and possibly in bonds to stabilize the portfolio.
You and your brother are right – the third option is the best one. If you assume monthly compounding, your balance after 36 months for Option 1 is $32,752.54, for Option 2 is $41,681.00, and for Option 3 is $42,284.74.
So, Option 3 is the best one, but it’s not enormously better than Option 2 – Option 1 is the only poor option here.
I calculated this by setting up Excel to run the numbers for me. I simply had one column that included the amount invested each month and another column that calculated the balance at the end of that month (which is the previous balance plus the money invested that month times 1 plus 0.07/12).
This is a fine idea and is absolutely in the spirit of hosting a potluck game night. In fact, my parents would do this about once a month or so when I was growing up.
If you have a card game that at least one person knows well and can teach, then you have a potential evening of fun ahead of you.
The only advantage of having a board game night is that it affords more gaming variety. With card games, you’re fairly restricted into a few types of games. They might appeal to some, but not necessarily to everyone. With board games, I’m pretty sure I can find at least one game that everyone will like.
(If you want to learn a card game from scratch, I have a deep personal love for contract bridge.)
This answer is almost long enough to be a post on its own, but I’m just not sure it makes enough sense as a standalone post.
First of all, I meditate/pray each day for about fifteen minutes. I call it “meditate/pray” because I think the basic technique has value regardless of whether you believe in God (or any higher power) or not. The only real difference is what you focus on.
Here’s what I do.
For about five minutes, I focus entirely on my breathing. I focus on breathing in slowly, then breathing out slowly. If my mind wanders off, and it always does, I just gently guide my thinking back to my breathing. I usually do this while sitting on the floor, but you can do it wherever you’d like.
After that, I spend about ten minutes focusing on one thing in my life that’s bothering me. My entire focus is on letting go of that one thing. Mostly, I just reflect on how that one thing is not actually hurting me as I sit there. I usually just mentally repeat the line “I am okay. I can handle ____.” I do that slowly for about 30 seconds, then focus on my breathing for 30 seconds, back and forth.
You can choose what you want to focus on. You can focus on a particular line from the holy book of your choice or else on a simple request or two that you’re praying to God for. Just make up a sentence or two to gently repeat (inside your head) and focus on.
I find this really powerful. Every single time I do it, when my beeper goes off (I usually set a phone alarm for 15 or 20 minutes), I feel as though weight is gone from my life and it makes all of the other challenges of the day much, much easier to deal with. I usually try to do this in the middle of the day when I can, but some days don’t allow it, so I just do it the first possible opportunity after mid-day.
Q10: Credit question
I worked very hard for a couple of years to pay off a lot of credit card debt – just about 13k. I have not carried over a balance on my credit cards for just about 6 months now. Though I still use the cards occasionally for things like concert tickets, car repairs or travel expenses. When I DO use my card I typically pay off the entire balance on my next pay day (bi-weekly). Is this detrimental to my credit? Is it best to wait until the balances show up on my monthly credit card statement before paying them off? I’m very hesitant right now to get back into credit card debt like I once was so I’m not very comfortable carrying over significant balances.
I have two reasons for this question. I currently have a very high credit score and my husband and I are planning to buy a home sometime next year. During a first time homebuyer class the instructor seemed to think that I should wait until the statement arrives. Also, on the Credit Karma app it shows that 0% credit utilization has a negative impact on my credit score and 1-20% as positive. If I wait for it to display on my statement then it typically shows up as a small % of credit utilization.
The credit card companies report the balance given on your statement to the credit bureaus, so that’s the number upon which your credit score is estimated. Provided you aren’t charging your card up close to the credit limit each month, your best bet is probably to wait until your balance comes, then pay off that full balance. That’s what I do.
Still, I wouldn’t freak out if you choose to pay it early. This is only one small factor among many that make up your credit score. If you feel more comfortable paying it quickly, as you describe, it’s likely your statement will still have a small balance on it.
I really wouldn’t worry about it. Just keep paying off your balance before the credit card company can start charging you interest.
Got any questions? The best way to ask is to email me – trent at thesimpledollar dot com. Iíll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.