This is Reader Mailbag #100. With this mailbag, I’ve decided to start naming the mailbags based on an interesting question or two answered within the mailbags, making it easier to find such mailbags (in theory).
I refuse to buy gas from BP [due to various political reasons]. In my town, however, the BP station almost always has gas prices that are a nickel per gallon lower than the prices at other stations.
As a frugal person, I’m constantly torn about whether or not to go back on my stance and save a dollar or two on each of my fill-ups. At the same time, I really don’t want to buy gas from BP. Do you have any thoughts or guidance here?
(I excised Shane’s political reasons because they’re not really germane to the discussion and they would cause a long political sidebar that doesn’t really need to be brought up.)
To put it simply, Shane, you’ve reached the very point where you’re putting your money where your mouth is when it comes to political beliefs. Are you directly willing to put your dollars on the table due to your political beliefs or do your more direct needs (saving money) supercede it?
This is pretty much entirely an internal issue. Do you believe in these political causes deeply enough to literally start putting your dollars on the table for it? I can’t answer that for you, but I can say that it’s never a cut and dried issue for anyone because everyone has different experiences, different values, and different ideas.
There are certain stores and businesses that I will not give my business to for various reasons, political and otherwise. Usually, the reasons have to do with atrocious customer service or poor products, but I can think of at least one case where I made the decision to stop using a particular company’s service because I didn’t like their overt sponsorship of certain political activities. I don’t really care whether or not it costs me a few dollars because it’s tied to a belief I hold quite dearly.
You need to ask yourself how deeply you truly hold these views – it’s not a question I can answer for you. I’ll just say that I think it’s perfectly reasonable to not spend your money at a business that engages in practices you don’t believe in.
What do you think of MMORPGs like World of Warcraft as a frugal gaming option?
Games like these require a monthly fee to play – in the case of World of Warcraft, it’s between ten and fifteen dollars – which is a bad thing. However, the good aspect of such games is that the amount of gameplay available is enormous, plus such games also develop a strong social pull because of the interactions with real people.
If you assume that playing such a game slows a person’s other gaming purchases down significantly – from, say, a new $50 game a month to one per quarter – then it’s obviously a good way to save on a hobby that a person enjoys.
The danger with any such game, though, is overplaying. The social connection – the fact that you’re playing with friends and people you know – often adds a “keeping up with the Joneses” mentality, which means that people can often get absorbed into playing such games excessively. You play and play and play in order to socialize and also to one-up your friends with various in-game achievements.
If MMORPGs like World of Warcraft are played a reasonable amount and result in decreases in the overall entertainment budget of a person or a family, I say they’re a good thing. However, if they are overplayed and cause disruptive behaviors or simply beocme another bill tacked onto spending that isn’t cut in other ways, they’re a problem.
I’m a fifty four year old widow with four adult children. A year ago, my husband suddenly died in a vehicle accident. He left behind enough life insurance money to pay off everything and to give me some time to figure out what’s next in my life, which was a blessing. I decided to sell our house and move closer to my sisters and our children.
Now, though, it’s time for me to start over with things. I haven’t worked at all in thirty years and I simply don’t know how I’ll ever find a job in the working world without any experience at all. Do you have any suggestions?
Your best approach as you re-enter the workplace is to be very clear and straightforward about your experience. Don’t hide it. When you’re asked to provide an employment history, tell your situation clearly. Don’t try to hide it or anything like that.
It sounds like your financial situation doesn’t require you to immediately work, but that you’re going to need to work in the coming years and you find yourself in a psychological position to be ready to go back to the workplace. What you choose to do likely depends both on your financial needs and also on what your interests and talents are.
If you’re seeking entry-level work to fill the hours, you likely already have everything you need to find work. If you’re seeking a position with higher financial rewards, however, you may need to go back to school in some regard.
The real question is what do you want to do? How would you ideally like to fill those working hours in the coming years? Spend some time thinking about it and come up with an answer that’s true to you and your skills and talents and interests. Once you know what that is, go for it – it certainly sounds like you have the resources you need to make what you want out of this situation.
One of my family members actually found herself in a very similar situation. She found an entry-level job and spends her spare time pursuing freelancing opportunities that relate to her hobby, which is a form of art. She’s absolutely happy with the way she fills her hours.
You sometimes review books that are pretty far from personal finance. How do you decide whether or not to review a book on here?
I mostly use my gut. If I see a lot of material in the book that I think is in some way connected to what I talk about on The Simple Dollar, I’ll consider reviewing the book, no matter what it is.
So, for example, I consider time management to be a very relevant area, because the more effective you are at managing your time, the more time you have to earn more money or to simply enjoy what life has to offer for you. I feel similarly about books on psychology issues, particularly common issues among the people I know. We all seek happiness, after all, and money is just one tool to help us get there (or keep us from it).
There are many books that I pick up and think, “There might be something in here relevant to The Simple Dollar.” When I read books like that, I usually consider them personal reading and don’t read them during my work times. I save my reading during that time for books I’m much more confident about in terms of their focus on personal finance and career issues.
Basically, if I find something interesting in a book or think it’s relevant in some way to the things I talk about on The Simple Dollar, I’m likely to at least consider reviewing it, no matter what the book is.
My brother believes strongly that the U.S. dollar is about to collapse. He is buying lots of gold coins and other such things. I bacially think the entire thing is ridiculous, but I’m curious as to how you would prepare if you believed the dollar was going to be worthless in a year.
I wouldn’t buy gold, for starters. If the dollar suddenly enters hyperinflation or something, gold won’t suddenly become the currency du jour on the street.
What do I think will be the currency you need? Food and skills. I would focus my money and energy on stocking up on non-perishable food items as well as useful skills. I’d probably practice my home repair skills and carpentry skills by fixing my home up as well as I could.
I would also focus on as much self-sustainability as I could, setting up a backbone for it. I’d buy a generator – but that’s something I intend to buy for myself anyway. I’d probably buy a wind turbine, especially if I lived in a rural environment.
I’d start growing a lot of vegetables and items that were very easy to replicate and sustain on my own – potatoes immediately come to mind. I wouldn’t worry that much about non-hybridized seeds because, frankly, it takes a lot of skill to not have them go to waste.
In short, I’d make sure that my family had the things they needed to make it through rough years – food, shelter, water, clothing, and so on. Gold might help, but I tend to trust actually having the food on my shelf a lot more than I trust having an investment.
Of course, I already do a lot of these things. We have a lot of food in the pantry. I know how to garden and produce plenty of food. I have quite a few tradeable skills that would pop up in that situation.
Would The Simple Dollar ever endorse a candidate for political office?
Unless Amy Dacyczyn decides to make a run for the Senate, no, I wouldn’t endorse a candidate.
Here’s the flat out truth: I don’t believe that either major political party actually has my interests at heart, nor the interests of most of you reading this. The current political climate doesn’t do much at all to reward people who are truly careful and thoughtful with their money.
A person who is debt free with a lot of cash on hand would want things that would be political suicide today. They would want the Federal Reserve to jack up interest rates – this would make the most secure investments, like CDs and treasury notes, return a lot more. Of course, that would also make all debts have a much higher interest rate, which would be devastating to people who spend money like water (and the businesses that rely on such spending). I’d want the elimination of the capital gains tax (which I guess would be more like the Republicans in theory) but I’d also want more security for my cash investments, like better FDIC insurance (which I guess would be more like the Democrats in theory).
In truth, neither party speaks to the financially responsible and frugal among us. If a candidate arose that truly spoke along those lines, it would be political suicide for them. However, that candidate might actually get an endorsement from me. Good luck with that, though – I don’t believe a lucrative Simple Dollar endorsement would really help against a wave of negative ads funded by big banks and large manufacturing companies.
What do you consider to be an excessive emergency fund? My husband and I have more than a year’s worth of living expenses in cash savings. We don’t have any children living at home with us any more. We have no debt and we both have solid jobs in careers that are at least somewhat in demand.
In your shoes, I would consider an emergency fund that large to be a bit of an overkill.
However, there’s another really important factor in play here. Does the emergency fund make you feel more secure? Does it help you or your husband to sleep better at night knowing your money is safe?
I don’t see any problem for risk-averse people to keep a lot of their money in cash. It might simply be that your husband is very risk averse and he does not relish the idea of putting the money at risk in the stock market or the real estate market. To me, that’s thoroughly understandable.
Sit down and talk about it. If it’s the risk that you’re worried about, consider putting some of the money into inflation-protected treasury notes from the U.S. Treasury Department or buying some CDs with some of that money. You maintain the security you have – owning things that are fully backed by the federal government – but you at least earn a bit more than you would in your typical savings account.
My brother makes amazing homemade wine in his basement. He’s won several tasting contests with his wines and I think he should get into the business of selling it and producing larger quantities of it. Every time I bring it up, though, he really doesn’t seem interested in it, but he’s obviously deeply passionate about the wine making. Do you have any suggestions on how I could convince him to turn this into what would be a surefire business?
First of all, it may be that he simply doesn’t want to turn something that is a fun hobby for him into something that is his life’s work. Another issue might be that he has zero interest in the business side of winemaking – things like cataloguing inventory, selling the wine, paperwork, and so on.
Sit down with your brother and see if you can figure out what he wants to do with it. If he does have some interest in expanding but he’s held back by a lack of interest in handling the business side of things (something that many hobbyists feel), perhaps you could help him to find a business partner for the endeavor.
Work through what his concerns are before you do anything else. If he simply loves it as a hobby, let it be. If he does have true interest in making something happen but is held back by some specific fear or concern, do what you can to make that concern go away.
You obviously believe in this wine that your brother makes – if nothing else, just make that really clear to him, because even if the business doesn’t happen, such genuine care will really mean a lot.
My twenty seven year old son still lives at home. He was laid off from his job in early 2008 and moved back into our home for what was supposed to be a short period while he looked for work. He’s no longer bothering to even look for work. Most days, he just sits down in the basement in his pajamas, surfing the web. I don’t know what to do.
Obviously, something needs to change about the current situation or else it will continue for a very long time. That change might come from within him, but that could take a long time and is wholly unreliable. Most likely, you’re going to have to provide the change in the situation.
One common method is to simply lay down an ultimatum – make him move out. Many parents are loathe to do this because it would likely mean that their child would go through a very rough period, potentially even including homelessness. Alternately, you can allow him to stay provided he meets certain criteria – he looks for a job a certain number of hours a day, he sends out so many resumes a week, or he gets involved in something that pushes him toward career progress (perhaps going back to school or something along those lines).
This situation needs a wake-up call, but that wake-up call can take a lot of different forms. If you want something to change now, you’re going to have to be the one to provide the wake-up call. If you “can’t” do it because you’re too worried about the consequences of it, then you don’t truly want change now.
Really, the decision is up to you far more than it’s up to your child at this point.
Spring training in baseball is about to begin. What are your predictions for the coming season? Let’s see how good of a prognosticator you are.
OK, here goes.
AL playoff teams: New York, Boston, Minnesota, Oakland
NL playoff temas: Philadelphia, Los Angeles, Saint Louis, Chicago
World Series champions: New York
NL MVP: Albert Pujols
AL MVP: Joe Maueer
NL Cy Young: Tim Lincecum
AL Cy Young: Ben Sheets (seriously)
Stories of the year: a big turnaround in Oakland thanks to Sheets’ veteran leadership of a bunch of talented young guys, Pujols chasing 61 home runs, and a current Hall of Famer confessing to steroid use (I have three possible names in mind)
Let’s make fun of these predictions in November, shall we?
Got any questions? Ask them in the comments and I may address them in a future reader mailbag.