Reader Mailbag: Clock Confusion

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.
1. The price of tea
2. Preemptive computer replacement
3. Retirement account confusion
4. Secret Santa thoughts
5. Infrared heaters
6. Investing in I-bonds
7. Children and television
8. Health and weight management insight
9. Goal savings when goal disappears
10. Theo with Cubs

On the Saturday evening before a timeshift, I’m usually quite diligent about going through our home and adjusting all of our clocks one hour or another. Then I go to bed, confident that tomorrow will go smoothly and we won’t miss anything that we’ve planned.

Inevitably, though, I’ll forget a clock somewhere in the house and at some key moment, I’ll look at that clock and assume it’s correct, causing me to miss out on something or another.

Q1: The price of tea
Is it cheaper to buy tea bags or use loose leaf tea? I can buy a box of 100 tea bags at Walmart for $1.00.

– Lisa

It really depends on what you’re buying. If you just want a mildly tea-infused drink and are really only interested in black tea, such discount tea bags are probably perfect for you. You’re going to have a hard time finding bulk black tea sold at such a price.

However, as a general rule of thumb, when you’re comparing identical teas and looking at bags versus loose leaf tea, the loose leaf tea will usually be a bit less expensive.

If you’re happy with the tea that those bags produce for you, then by all means keep buying it.

Q2: Preemptive computer replacement
With Black Friday deals fast approaching, my husband and I are trying to decide whether or not to replace our HP desktop. It’s about 5 years old and for at least a year or two of that we’ve kept it on all the time because it takes so long to boot up (I know this lessens it’s life and we’re trying to remember to shut down now). Besides the usual aging factors, like increased fan noise and the slow boot, it’s doing well. Our concern, however, is that it might not last another year and Black Friday is the best day to get a great deal on a new one.

We’re living on a small graduate stipend and minimal student loans plus a little bit of babysitting income. We use the desktop for movies, etc, since we don’t own a tv, and basic word processing. So we don’t have any particular high power needs, just something that has a monitor large enough to watch movies and that provides me with a computer when I’m home with the kids. In a perfect world, though, I’d love one of the all-in-ones since it’d mean less computer the kids can get to and mess with (the blue power button is a constant temptation to my toddler).

Any thoughts on preemptive replacement? We have the money for a Black Friday deal, but not for a full or typical sale price.
– Jenny

Although you might save a bit of money buying a computer on Black Friday, the honest truth is that entry-level home computers are so inexpensive at this point that the deals on Black Friday don’t blow away the day-to-day prices like they did several years ago. You can buy a very solid home computer for $300 that will meet the needs you describe any day, and over the last couple of years, there haven’t been huge discounts on such home computer units.

That’s not to say it’s a bad idea to replace the one you’ve got, nor is it a bad idea to check and see what’s available on Black Friday. However, if you don’t see anything that’s really exceptional, I wouldn’t buy. Instead, I’d just wait until I actually needed a replacement.

Regardless, you should have some kind of backup plan in place for your key documents. You don’t want to lose them, especially on an aging computer, and having such a backup will make a switch to a new computer that much easier.

Q3: Retirement account confusion
I am 26 years old and am trying to figure out retirement accounts. I am currently investing through my employer’s 401k which is with Wells Fargo. However, they are not currently offering any matching benefits at this time. Is there any reason why I should continue putting money into this account versus starting an IRA with another company like Vanguard or Fidelity? It seems that these offer more options for funds to invest in.

– Josh

I definitely agree with your plan of opening an IRA elsewhere. However, there are still reasons for keeping a regular 401(k).

The biggest reason is that the maximum amount you can contribute to an IRA of either kind (Roth or Traditional) is $5,000 or $6,000, depending on your age. If you’re wanting to contribute more than that to retirement, the 401(k) is most likely your best option.

Aside from that, you may find that there are better investment options in certain classes with the 401(k). It is never a bad thing to have more options available to you.

Q4: Secret Santa thoughts
What are your feelings on “Secret Santa” gift exchanges during the holidays? My office is doing one and my extended family is thinking about it too.

– Ron

The entire purpose of a “secret Santa” gift exchange in an environment like an office is to simply ensure that no one is left out (assuming they choose to participate) and that gifts are more or less equal and anonymized. Without this, it’s pretty easy for gift exchanges to create hurt feelings in an office environment, which can quickly turn poisonous.

That being said, if you’re resorting to such methods to preserve everyone’s feelings, why have an exchange at all?

My solution would be to do something fun with it, such as turning it into a game. I participate in one such exchange that’s done as a “yankee swap,” where everyone takes turns opening an item then has the ability to “swap” that item with one that’s already been opened.

Q5: Infrared heaters
Trent, would dearly love to see you write on the infrared heaters that are getting so popular. I’d love to get one but don’t want to spend the money if they aren’t worth it. I get confused in reading about all of them. Do they really cost a dollar a day to run?

– Millie

Infrared heaters seem popular mostly due to a large deal of advertising for the EdenPURE brand of heaters as well as the “Amish” heater.

These heaters can be inexpensive to run, but they’re really no different from any other space heater. They save money due to the principle of zone heating, in which you lower the overall temperature of your home and then use a space heater only in the room you’re in. This, of course, can be done with any space heater.

In fact, many of the popular “infrared” space heater models get pretty poor reviews from Consumer Reports.

If you want to try this tactic, get a lower cost space heater and use zone heating. That’s how you’ll save money.

Q6: Investing in I-bonds
I am 23, I have been working as an accountant for a Fortune 500 company for 5 months since graduation. I live on half of my after tax income, I have an emergency fund consisting of 8 months of expenses (in a high yield, online savings account), and next year I plan on putting $1,000 to my Roth every other month and a $1,000 the other months to save towards an engagement ring and a down payment on a house. Still will have an extra couple hundred, after taxes/10% contribution to a 401k, that will increase my e-fund and car fund.

I am risk averse and my idea is to put the short-term savings in I-Bonds to obtain a decent yield. Is that a prudent idea or is there somewhere else to put my money? I do not plan on buying a house for awhile because I have location volatility for the next 2-4 years. I have seen many co-workers lose money on homes, I love renting and will rent until I am in a more stable location.
– Will

Right now, I-bonds offer a 3.06% rate. However, to get that rate, you have to lock up the money for at least a year without any sort of option to cash them in. If you cash it in before the five year mark, you sacrifice three months worth of interest.

The reason you get a better rate on I-bonds than on bank CDs or savings accounts is because you are locking down the money very tightly. For the first year, they’re essentially not liquid at all, meaning you can’t tap them even if you wanted to. Even after that, the penalty for tapping them early is pretty stiff until you reach the five year mark. Not only that, the fixed rate on such bonds is really low. You do get some inflation support, but it’s not strong support.

I’d only consider such bonds if you’re planning on cashing them in at exactly the five year mark, as I’m pretty confident that at that point you’ll want to have your money in something else. I’d also make sure that you have plenty of money not locked way in such bonds.

Q7: Children and television
Do you let your children watch television? If so, how do you monitor and control it?

– Shelley

The only television our children are allowed to watch are programs that we’ve pre-recorded on our DVR. This lets us pre-screen the programs so we know what’s being recorded. If it’s not recorded, they don’t get to watch it.

Most of the stuff that’s recorded are PBS children’s programs like Sesame Street, although we record a few other family shows like Max & Ruby.

Our children average about twenty minutes of television a day, usually as a “wind down” before we start our real bedtime routine of teeth brushing and fish feeding and bedtime story reading. It’s usually a half hour program about two out of every three days or so.

Our only television is not in the room where most of the children’s toys are, so when they’re playing, there’s not even a television available to watch. The only television is in a room that’s largely filled with adult things, so it’s not really a room that they go into when they’re looking to have fun.

Q8: Health and weight management insights
I love reading your blog and find it the continuing source of encouragement I need to spur my family on to making better financial choices and making the small choices everyday to be more self-controlled with finances. I am wondering if you follow any blogs that would help me in the same way that the simple dollar has with money but in the area of health/weight management and overall fitness? There’s so many out there I just thought I’d ask for advice from someone who’s writing style and personal philosophies about deeper issues seem to connect well with me.

– Andrew

To be honest, I’ve never really clicked with any blog ever written about health and weight management issues.

I think the big reason is that, unlike personal finance, it’s often hard to demonstrate how something universally works in terms of weight loss and health. Money is an absolute thing – you can count the dollars and cents no matter what. Time management is another absolute thing.

Health and weight loss is not an absolute thing. In college, I had a roommate that was as thin as a rail, yet he ate amazing quantities of unhealthy food. I know people who look and feel best when they eat really carefully and others who look and feel best when they eat whatever they like. I know people who are healthy who are gym rats and others who would never enter a gym. Lots of people tell me that diet is the key, but I find over and over again that my activity and exercise level is the real key for me.

When I read personal finance and personal growth and time management blogs, I can relate and analogize those experiences to my life and use those tactics. When I read health and weight loss blogs, I can appreciate the story, but even the tactics that make sense may or may not work for me. Rather than being a helpful story, it’s just an inspiring one, and because of that I’ve never really found any that have clicked with me.

Q9: Goal savings when goal disappears
I’m interested in your thoughts on what to do with savings it turns out you don’t need for a specified goal. Let’s say I need a new lawn mower. I start saving up and have enough cash on hand to replace it. I then receive a perfectly functional used one from a family member. Should I move some/all of that saved money to apply towards other goals or just leave it there as someday (years out I’m hoping) I’ll need that new mower? I like the idea of having that money set aside in case something happens…but it could be used for something else now. Is the answer just to reprioritize goals, moving some money out of the mower fund for other things, setting a new mower goal date, and continuing to save as before? Perhaps the real question is, how do you save proactively for something that may not have a current goal date?

– Ron

If you have another goal that you’ve thought about, planned for, and are currently saving for, then it’s completely appropriate to take that saved money and apply it to your newer goal. All this is going to do is accelerate you toward something you really want and have planned for.

The reason for having a goal is so you know how to save for it. If the goal is more than ten years out, for example, you should be putting that money into stocks, not into a savings account. If you have a very short term goal, for example, you might want to throw all of your savings toward that goal for the next month or two.

One caveat, though. I’m not clear on whether you have any sort of an emergency fund or not. Everyone should have at least two months’ of living expenses just sitting there in a savings account for emergencies like the one you mention. If you don’t have an emergency fund, this savings should become your emergency fund before anything else.

Q10: Theo with Cubs
You’re a lifelong Cubs fan. How do you feel about the team’s new management?

– Elliott

I’m happy with it. I feel like the new owners of the Cubs (the Ricketts, who bought the Cubs a couple years back) are taking their time and building the team that they want in Chicago. Theo Epstein, more than anyone else in baseball, knows what it’s like to take over a team with a long history of choking in the postseason and build a winner.

For the first time in my lifetime (or at least since I became a more serious fan of baseball), I feel like the Chicago Cubs are taking steps to actually build a long-lasting contending team. They’ve had playoff runs before (1998, 2003, 2008), but each time I felt like they sacrificed the long term in a terrible way for the short term, often destroying the nucleus of something that could have been long-lasting to take a (failed) shot at winning that year. I just don’t think Theo Epstein works that way based on what I saw in Boston.

The only thing that worries me is how much of an impact Larry Lucchino (the Boston Red Sox president) had in Boston in terms of building those teams. How much of the credit does Theo really deserve? From all accounts, Theo deserves a lot of it, but did Lucchino curb some bad impulses and decisions? I guess we’ll find out.

Got any questions? Email them to me or leave them in the comments and I’ll 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 hundreds of questions per week, so I may not necessarily be able to answer yours.

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