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. Comparing income levels
2. Driving for cheap gas
3. Finding a mentor
4. Bread or all-purpose flour?
5. Breathing room in budget
6. Week of work lunches
7. Questions about renting out room
8. Inexpensive pest solutions
9. Good Kindle books for cheap
10. Reliable car suggestion
One of my biggest frustrations with the modern world is the freedom companies have to make claims on their packaging. Almost no evidence is required to make a broad statement on a food package.
The reality is that almost everything claimed on the package is dubious outside of the Nutrition Facts label.
If you want to eat healthier, the best way to start is with that Nutrition Facts label. Or, even better, buy fresh fruits and vegetables that don’t even need such a label – they’re simply good for you.
But sometimes I have problems to understand your posts when it comes to income. I see numbers like 70k per year for a Bachelor etc and want to compare them to our income levels. But this is quite impossible i you know nothing about taxes in the USA. So maybee it would be interesting for your international readers to do a simple calculation what a 70k income means net per month afther all taxes. Or are these numbers already net-values?
I give you a small example from austria:
If you earn 52k € a year you get 3700 € a month. But only 2200 € are payed directly. The difference goes into social inssurance an a state run retirement-program (no alternative here). So you end up with 32k net a year.
Maybee you could post something like this for an american employee so everyone can a better understanding of the numbers.
That’s difficult to do easily. One tool you can use is this page, which compares minimum and maximum tax rates between countries. In the United States, though, the range is anywhere from 0% to 55.9% depending on your location and income level, while in, say, Azerbaijan, the range is anywhere from 14% to 25%. It’s almost impossible to compere individuals because of the differences in income and location.
On top of that, you have the issue of exchange rates, which change constantly. Over the last three years, the dollar has varied quite a bit even with the euro, ranging from 0.82 euros to the dollar to the current 0.72. That also alters the exchange.
If I were comparing Austria to the United States right now, I’d look at the income tax range – 0% to 50% – and assume that they’re pretty similar. Then, I’d look at the exchange rate, which is about 0.72 euros to 1 dollar, and use that to convert dollar amounts to euros. So, if you see someone earning $70,000 annually in the US, you could convert that to about 50,000 euros per year, and they’re probably paying something similar in taxes. Getting more specific than that gets really complicated really quickly.
Q2: Driving for cheap gas
My parents have no appreciation for the time value of money whatsoever. I am trying to figure out how to show them that it’s not worth it. For example, my mom will drive clear across town to save $0.03 per gallon to fill her car. This seems like it’s barely saving her any money at all.
You’re right that it’s not saving her much money in this case – it’s probably losing her money. Let’s say your mother’s car gets 25 miles per gallon and she has to drive two extra miles (each way) to save $0.03 per gallon. Let’s also say that her car takes 10 gallons to fill up on average.
So, if she fills up her car and saves $0.03 per gallon, that saves $0.30. However, if she’s driving four extra miles to fill it up in her 25 miles per gallon car, she’s eating 0.16 gallons to do so. If gas costs $4 per gallon, it’s costing her $0.64 to drive over there and “save” $0.30.
This isn’t even a “time value of money” question, really. The dollars and cents don’t add up, regardless of time. If you can drive a block to save $0.03 per gallon, that’s fine, but if you have to drive much further than that, it’s not worth it. You need a big savings – $0.10 or more – to make it worth a multi-mile drive.
Q3: Finding a mentor
I am the only “computer guy” for a business of about 40 people. I mostly just make sure the systems are working and we have everything in the “cloud.” I am really struggling to find a mentor to help me grow my career. While I like my job, I would like to figure out where to go next and how to build my skills but most of the other “computer guys” I know are kind of aimless and happy where they are. What can I do?
The recipe for finding a mentor is easy. Find someone you respect in your field, preferably someone you won’t come into direct competition with in the reasonable future. Find a way to offer help to this person so that they’re willing to help you, too. A mentor-mentee relationship is one of sharing – it’s not just the mentor giving to the apprentice.
If you don’t have anyone in your community that fits, start looking online. Look online for people who are doing what you want to be doing someday, then look for ways to help out this person. You’re much more likely to get their attention with genuine help or insight than with a generic plea for that person to be your mentor.
Don’t even make a formal request for mentorship. Once the communication channel is open, just explain your situation and ask for their thoughts. Follow up as needed. Most important, keep that channel open and give help back to the person who is helping you. If you keep it a two-way street, the relationship will last and last.
You’re going to have a bunch of false starts with this approach, but you will find people who will help. Another tip: don’t go for the most “popular” person, as those people are often so flooded with requests that they don’t have time to give individual attention. That doesn’t mean the person is bad or a “jerk,” it just means that they get many, many, many requests and they have to either say “no” a lot or give trite answers to everyone.
You certainly can.
You would still be checking for the right state of the dough, which means you’d keep adding flour until it’s just barely sticky. That indicates that you have the right amount of flour in there.
Bread flour actually works best for making loaves of bread. All-purpose flour makes a good loaf, but it also works well for many other baking uses, whereas bread flour works best only for bread.
My philosophy is that an ideal budget rarely has “overages.” Instead, your categories should consistently come in under the budget target.
If that happens, you’ll have money left over in your checking account at the end of the month. That money can be used to build up an emergency fund or as an extra debt payment.
This also solves the “breathing room” problem because if you do go over in a category a little bit, you should be “under” in a few other categories which takes care of the problem.
That’s how I handle it, anyway. I budget high for things like food and household expenses.
Here’s how it works. For lunch or supper on Saturday, make a big meal, enough so that there are two or three leftover meal-sized portions for you. Package up one of those portions in a container in the fridge, then put one or two more in individual meal-sized containers in the freezer. Do the same again on Sunday. On Monday, take the Saturday meal from your fridge to work. On Tuesday, take the Sunday meal from your fridge to work. For the rest of the week, you have two or three meals in the freezer, ready to grab.
It doesn’t take a bunch of extra work to do this. It just adds a minute or two to meal prep and then to cleanup.
Some ideas that work well for this are soups, stews, chili, pasta meals, and protein-and-vegetable pairings. It’s easy to package these things and easy to warm them up in a microwave for a good cheap lunch.
(I usually eat leftovers for lunch myself, but that’s because my lunch happens in my home kitchen every day.)
Q7: Questions about renting out room
A close friend of my husband just got into medical school near our home, and he and his wife are going to move to our area. They approached us about renting some space from us since we own a 4 bedroom house (no kids) and they will have a limited income.
My husband and I are open to the idea of renting out space -one of the bedrooms and then letting them use our bonus room as a living space, and then we would share the kitchen. We could definitely use the extra money towards are mortgage and to pay down student debt, so we are excited about that. We know that it is going to be hard and the 4 of us need to sit down and establish clear boundaries and guidelines.
Here are my questions:
1. What is a good way to determine how much we should charge them to live here- we are thinking of a flat rate that will go towards rent and utilities.
2. How does this effect our taxes? I thought we would need to declare it as income, but my husband doesn’t think we would need to report it.
3. Do you have any advice on how to set up this arrangement so we can start off with a good foundation?
You should check out rental rates for similar space in your community. Look at Craigslist for rooms for rent and see what they’re charging. Your idea of a flat rate is probably best.
You absolutely do need to report the income on your income tax. This document from the IRS explains the details. Any tax package, like TurboTax, will handle this easily, though, so you don’t need to stress out at all if you keep good records and hold back some of your income for taxes.
You absolutely need a written lease that states the terms of your agreement with the renter. Your state likely has templates for such a lease agreement online that you can download and modify a bit to your specific needs. Your community may have additional rules as well, so you’ll want to check with city hall first. Be very careful when you screen the people who might rent from you – you’re better off not renting if you’re concerned about the potential renter in any way.
Q8: Inexpensive pest solutions
During the summer our kitchen just gets filled up with these little tiny ants. They aren’t harmful, but they crawl on everything and get into any food that isn’t very well sealed. We have tried several things to get rid of them. Do you have any ideas that we might try to keep them away?
Assuming you don’t have pets, your best solution is borax. Buy a box of borax at the store and mix half a cup of it with half a cup of sugar. Sprinkle that stuff all over where you see ants regularly.
It’s not really going to bother you much in such small amounts, but the ants will carry that stuff back to their nests and it will take care of business.
We had an ant problem in 2011 – tiny ants just like you describe. Borax and sugar got rid of them for good. I haven’t seen them since.
Q9: Good Kindle books for cheap
How do you find good Kindle books that aren’t as overpriced as books in the bookstore? I got a Kindle because I thought the books would be cheaper and they are a little bit but good books are still expensive. There are lots of cheap and free books but you have to dig through mountains of trash to get to a few good ones.
Even with these, you still have to hunt through 20 books you’re not interested in to find one that you are interested in, but I’ve found a lot of good books using those resources.
Just bookmark it in your browser and visit the daily link every single day. You’ll eventually find some good stuff.
Q10: Reliable car suggestion
I need a reliable car for work. I am deciding between buying a new car or a certified pre owned model with very little miles on it (mainly to avoid paying for depreciation on new cars). I am looking at Mazda 3s and will probably pay cash for either option. The main thing that is important for me is reliaibility. What would you recommend?
J.D. Power does a survey of three year old car reliability and their data matches my own experiences (and the stories I’ve heard) quite well. Here are their latest numbers.
Mazdas are actually near the middle of the pack here. The best “bargains” in terms of this list are Buicks, Hondas, Lincolns, and Toyotas.
Rather than getting a Mazda 3, if you’re looking for reliability, I’d look at a Toyota Corolla or a Honda Civic.
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.