Reader Mailbag: How Many Questions?

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. Replacing cable
2. Do-it-yourself wills
3. My no-generic items
4. Money goals after retirement
5. Tipping tip
6. Frugality and building relationships
7. 401(k), Social Security, and taxes
8. Selling a used car
9. Freezing baby food
10. Which card to pay off?

In case you are wondering, I get somewhere between 150 and 200 questions a week for the reader mailbags that I do. I can realistically only answer 20-25 of them.

When I get a question, I usually read it. If it’s someone going through something life-altering or very urgent, I’ll answer directly to them immediately. If not, I file it away in a folder. When I get ready to assemble a reader mailbag, I go through that folder and decide for each mail that I read whether a question makes for good mailbag fodder. If it does, I put it in the mailbag column I’m writing. If it doesn’t, I archive it. I usually do not get through everything in the mailbag before the column is full, so I leave the rest for next time.

Sometimes, I’ll pull out a question, start answering it, and find that it goes on for several paragraphs. I usually spin these off into their own posts.

If I don’t get to a question you asked, I apologize. It’s simply a matter of numbers. I could almost do nothing but reader mailbag posts at this point and still not answer them all. I usually just pick the ones that I like for some reason or that I think will provide an interesting answer.

I noticed you talked about possibly going “Cable-free” in your most recent entry. I agree! I use Netflix to get a movie fix, but there is also a great program called “PlayOn”. It works with the PS3/Xbox 360. It lets you stream Hulu, CBS, and a few other types of programs straight to your TV through the PS3. A little application gets installed on your PC, and then streams to the PS3. Check it out, I think you can get a free 2 week trial, too, before you buy. When I bought it, I think it was $30. One-time fee, no subscription. However, I have heard rumors of possibly free content on Hulu turning into paid content, so I don’t know how that would effect this program.
– Josh

The current generation of home video consoles – particularly the PS3 and the Xbox 360 – do a really good job of streaming media to your television for a very low cost. Netflix, for example, offers a streaming service with every subscription, even the $9 a month one (which gets you one disc at a time and unlimited streaming). If you have one of those consoles, it lets you access a good chunk of Netflix’s library while sitting at home – you just choose the item you want and you’re watching it within a minute or two.

There are several options out there for streaming other kinds of media to your PS3 or other console, too, like Hulu.

A friend of mine recently bought a Playstation 3 because of these arguments. He has no intent of playing games with it. He’s using it to watch Netflix ($8.95 a month) and Hulu (free) on his television at his convenience, as well as watch DVDs and Blu-Ray discs. Considering he’s doing this at the same time as getting rid of his cable box (that had a DVD player in it, since he doesn’t own one), he estimates his break-even point will be in about five months and he’s not going to miss any programming that he actually cares about. Sounds like a good move to me.

Is there a simple, frugal way to do a will for yourself? I have a few assets, no spouse or children. I would want my estate to go to my sibling,
– Mary

You can certainly write a will yourself. All you essentially have to do is list your assets, name your beneficiaries (your sibling), name your executor, and have two witnesses sign it in front of a notary. The difficulty with this is that if anyone chose to challenge this will, the witnesses would have to testify to your state of mind, and lawyers are creative folks who will find a reason to challenge if someone is paying them to find it.

I don’t think in your case you have too much to worry about, but you might want to consider using a service like LegalZoom as a compromise. They’ll help you set one up for a pretty reasonable price.

I know you have experimented in finding ways to save money – making food at home and making your own laundry detergent for example. A few weeks ago I recall you saying you hadn’t found a way to make a cheap shampoo so this created a question for me – What are some of the items you do not buy used or make or refuse to use the generic of? I know some people find it gross to wear shoes from the thrift store but I find that they can be a good buy for nice shoes. I personally love soda so while I am cutting it out if I’m going to buy a drink its going to be a big name brand.
– Katharine

I won’t buy generic garbage bags. I’ve had too many disasters with garbage spilling all over the floor due to cheap bags.

I am very picky about dairy-based food items. I won’t buy them if I can’t clearly see that they don’t have rBGH or other added growth hormones in them. I’ll often choose organic milk because of this.

I strongly prefer local produce when in season, to the point where I’ll happily pay more for something grown locally that morning rather than something grown far away a week ago.

If I’m buying pure luxury items, I don’t skimp. For example, I figure if I’ve decided to have a good beer, I’m not going to go cheap and get something awful. I’m going to get something tasty.

I think that largely covers it, at least in terms of the examples I can think of.

Everyone agrees that during our working years it makes sense always to try to spend less than what’s coming in. But what happens after retirement? My wife and I have small pensions, I have Social Security (she may start collecting in two years, or may wait), and we both have saved money in various retirement vehicles. The usual advice I’ve seen is to take out no more than 4% of savings each year. But that’s with the goal of preserving principal, as I understand it. We could live comfortably now taking no more than that (though we expect our medical expenses to increase as we get older). We do not have heirs we need to provide for. The causes and family we care about we’d rather help now while we’re living.

Our question is: How do we set money goals now? A lifetime of frugality means we don’t want to throw away the money we’ve slowly acquired, but we also don’t want just to sit on it. There aren’t a lot of material things we need and don’t have. We could travel more, we could go to more concerts and theater, we could buy art, but we don’t feel stongly impelled to do so. We’re lucky to be happy with the things we have!
– Michael

If you’re happy with what you have, don’t spend it. Hold on to it, make sure that you’re both sustained through any lifespan that you might have, and then give a large gift to a charity in your estate.

Now, that doesn’t mean you can’t help a charity now. For example, some charities can borrow against such pledges for improvements now without taking a dime from you or can move forward with projects based solely on pledges. Other charities offer charitable annuities, where you give them some lump sum of money and they give you payments for the rest of your life. I know, for example, that Consumer Union (the makers of Consumer Reports) do this.

My concern would honestly be that you have enough money to splurge on stuff for the sake of splurging now, only to find one of you alone in fifteen years without enough money to make ends meet. I don’t think that’s a fate either one of you want. I’d consider an option that allows you to give while you’re alive without abandoning your security.

I live on Long Island, NY and when out eating with friends, we just double the sales tax on the bill. Our sales is 8.625% and that would bring the tip to 17.25% which is great since we usually tip between 15 and 20%. If the service was lousy, go back to the 10% rule!
– Barbara

That’s a good strategy in a locale that has a good interest rate, so I thought I’d share it.

One thing I’ve seen recently is that some restaurants are starting to add a 15%, 18%, and 20% calculation to the receipt to aid in tipping. I am actually strongly in favor of that as it makes such calculations much easier.

I usually give the low one – 15% – for bad service (unless something degrading happened). I give the high end for great service.

I became frugal months ago, I like it and I feel I’m doing the right thing.

But people doesn’t see it this way, they see it as something bad, when people know I’m frugal they start to dislike me.

I don’t care about people’s opinion, but you always suggest building relationship with other people, everything goes smoothly until they know I’m frugal, then they start to have this bad image about me.
– Al

I don’t think there’s a need to bring up one’s frugality in an environment where you are establishing a relationship with someone unless it’s a “frugalites anonymous” meeting.

I’ve often heard that you should avoid talking about money, politics, sex, and religion when you’re first getting to know someone because those issues are sensitive and rife with disagreements. Frugality would fall under the money category.

You can certainly talk about some of the techniques that you use for things in life, but you don’t need to lead with them. Just focus on other areas of conversation and if you feel uncomfortable talking about something, lay low during that part of the conversation.

I have a question about my 401K that I wonder if you have any experience with. I currently contribute 17% of my check each week. That means I max out the yearly $16,500 contribution sometime in September every year. I also meet the Social Security tax limit at about the same time. This means for about the last 10 weeks of the year my weekly pay check is about $400 per week higher. However, I have been wondering if I would be better off tax-wise reducing my weekly percentage to have a smaller amount taken out year round. Or does it all equal out when my yearly federal taxes are done?
– Danielle

I don’t believe it would make any difference at all in terms of the total taxes you pay. However, it might result in a situation where your employer is not withholding adequate amounts from your paycheck over the course of the year, but most employers usually strive to withhold enough to ensure their employees get a refund at the end of the year, so your result would likely just be a change in the size of your refund (or the amount you pay in) versus the size of your checks throughout the year.

Another difference it would make is in terms of equaling out your paycheck over the course of the year. Depending on how you budget, that could be important, too.

I don’t think it’s something to stress out about in any case. The amounts we’re talking about are very small in terms of your annual income.

I have an older British sports car that I’m no longer interested in. I would like to sell it, and use the money to help replace my older everyday vehicle.

I know this is silly, but for some reason I dread the whole selling process. I ran an ad on craigslist, and I got a bunch of tire kickers that I really didn’t want to deal with. The result is that I’m now procrastinating in my efforts to sell the car, which doesn’t solve my problem.

The car is in decent shape and running order, but it is also old, so it has flaws that would be normal for a 35 year old car. I also keep thinking of small improvements that could be made to the car, and these become excuses to not proceed with the sale.

I’ve thought about trading this car in, but I’m assuming most dealers don’t want to buy an older car, and they also won’t give me even a fair price for it.

I believe this car is worth $7-8K, but I’m willing to take less to sell the car, so I’m not being stubborn about the price. I did turn down a sight unseen offer of $5K.

This all leads to my question for you: Do you have an recommendations/advice/strategies for selling a used car?
– Jay

The biggest thing you need to do is to determine the price that you minimally expect to get for the car. You seem to expect more than $5,000 but you’re willing to take less than $7,000.

My suggestion would be to figure out what you want to get out of it, add on about 15%, then list the car widely. If it doesn’t sell for what you want, keep trying.

I would also make sure that you’re not overvaluing the car. What is the car’s blue book value? Use KBB and get a good estimate.

We are expecting our third child this December and I am already starting to get the nesting urge! I consider myself pretty hand in the kitchen and cook all of our meals at home. I am not, however, confident in my freezing abilities and I would love to begin thinking about preparing some frozen meals for the cold winter months when I’m A) too pregnant and exhausted to cook or B) have just given birth!! I am looking for information such as: what containers work best for freezing, how long do frozen meals last, what recipes work well for freezing, can you freeze contents that you put in the crock pot, etc. I guess I’d love to see kind of a “Freezing 101” post!!
– Carrie

I have indeed frozen baby food in the past and it does work. My intent is to have a more detailed post about this when our youngest gets old enough for baby food (probably this winter), but for now, here are a few tips that address your specific points.

You can freeze stuff in about anything. We’ve used baby jars and ice cube trays in the past and both have worked just fine – just make sure you label stuff. The frozen food usually works well for about three months, from our experience. You can freeze about anything that would be all right for a baby to eat – just avoid the potential allergy foods. We’ve frozen stuff prepared in a crock pot before without any problem, as crock pot food is usually cooked at least as well as other foods.

The real key is to just make sure it’s pureed to a point that your baby can eat it. The younger the child, the more smooth and water-like it needs to be. Don’t hesitate to add water to any puree you make.

Good luck! Look for a better guide this winter!

I have just transferred a cc debt ($4800) to a new card with 0 interest for 18 months. I have another cc with about 4k on it with 16% interest. I have $300 a month to put toward these 2 debts. How should I divide the amount between the two?
– Henry

The first thing I would do is figure out what happens when that balance transfer expires. The big question is what happens if you haven’t paid back all of the transferred balance. Are you responsible for all of the back interest or not? You may have to call them to find out if you can’t get this information from the documentation.

If you will get dinged for that back interest, compare that interest rate to your 16% card. Which rate is higher? Pay down the higher debt.

If you won’t get dinged, pay down the 16% card first.

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

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