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. Renters insurance
2. Mint and security
3. A question about blenders
4. Network marketing question
5. Yard sales waste of time?
6. Career shift misery
7. 529 plan questions
8. Unhealthy food in pantry
10. Roth 401(k) rollover question
When children are young, their emotions tend to fly right at the surface. If they’re sad, they’re very sad. If they’re happy, they’re very happy. If they’re angry, they’re very angry.
Of course, emotional outbursts – particularly negative ones – can have a disrupting impact on day-to-day life and can end up casting a pretty negative shadow on yourself if you don’t have those outbursts under control.
Thus, one big part of parenting when it comes to younger children is teaching them how to properly control their emotions. You don’t want your child to act detached and emotionless, but it’s also not healthy to have them flip out in anger or withdraw in sadness when they’re at school or in a social situation.
It can be really trying, particularly when they’re three or four years old and really aren’t quite capable of controlling their responses in a lot of situations. This process is definitely one of the challenges of being a parent.
Q1: Renters insurance
I recently bought a ring and proposed to my girlfriend, and now I need to insure her ring. I currently don’t have renters insurance (which I really should have). I’m also in the process of paying off credit card debt, and once it’s gone a few months from now, I plan on financing an inexpensive car. I would like to take out renters insurance, and insure the ring immediately, but I’m hesitant since I’d like to save the most by bundling renters and car insurance, and I don’t know which company will give me the best quote when it’s time to buy a car.
Is it worth waiting a few months until I’m in the market for car insurance to look for the best renters/car insurance bundle? Or should I buy renters insurance now, insure the ring, and see what my car insurance options are when the time comes?
If your girlfriend already has the ring, then it is her responsibility to ensure it as it is her possession. If you are living together, you should collectively have rental insurance to protect both of you.
If you’re shopping for renter’s insurance and car insurance but you can’t start the car insurance right away, I’d shop around for the company that has the best package deal and sign up with them for just renter’s insurance, then talk to them about moving the car insurance when it makes sense. Shop as though you’re buying both, but then just buy the rental insurance for now.
I wouldn’t wait on the renter’s insurance, though. If something goes wrong at your apartment, you’ll be left with no possessions other than what’s in your car.
Q2: Mint and security
In the past, you’ve written about Mint and why you don’t use it because of security concerns. I found this information from a Mint VP of Engineering that certainly makes it sound like Mint is really secure. Do you feel differently after reading it?
No. I’m not concerned as to whether or not Mint itself has good security. I have no doubt that they do.
My concern comes from the fact that any system, no matter how secure, is hackable. Even if the chance is miniscule, it still exists. The more accounts I have out there with my personal information on them, the less secure my personal information is, even if it’s just by a small amount.
So, in order for me to get a new account where my personal information is made available, I need for that account to provide me with some value I can’t get elsewhere. I have looked carefully at Mint, but I don’t see where I get additional value that goes beyond what I get with You Need a Budget.
Speaking of which, I really need to write a review of this software at some point.
Q3: A question about blenders
I’m with you on “buying it for life” but I went to buy a blender recently and I found a huge price gap. Some of them were $20 or $30 and then there were none until the prices got well over $100. In a situation like this, wouldn’t it be better to buy a cheap blender? You could buy several cheap ones and use them to death before you’d match the price of an expensive one.
Over the past decade, I’ve owned a blender found at a thrift store and two different low-end blenders. I found all of them really frustrating and tried to avoid using them. Eventually, Sarah or I would burn out the motor or, in one case, we’d damage the blender in some fashion.
A few years ago, I was visiting a friend who was using a Blendtec blender. She threw several fruits and vegetables into it with some ice. I walked away, figuring it would take her fifteen minutes to make any sort of worthwhile smoothie. She had one made in about twenty seconds.
In my eyes, it really depends on what you’re using the blender for. If you’re only going to use it once every few months, a cheap one is fine. If you’re going to use it multiple times per week, a cheap blender is going to eat up so much time and frustration that it’s not worth it.
My honest suggestion is to hit every thrift store in your area (particularly ones near expensive neighborhoods) and look for a good blender, like a Vitamix or a Blendtec. If you can’t find one of those, get the cheapest one the thrift store has… but it will probably frustrate you. Always keep an eye out for a quality blender. We own a Blendtec and love the thing.
Q4: Network marketing question
I recently was contacted by a friend who is investing in Karatbars. Karatbars claims that you can make as much as $4,000 a week with their 12-week plan. Of course, it requires signing up others “under” you, and you get a share of their profits, etc… I have scoured the internet, and have been unable to find anything strictly negative about their program, however what little I have found is comparing purchasing a Karatbar to purchasing gold, and the price differences. So, I find myself asking, is Karatbars a sound “investment” and are you, or any of the readers at TSD aware of this scheme?
Karatbars is just another variation on the whole network marketing system. As always, the systems have a few small differences that they use to claim that it’s not like the other ones, but the core of the system doesn’t change. You still only make good money by having people selling product that have been referred to the system by you.
If you’re a good enough salesperson that you’re actually making some money at one of these systems, then you’d make a lot more money doing something else. If you’re not a good salesperson, you’re not going to make money at this and you’re likely to just annoy your friends while you make just a few bucks.
Karatbars is to gold as Pampered Chef is to kitchen products or Scentsy is to potpourri. It’s not a perfect analogy, but it’s pretty close.
Q5: Yard sales waste of time?
Last year, I tried going to a bunch of yard sales in my area to look for cheap items to replace some things around the house. I spent bunches of Saturdays going to yard sales and I found one item that I was willing to bring home that saved me maybe $10. Other people seem to do a lot better than this. What am I doing wrong?
You’re probably not doing anything wrong.
Going to yard sales for bargains has a lot to do with luck. There are a few strategies – look for yard sales in expensive areas, for example – but unless you have a long list of items you’re looking for, an average yard sale probably won’t have exactly what you want.
I have some friends who go to yard sales mostly for entertainment. They might buy two or three items over the course of a whole day, but they figure that $10 spent with a friend or a sister over the course of a whole day seems okay to me.
If you look at this strictly as a cost-effective way to save money, you might not find yard sales to be a bargain.
Q6: Career shift misery
For the first ten years after high school, I worked as an electrician. I was a journeyman and made decent money, but I got bored and decided to do something different. I went back to school and got a degree in MIS and started working as an IT specialist. I mostly keep a bunch of computers and laptops running, updating templates and things like that. Problem is that I hate this job. It is far more boring than the electrical work. A few days ago an electrician was at our business and I had far more fun hanging out with the electrician and talking shop than I’ve had in months at my real job. Should I just ditch the IT job and go back to being an electrician?
If you’re really miserable, I don’t think it would hurt for you to feel out the job market for electricians in your area.
However, before you make the leap, make sure that you can easily afford to make the transition. I am assuming that you’re earning more right now as an IT worker than you were making as an electrician. If that’s the case, can you afford the drop in pay?
If you’re spending everything you earn right now, a drop in pay is going to be painful. If you’re currently able to save some of your income, a drop in pay will be much more tolerable.
I wouldn’t quit your job until you have another one lined up, though. Don’t trust in your employment potential. Have a job before you make the leap.
Q7: 529 plan questions
I had a question about 529 plans. Can I make my own 529 plan through a bank and manage it myself or do I need to go through an investment company? Do the investment companies charge fee’s similar to mutual funds or how is it structured?
I know the idea of 529 and potential tax savings, but want to be sure I don’t pay any unnecessary companies.
529 plans are operated by states, not by individual banks. Each state has a 529 plan that they run which is usually managed by a financial institution. For example, Iowa’s plan is run by Vanguard.
You can shop around the plans offered by various states; however, using the one in your own state often has some tax benefits.
I would suggest starting by comparing 529 plans that are sold directly to the public.
Q8: Unhealthy food in pantry
A few weeks ago, I had a medical checkup that really scared me. I have made the decision to eat healthier and even with some pretty unhealthy food at home I have been sticking to it and enjoying it. However, there’s a bunch of food I never intend to eat just sitting in my cupboards. What should I do with it?
If it’s sealed, I’d donate it to a food pantry. They’ll happily accept donations and pass the food along to people who can really use it.
You can try re-selling it on Craigslist, but you likely won’t get very much for it. I know I wouldn’t buy random food items on Craigslist.
If it’s partially consumed, I’d probably toss it out. It’s just going to get stale.
I use OmniFocus. It works really well for everything I want to do.
The problem is that it’s a little expensive. I used an iTunes gift card to buy the app, but I’m not sure I would have spent the money on the app.
Q10: Roth 401(k) rollover question
I’m a recent college grad and I’ve been working my first full-time job for about a year. I became eligible to participate in my company 401K plan last month, and I elected to make Roth contributions almost equal to my entire paycheck over the next several pay periods. I’ve been anticipating this move, so I built up a sufficient savings that I could draw from while on paycheck hiatus.
I’m seriously considering leaving my job to attend graduate school in the fall. I understand that I would be able to rollover my Roth 401K account into my Roth IRA after I leave my company. Regarding my exisiting Roth IRA, I also understand that I can withdraw contributions from my Roth IRA at any time without a tax/fee/penalty. My question is really regarding whether or not I can access the money I’ve rolled over from the 401K to the IRA. Can I withdraw my contributions just like in the IRA?
My only reason for withdraw would be for an emergency or large unexpected expense. I’m planning on having enough in savings to cover tuition and living expenses while in grad school, but I need to figure out if I should save anything additional or if I can use my retirement as an emergency fund.
You can do this. However, you can only withdraw the amount you contributed to the Roth 401(k) from your Roth IRA after the rollover without facing a stiff tax penalty.
For example, let’s say you contributed $10,000 to your Roth 401(k). You decide to roll it over, but it has a balance of $15,000. You can withdraw the $10,000 you contributed, but the other $5,000 is treated as earnings within the Roth IRA, which means you can only touch that money under certain conditions or if you’re willing to take a stiff penalty.
To make this work, you’ll have to keep careful records and have both investment houses communicate with each other. Make absolutely sure that you never take out any more than you contributed at any point.
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.