What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. Teen’s first steps for investing
2. Part time auto insurance
3. Thoughts on vacation cruises?
4. Starting my financial journey
5. Helping sick friend
6. Dealing with a “funk”
7. Prime Day strategies?
8. Expensive watch guilt
9. Minimize risk in Roth IRA
10. Getting started with Social Security
11. Books on mindfulness and meditation
12. The Simple Dollar and dating
We spent the weekend camping. It turned out to be a weekend with a lot of rain and, during the windows when the rain stopped, intense heat and humidity. My entire family came home after a few days feeling utterly drained.
It’s the good kind of drained, though. It’s the kind of drained where you’ve had a ton of sunshine and fresh air and exercise and sweat and laughter.
It’s good to be home, though.
I am a teen working on a part time job at Publix getting paid from $60 to $80 a week and how can I invest in making more money?
The very first thing you should do is figure out what your goal is with that money. What do you want to someday do with it?
The biggest thing you should be concerned with is volatility. Volatility refers to how large the range of reasonably possible outcomes is for that investment, particularly in the short term (a year or less). For example, a stock market investment has a large one year volatility, but people still invest in it because the average annual return over many, many years is quite good. On the other hand, a savings account has extremely low volatility, but the average annual return isn’t nearly as good.
So, if you’re going to use the money soon, a low volatility investment is good, but if you’re not going to use it for many years, a high volatility investment is good.
So, what’s your purpose? Is it to pay for college? College is likely coming for you within the next 2-3 years, in which case you should put it in a low volatility investment, like a savings account. Consider opening a 529 college savings account and putting your money in there in an investment marked as “low risk.”
What if you’re aiming for post-college expenses, like buying a house or saving for retirement? In those situations, a higher volatility investment, like the stock market, is a good idea. Consider opening up a Roth IRA and putting your money into a total stock market index.
I am shopping for car insurance. I have four vehicles. I am retired and spend 5 months in Florida. I normally have one or more vehicles garaged for several months. Can I easily switch to a “storage” rate for these vehicles when not being driven for a few months?
Most auto insurers enable you to do this whenever you like, though with a few caveats.
For starters, for most auto insurers, “storage” rate usually just means that you’re removing liability and collision coverage and just paying comprehensive coverage on the vehicle, which protects it from things like fire and theft, but covers nothing if you’re actually driving it. That’s usually quite cheap.
Most insurers will allow you to make that switch easily provided you maintain driving coverage on at least one car on the policy. So, if you have four cars and you sometimes put two of them into storage, this can easily be done with a phone call, reducing your insurance rates.
However, some insurers may require a thirty day waiting period before downgrading your insurance.
Any thoughts on vacation cruises? Are they a good deal or not? The price tag is steep but they’re providing all the food and entertainment and taking you to interesting places.
I haven’t been on a cruise, though I have several family members who have done so. I think it really depends on the type of vacation you’re looking for.
If you’re looking for a relaxing vacation where most of the planning and options are already handled for you and you’re mostly just going to eat meals, catch up on some reading, watch the sea, do a few leisurely activities, and do a couple of shore days mixed in, then a cruise is great. The prices tend to be pretty reasonable for what you get as an all-inclusive package, though this depends a lot on the cruise line, the specific ship, and the destination.
If you want a more active vacation, though, cruises probably aren’t the thing for you. If your vision of vacation is “hiking in the backcountry” or something akin to that, a cruise isn’t going to match up.
I am eighteen years old. I graduated high school in May and am about to enter [a well regarded state university with a good engineering program] in the fall to major in electrical engineering. I have some scholarships and my aunt and uncle are paying for the rest for all four years, so I am very lucky.
My goal is to reach a point where I can retire as early as possible. I want to do things like walk the Appalachian Trail and backpack across Europe and Asia and Africa aimlessly while I am still young and without having to return to pick up a career. If I want to come back I can but if I want to stay in Kenya for some reason I can. That is my dream.
Spend your college years focused on getting the best possible electrical engineering job. The second you get to college, start seeking out mentors in your department that can help you find internships. Get good grades in your classes and make yourself known at office hours to build relationships that might turn into references later. Join clubs and groups on campus that bolster your specific interests in EE. Everything you do, as much as possible, should be geared toward getting a great EE position when you graduate.
When you do graduate and move into a great EE position, live really really lean. Live in a small apartment, ideally a shared one, or even consider living in your vehicle (for real – high income people do this when they have their own goals). Keep all of your expenses as low as you can and bank everything else.
Over time, you’ll start developing a clear picture of what you need to live the life you want as you figure out what that life specifically is. Keep living super lean and you’ll get there.
A close friend of mine has/had diverticulitis. He went into the hospital two weeks ago and had emergency surgery on part of his intestine that was gangrenous and since then has been in the hospital with several complications. I have visited him several times but I don’t know how else to help. He’s facing some intense medical bills but hasn’t lost his job. I am not in a position to help him pay his medical bills either but I want to help and I feel bad that I can’t help him recover financially. What can I do?
Don’t give money. Give time.
While your friend is in the hospital, ask and figure out what tasks he needs done outside of the hospital that he can’t take care of. If he gives you something you can do, go take care of it.
When he comes home, he’s not going to be real mobile for a while (trust me when I say that diverticulitis like this isn’t fun). Stop by daily and take care of chores for him. Offer to run errands like getting groceries.
You have no idea how valuable this will be to your friend as he recovers from this. It will mean more than just throwing money at his bills. Yeah, he might be cranky sometimes, but he’s going to hurt and he’s going to not get around well for a long while and that can be really frustrating.
I have been in a serious funk lately. All I can muster the energy to do is go to work and come home and nap on the couch and go to bed and then repeat it. On the weekends I catch up on a few of the undone things but that’s about it. I have fallen into a cycle of just ordering a lot of delivery or making microwave foods which is expensive. Friends say I should go to a therapist but I can’t afford it. Ideas?
My first thought is that you should go to your doctor for a wellness checkup. Most medical insurance will pay for this kind of a visit because it’s far less expensive to catch minor things in the bud before they explode into major things.
Just go to that visit, explain to your doctor that you have no energy and motivation, and get some general bloodwork done to make sure that you’re not lacking in a certain vitamin or something simple like that. If your issues can be fixed with an iron supplement or a B12 supplement, then that’s great.
Your doctor may also have some other suggestions for you along those lines – low cost things you can do in your specific situation.
Since I don’t have a full picture of your health or lifestyle, I can’t really give you specific ideas that will work. Your doctor will be much better for that. However, I can say that things that work really well for me include making myself get some degree of daily exercise and spending some time outside every day. This is my normal routine and I’ve learned that when I slip away from that routine I usually slip into a blue mood.
Is Prime Day worthwhile? What strategies do you use?
For Prime Day, my strategy is to make a list of items that I’m intending to buy in the next several months. Holiday gifts for some people are on that list, as well as a couple of planned hobby items.
I then simply watch for those items and nothing else. It doesn’t matter how “cool” that item was – if it wasn’t something I had considered beforehand, I don’t buy it now just because it’s on sale.
So, my suggestion is simple: just make a list before you even look at the site. Consider things you might find useful and things you might want to give as a gift this holiday season and aim specifically for those items.
For the past several years, I have been saving up for a really nice watch like the one my grandfather wears and about a month ago I finally purchased a Longines Master Collection Chronograph. It is so beautiful and it is like a modern pairing to my grandfather’s watch. He was with me when I bought it and he is getting quite old so it might be one of the last things we get to do together because he lives 2,500 miles away.
The thing is beautiful to me and full of meaning but yet I can’t bring myself to wear it without feeling tremendously guilty about the $7000 I poured into it. I could have knocked off the rest of one of my student loans with that kind of money and instead I’m still making payments and paying interest. I should have been out of student loan debt at least before buying it and now when I look at it I think of my foolishness.
I can’t sell it and recoup the full value of what I paid for it but I can recoup most of it.
Gerald, don’t sell this watch. Just don’t.
You saved carefully for it for quite a while. You planned for this purchase. You bought it with your grandfather and it has that kind of shared meaning that is rarely found in life.
Don’t sell it.
Yes, it was expensive – probably unnecessarily so. However, this is truly a “buy it for life” watch. You are going to wear it for the rest of your life. Every time you look at it, not only will you appreciate the beauty of it, but you’ll be reminded of a man who obviously had a ton of impact on you to this point in your life. As you say, you may never get to share a moment like that again with him.
Wear it. Think of your grandfather. That’s the kind of meaning that you shouldn’t sell. I wish I had something like this to remind me of some of my relatives who have passed on.
To those of you thinking about spending your money on something like this: think about it extremely carefully. My gut instinct is to advise against it in most cases unless you saved for it carefully and it has additional meaning beyond the aesthetic appeal.
I opened a Roth IRA in 2017 and put all of my contributions in Target Retirement 2045. I am scared that I am going to lose my investment because I think the stock market is going to go down a ton in the next few years. What is a good investment with no risk?
There is no good investment with no risk. As you reduce the risk of an investment, you almost directly reduce the return on that investment. A zero risk investment typically offers a return that’s a bit less than inflation, so somewhere around 2%. A good example of that is a savings account or a money market account.
As you add risk, your returns go up. Highly rated bonds, for example, usually beat inflation by a little but offer a little bit of risk. That risk level slowly inches up, as do the returns, when you move into other bonds, then into stocks and real estate, then into things like precious metals, or keep moving into things like cryptocurrency or collectibles, where the risk is incredibly high.
The question you really have to ask yourself is how much risk you can stomach. The thing worth noting is that many investments aren’t that risky over the long term, they’re just volatile in the short term. If you’re trying to invest for the long term (more than ten years), you should accept that some years you will lose money and take on a somewhat risky investment. I recommend a broad stock market index fund or the Target Retirement Fund you already have.
I am 61 and have been employed at Target for 33 years in a number of roles and have been store manager at three different stores for 16 years. I am getting ready to retire. I need to figure out my Social Security benefits but I do not know where to start. Can you help me?
Your first step should be to head over to https://www.ssa.gov/myaccount/ and sign up for an online Social Security account so you can manage your benefits from anywhere. That’s the best place to start.
From there, you should be able to get a clear picture of what benefits you have coming and the options available to you. You likely have options that involve retiring at a later date and receiving more benefits per month or retiring earlier and receiving less benefits per month.
Take all options into consideration and see what works out the best for you. Also, consider what you will actually do with your time when retired.
You have written many articles in which you’ve referred to how mindfulness meditation has really helped you stay focused on the moment. Do you have any book recommendations on mindfulness and meditation practices and how they benefit?
The book I almost always recommend to people is 10% Happier by Dan Harris. It’s a very well written introduction to the personal benefits of mindful meditation, backed up by both research and an intensely personal story. The book offers a lot of straightforward beginner practices as well.
Another very solid introductory book, one more focused on benefits and techniques and with less of a personal story behind it, is The Headspace Guide to Meditation and Mindfulness by Andy Puddicombe. This was my default recommendation before I read the above book by Harris and is probably the best option if you’re not engaged by a strong overall personal story.
Beyond those two, the rabbit hole goes very deep. I enjoy the books by Thich Nhat Hanh quite a lot – he has written a number of books over the years and all of the ones I’ve read have been very thoughtful and powerful, though not all are really “introductory.” A good place to start with his books is probably Peace Is Every Step.
Given that finances are such a large part of relationships and marriage, how about starting a Simple Dollar dating group?
While I find the idea of a Simple Dollar dating group rather funny, I do think that it can be difficult for frugal and financially stable people to find each other for potential dating.
My advice is simple: look for dating opportunities where frugal people go. If you’re religious, start with your local house of worship. Check out civic groups. Check out community festivals and free concerts. Check out state and national parks. Check out what’s going on on Meetup. Go to these places and do things. Talk to people and see what clicks.
At the same time, avoid places where people spend money recklessly. A place where people are paying a cover fee just to dance to loud music and pay for overpriced drinks is probably not a place where you’re going to meet people who are careful with their money.
Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. 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 many, many questions per week, so I may not necessarily be able to answer yours.