Questions About Christmas, Betterment, Vanguard, Oil Changes and More!

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. Christmas spending and family
2. “First Christmas” gifts for baby
3. Selling unwanted Christmas gifts
4. Living a little
5. Betterment or Vanguard
6. Motivating past temptation
7. Becoming a manager
8. Career or decent child care
9. Quick oil change scam
10. Low life expectancy and retirement
11. Handling wasted time at work
12. Digitizing old journals and letters

The fourth quarter of the year has arrived and, based on the reader mailbag questions I’ve received over the last week, that has triggered a lot of thoughts about Christmas in people’s minds. So, this week’s mailbag starts off with a trio of Christmas-related questions.

I guess it’s appropriate because our house has also see the first real talk of Christmas in the past few days. We’re planning a few homemade gifts this year and to pull them off, we need to get started on them sooner rather than later. In fact, we probably should have already started on at least one of them.

Q1: Christmas spending and family

Christmas has been a stressful time of year for the past several years, as my husband and I take control of our finances and cut spending. Our dilemma is that, though we always make it clear we are trying to be “frugal this year”, our family always stresses out and spends more lavishly than they can afford, so in turn I stress about us spending.

The past two years, my extended family has flown in for the holidays, and I have asked that everyone keep gifts inexpensive, as a way to save everyone the stress and expense. We have lived across the country from each other for years, so we barely know each other so it’s hard to find something meaningful for each other. Last year was a bust, everyone spent so much money, despite my efforts. Nobody truly loved their gifts, because it was just generic stuff since we don’t know each other!

So here’s my dilemma, how do you convince family to stop spending so much money on gifts, when all any of us really want is to enjoy the time together? Or how do you handle gift giving throughout the year?
– Stacia

You can convince the family by taking a stand. Simply inform everyone that you are abiding by a personal low spending limit this year – whatever you feel is appropriate – and ask them to abide by that same limit when buying stuff for you.

For example, try to cap yourself at $10 per person that you might have to buy for, and clearly announce that cap to everyone. You can actually find a lot of cool, thoughtful gifts in that price range, because the truth is that a great gift isn’t about money, it’s about thoughtfulness regarding the recipient.

So, instead of throwing money into that gift, simply do a bit of homework on each person. Look at their Facebook or Twitter accounts and see what groups they’re in or what they post about and let those ideas take the lead.

In years past, we’ve done this exact thing, getting different people things like deluxe hand warmers, a couple packs of trading cards, pocket notebooks, and so on. Almost all were well received because they all were thoughtful.

The thing is, that limit will never take hold with everyone unless you stick to it, no matter what other people are doing. So, when you tell others about this limit, you need to make it clear that this is what you’re doing and it’s also what you’d like others to do for you.

Remember, all you can really control is what you do.

Q2: “First Christmas” gifts for baby

I’m having a difficult time understanding how exactly a person buys a Christmas gift for a baby. My younger sister had her first child a month ago and it occurs to me that a Christmas gift is probably appropriate, but the baby will be about three months old at Christmas. The baby will be too little for toys and she has a ton of clothes from the baby shower to cover the first year or so of life and things like diapers seem weird. Every idea I’ve had seems dumb or way too expensive.
– Jane

There are a lot of great ideas for gifts for babies, but keep in mind that many of them won’t be really appreciated for a few years and that, in many ways, gifts given this early are more for the parents than the baby.

The gifts we were perhaps most thankful for when we had babies around our house were books to read to them (which could often be read and re-read over the first several years of life), clothes that were a size or two too big (as the initial batch of baby clothes tend to mostly be sized for them during their first few months of life), and offers of babysitting. Those were the ones that were simultaneously worthwhile for the baby as well as useful to us as parents.

For a baby’s first Christmas, you almost can’t go wrong sticking to those areas. Look for good picture books, clothes that are just a few months too big for the baby right now but will be perfect in the spring, or offers of babysitting help.

Q3: Selling unwanted Christmas gifts

My closet is full of old Christmas gifts I didn’t want. I have things like sandwich presses and ugly picture frames in there. I feel like I should just sell that stuff but then I feel guilty because it’s a gift from someone who cares about me.
– Tara

You shouldn’t feel guilty, not at all. Just because someone gives you a gift doesn’t mean that it is a thoughtful gift that you want to keep.

Often, gifts like the ones you mention were bought at the last minute by someone who feels like they should be buying you a Christmas present but doesn’t have any idea what to get you, so they went out on Black Friday and bought one of the sale items or they bought something in a last minute rush at their local department store.

It would take quite an exceptional person to be mad at someone who got rid of a sandwich press that they were given as a gift a year (or more) ago. Likely, the person that gave you that sandwich press can’t even remember what they got you, and if they actually do remember and care, they’re probably thoughtful enough to understand that you wanted to pass the item on to someone that could use it more than you.

Q4: Living a little

What do you and Sarah do to “live a little”? From reading this site it sounds like you guys don’t do much that is fun.
– Karen

Fun is in the eye of the beholder. I see people doing things all the time that they consider fun that seem like misery to me, like going to an indoor music concert (I get a pounding headache within a few minutes and my ears ring like a bell for days when I leave).

If you’re asking what kind of things we do for fun, over this past weekend I went to a game night with some friends and also went to a home brewers’ meetup. Sarah went to a friend’s house for an evening where they apparently drank wine and did some group cooking.

A lot of our time is simply eaten up by being working professionals, parents to our three young children, husband and wife to each other, and simply being involved in our community. When you remove those things, you’re not left with a whole lot of time. Honestly, free time to enjoy hobbies is the biggest pleasure we have in our lives.

If you’re talking about things we purchase to “live a little,” we both like craft beer. I have one in the evening every other night or so. We both spend on our individual hobbies and interests – mine include tabletop games and home brewing. When we go on vacations, we try not to worry about unexpected expenses. That pretty much sums things up.

Q5: Betterment or Vanguard

I’ve been looking at Betterment lately. Their strategy of using an automatically balanced portfolio seems like a good one and I have been considering using them for my Roth IRA. I know you have advocated for Vanguard in the past. Why would you use Vanguard over Betterment?
– Kevin

There’s one simple reason why I choose a Roth IRA directly through Vanguard over one through, say, Betterment: cost. While Betterment’s fees are low, they’re still charging you fees for the service they provide to you. On the other hand, you can do basically the exact same thing yourself using a Roth IRA through Vanguard for free.

But isn’t it more work? I look at my Vanguard account about once a year, which is roughly as often as I would have to look at something like Betterment. I usually look around tax time as I need to have the numbers for my tax return. Since I contribute to a Target Retirement fund, I don’t really have any need to change anything at all.

Betterment offers a good service that’s better for the dollar than a lot of full-service investment houses. I just feel no need for the services that a full-service investment house provides.

Q6: Motivating past temptation

I understand the big picture. The less you spend, the more you can save and the more you can save, the sooner you can retire or do other “big” things in life. The problem is that when I am faced with enjoyable things I can afford right now it makes more sense for me to enjoy life today rather than someday. How do you motivate yourself to say no to a great dinner out with your wife just because it puts a few more bucks into your retirement?
– James

It’s pretty easy, actually, and my wife has the same motivation.

Let’s say we realize that we need to bring home $30,000 a year from our retirement savings in order to never have to work again. To earn that much, we’d need to be making about $15 an hour.

Then, let’s say that for the two of us to go out to a nice restaurant and a movie together instead of eating a meal at home, we’d have to hire a babysitter for our three kids (paying, say, $40), go to a nice restaurant (paying $25 each for meal and drinks, so $50), and perhaps do something fun after that like go to a movie ($30). That’s $120. That’s eight hours of work ($120 divided by $15 per hour) in exchange for one meal and a movie.

(Some people might say that’s an expensive dinner date, but if you start cutting back much on that dinner date, it soon reaches a point that I’d far rather just eat at home. I see no point in going out to a restaurant that serves me food that I could easily make for myself at home.)

I would far rather have an extra day with no work and no work responsibilities with my wife in a few years than a dinner date with my wife tonight. It’s not even close.

The thing is, when you start making those kinds of choices again and again in your life by looking at what you actually gain – time – from choosing not to spend money on unimportant stuff right now, the choice gets easier and easier. At least, it does for me.

Q7: Becoming a manager

I recently found an article about your decision to step away from managing The Simple Dollar and simply be a writer. That situation sounded very familiar to me and I want your advice.

Like half of Silicon Valley I started a tech company in my spare time mostly to explore an idea I had. It clicked really well. I received some funding and soon the company was growing faster than I could keep up with so I had to start hiring help.

But now there’s so much “help” that I spend all of my time managing and no time doing what I actually started this company to do. I miss spending every day solving problems instead of talking to people on Skype. On the other hand I cannot imagine someone else running this for me.

I have talked to some people about this and they seem blown away that I don’t want to be a manager of people and the “face of the company” but I really don’t want to do any of that.

How did you come to the decision to step away from running your “baby” and accept a different role?
– Andrew

I should point out here that I asked Ron to rewrite his note to take out the specifics of his company, which he was glad to do. I didn’t want this to turn into discussion of Ron’s company in any way, because this issue applies to a lot of growing small businesses in all kinds of sectors.

Personally, I reached a breaking point of sorts around Thanksgiving 2011. After deciding to run The Simple Dollar full time starting in 2008, the site kept growing and growing. I was earning more money each year, of course, but there were far more things to do at the same time. Running a website requires a lot of things – reading all the feedback, keeping the site functional, updating the website interface, writing new content, keeping the software that runs everything updated, and so on. I was also being pulled to do a lot of media interviews, write books and articles to “enhance my brand,” and so on.

The thing is, all I really wanted to do was write the kind of personal finance stuff that had helped me and had helped a lot of people during the early days of The Simple Dollar. That kind of stuff had personal meaning for me. Things like installing a WordPress plugin or having a conference call with an advertiser or doing an interview with a radio station? Those weren’t meaningful to me.

In 2009, I decided to hire a virtual assistant to help with managing all of this stuff. This person was basically my “first pass” filter for my email and also my scheduler for media things. In 2010 I hired another to handle technical things, and in 2011, I hired a third “virtual assistant” to handle social media stuff.

By Thanksgiving 2011, I realized that I was spending most of my time managing the virtual assistants (who WERE helping me get more done, but at that point the stuff that needed done had actually expanded far beyond what one person could do), jumping in and fixing emergencies, and squeezing in unsatisfying writing that I didn’t really feel any more. I felt burnt out and detached from what made me passionate about The Simple Dollar in the first place.

So, I started looking at buyers. I talked to a lot of different people in November and December 2011 and eventually went with one, not the highest bidder, but the one that gave me the most freedom to just write and be selective when it came to media requests, which is all I really wanted to do. I wanted someone who would effectively take over all of those other tasks and keep me around to create content.

It was the best decision I ever made. Like you, I have zero interest in ever being a manager of people provided that life gives me a choice to do anything else. I enjoy being a “mentor” and wouldn’t mind managing a few very self-sufficient people if necessary, but that’s about as far as I ever want to go. Running a big business has zero appeal to me.

Yeah, I probably would have earned more money in the long run had I stayed in control of things, and the subsequent owners have made a choice here or there that’s different than I would have made (though we are in line on the vast majority of stuff), but the last few years have probably been the best years of my life. I get to focus on writing – the part I care about the most. I have enough breathing room in my life to dabble with other things. I also have the freedom to be sitting on the front step when my kids get home from school. I wouldn’t trade all of that for anything right now.

My advice to you is that if you’re not happy in your current role, rework it and come up with a role that you are happy with. Right now, you have leverage – you have ownership of this burgeoning company. If you’re not happy in the “owner” role, figure out what role you do want and transition to that role. Sure, you may have to give up a small piece or two that you want along the way and you might not get to squeeze out every possible dollar that you could have, but being in a role that makes you feel joyful and alive and not stressed out all the time is worth its weight in gold.

Q8: Career or decent child care

I live in a Chicago suburb. In my area, the cost of every decent child care option is incredibly expensive where I would be spending most of my salary just on child care. The ones with more reasonable costs are places that I wouldn’t feel comfortable leaving my baby. So the choice is easy – I just stay at home, right? If I do that my career stalls out which puts me in a harder position for the rest of my life. I am a single mother. My husband died in a car accident early in the pregnancy. I have no family help as everyone else lives in North Carolina. Not sure what I can do.
– Carrie

My suggestion is to try to find a job in North Carolina. That would be my first instinct.

Being a single mother with a career basically means that you need some form of child care, and if the child care options available to you are prohibitively expensive, you have to change some other variable in your life. One variable is the place you’re living.

If living close to the rest of your family would offer you some better child care choices, such as a family member that could offer low-cost care to you, then you should strongly consider moving there even if the career choices aren’t exactly the same. I don’t know what your career is like, but there’s a good chance that there’s something appropriate for you in North Carolina. If I were you I would start looking.

Q9: Quick oil change scam

Hey, check this out:

Any thoughts? I use Jiffy Lube for my car and now I’m wondering if it’s going to end up costing me a lot in the long run.
– Stephen

The video, for those who aren’t in a situation where they can easily watch videos, is an episode of CBC Marketplace (CBC referring to Canadian Broadcasting Centre) that discusses the shady practices of a quick oil change chain in Canada. Most of the practices of the chain will seem pretty familiar to customers of quick oil change places in America.

My first response is that this is always part of the risk when you’re trusting someone else to maintain your car and you don’t know how to at least verify the work. You’re trusting that oil change place to do the job that they’re promising and that the person talking to you is telling the truth. That person could completely lie to you and not do the work and it would be hard for most people to tell.

How do you solve that? You could do the work yourself, for one. If that’s not something you’re going to do, then you need to find a place that you trust and stick with that place. I usually recommend that people get their regular maintenance with a local auto shop that has a good reputation among your social circle.

I’ll be honest – I personally don’t trust an oil change that takes only a few minutes. There’s no way that they allowed the worst of your oil to drip slowly out. They just let most of it run out, then dumped some new oil on top and called it good enough. They know that most modern cars will just handle it. That’s not good enough for me. I also don’t like all of the upselling where they add tons of services. I’d rather just take my car to a local shop that I trust because they know they’ll get the big repair business when it’s necessary and they’ll make very nice money with something like a transmission replacement, something a “quick lube” place won’t touch. They have to make their money on the little things, and thus I usually avoid such places.

Q10: Low life expectancy and retirement

My family has a very high rate of cancer in their forties and fifties on both my mother and father’s sides of the family. One side seems to constantly get breast cancer and the other gets stomach cancer.

I feel like my odds of living past 55 are really low. I’m at peace with that, but then saving for retirement really seems like a waste of my money. Thoughts?
– Jennifer

I understand the logic here, but then what do you do if you find yourself at 65 and cancer free? You’ve got your health, sure, but you’ll have nothing in the can whatsoever for retirement.

You’re alive now, so it is quite possible that you’ll be alive at 65. Is whatever you’re thinking of spending that money on – in other words, your least important 10% of your spending in your life – worth the risk that comes with that “65 and broke” scenario?

For me, it wouldn’t be worth that risk. You may feel differently, but if I were in your shoes, I’d still save for retirement.

Q11: Handling wasted time at work

I have a very stable and steady job that pays well. The only catch is that I do maybe two or three hours of actual work a day. The rest of my time is spent in meetings where I usually don’t say anything (it’s not my place to say anything and in fact there’s no real reason I should even be there) or doing training programs or listening to my boss’s daily pep talk or answering emails from other people that they could figure out with five minutes of research instead of emailing me. How do people spend thirty years of their life doing this?
– Alex

You basically described the big reason why I became dissatisfied at my last job before working on The Simple Dollar. I really enjoyed the hours I spent actually doing my job as well as the time interacting with my immediate coworkers. Everything else, from the paperwork and the email to the meetings and the online training, was just numbing.

I spent a lot of my free time building a business that eventually became my full time job, but while I was at work, I kept sane by constantly taking notes and/or brainstorming. I always had a notebook with me and I was constantly jotting down ideas or working through problems or making follow-up notes about things I overheard. For me, at least, this helped a ton.

I understand that large organizations are always going to have some time demanded of their employees for organizational things. That’s the tradeoff for some of the protections and services that a large organization gives you. For me, though, it just wasn’t worth it in the end.

Q12: Digitizing old journals and letters

What are your thoughts about digitizing old handwritten journals and letters? I already have the equipment on hand to do this and doing so would allow me to empty out a few boxes of stuff in my closet. But on the other hand, isn’t there something of value in keeping them?
– Amanda

If I were you, I’d go through those items carefully and decide whether someone else – not you – would every get value out of leafing through these documents in their original form. Would your children ever enjoy reading your old journals, or your mother’s old journals, or your grandfather’s journals? What about those old letters?

If you can’t imagine them having value to anyone but you, ask yourself whether they would still have value for you if they were in digital form. Would you ever look at them again?

For me, at least, if a handwritten object is personally valuable enough for me to keep in digital form, it’s worth the small amount of space it would take to keep it in paper form. I know I’ve really enjoyed looking at my grandmother’s old journals, for instance, and I’m not sure I would have ever looked at them had they been digitally stored.

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.

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