Questions About Excel, L.L. Bean, Food Processors, Wallets, 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. Excel for tracking spending
2. Looking at old receipts
3. Setting up life without cable
4. Is a food processor necessary?
5. Divorce and life sabbatical
6. Planned obsolescence
7. How to carry a wallet
8. Investing down payment
9. L.L. Bean return policy
10. Handling big savings in budget
11. The lesson of $2 bills
12. Taking gifts of help seriously
13. College savings and discretionary funds
14. Investing tiny amount in stocks
15. Frugally inadequate

This past weekend, we celebrated my birthday. I received a few gifts, but the one I was truly the most excited about was a nice new backpack to replace my old North Face, which I had been using for many years. I felt like my old pack still had a few more years left in it, but it admittedly was getting ragged and my new one is a lot roomier.

Looks like I have a great pack for taking to the library and pretty much everywhere else I go for the next decade or two!

Q1: Excel for tracking spending

I know you’ve recommended using Excel spreadsheets to keep track of spending. Do you use a spreadsheet to keep track of your grocery prices? If so, would it be possible for you to share an example of the spreadsheet you use for this? In keeping a log of your spending, do you also use Excel spreadsheets to classify the spending?
– Connie

It’s really easy to do this. All you need to do is make four columns in a spreadsheet. The first one is CATEGORY, the second one is DATE, the third one is ITEM, and the fourth one is COST. Whenever you have an expense, just fill in the date in the DATE column, the description of the item in the ITEM column and the cost of the item in the COST column. When you want to categorize the items, just write appropriate matching categories in the CATEGORY item.

If you want to see your total spending, use the SUM function. If you want to see your total spending in a category, use the SUMIFS function (see this explanation).

Honestly, though, I moved on to using You Need a Budget for this kind of expense tracking. It easily does all of this for you in an easier package.

Connie has another question along these lines.

Q2: Looking at old receipts

I have over a year’s collection of receipts. Would it be worthwhile to enter all of this information in a spreadsheet?? How many months would you recommend maintaining?
– Connie

I wouldn’t put in all of those old receipts unless you’re bored. The reason for tracking expenses is to build a good model for your monthly budget so you know how much you’re really spending in each category, and the older the receipts, the less accurate it is (because life changes).

I would probably type in the last month or two of receipts and keep track of them going forward. Once you have that information electronically, it takes up basically no space at all, so there’s no reason not to keep that information in perpetuity.

Across Excel and You Need A Budget, I have several years of expenses listed (with a few gaps where I slacked off).

Q3: Setting up life without cable

We reached the end of our satellite contract and we’re thinking about dropping it and using Netflix for our main television source. What’s the best way of going about this? What is your ideal “television without satellite or cable” setup?
– Dan

For me, the ideal setup would be to have a regular over-the-air digital antenna that allows me to get my local channels (for local weather and network programming and the local PBS stations). I’d also have either a Roku or an Amazon box attached to my television that would provide me with Netflix and access to Youtube and other streaming options.

Of course, this requires you to still have internet access, but for me at least, that would be far more than enough to drop the cable.

Amazon’s streaming service is quite good, too. It gives you most of what you find on Netflix and it comes with Amazon Prime, so you’ll also get two day shipping on stuff you buy from Amazon. As a strictly streaming service, Netflix is better, but Amazon’s total package is compelling.

Q4: Is a food processor necessary?

My wife and I made a commitment at the start of the year to start cooking more meals at home. We’ve moved from about five meals eaten out per week (and two at home) to the exact opposite – five at home and two eaten out. We have been shocked at the savings and actually how easy and fun it is.

We have been buying a few things for our kitchen to get rid of old things like our awful knife set. We have been wondering about a food processor. Do you consider it to be a worthwhile kitchen tool?
– Derek

I have owned a nice food processor for several years. I can count the times I’ve used it on one hand.

Everything that a food processor does, I’m content to do either with our blender, with a knife, or with a box grater. I haven’t found a use where a food processor goes beyond those things so well that it’s worth the extra setup time and the cleanup from using it.

I know there are a lot of people out there that love their food processors, but it’s just not something that has ever really clicked with me. I tried to love it… but I just found myself using the knife, the blender, or the box grater.

Q5: Divorce and life sabbatical

I’m coming out of a difficult divorce, (to put it mildly). Looking back at the marriage, I realized that rarely were we partners in our finances. The signs were there when we met that we were on different pages but I chose to ignore them at the time.

I will be receiving significant alimony but being quite conservative financially I feel I should immediately go back to work. (I left a dead end job a few years ago to spend time with my kids who are growing up fast.)

A friend has suggested I take some time to get my confidence back and reassess my life and what makes me happy. Along those lines, I registered for a class in a field which could ultimately be profitable and enjoyable. However, I already have an advanced degree so spending money in this way is almost too much of a luxury at this point.

I have no debt, live in an apartment, have a little money in the bank, and my retirement accounts.

I’d be curious to hear your thoughts, if any.
– Eileen

Given that you have some money in the bank and are receiving alimony payments, it does make at least some sense to spend some time figuring out where your newly-single life is going to lead. If coursework can help you embark on a new career path, that’s probably a good idea right now.

As for feeling like you’re misusing your advanced degree, don’t. Only 27% of college graduates have jobs closely related to their degree. It is completely normal to move through life and realize that you’re actually drawn to work on something else entirely.

Not only that, the process of earning an advanced degree teaches you a bunch of transferable skills – time management, information management, and so on. Those skills are incredibly valuable, and they were honed by your earlier work.

If you know what you want to be doing right now, start preparing for it. You’re not wasting your degree by switching paths.

Q6: Planned obsolescence

Have you ever written about the concept of “planned obsolescence”? Manufacturers often don’t make products as good as they can. Instead, they design them to fail after a certain length of time, forcing you to buy another one. Here is a great documentary on it:

How do you tell if something has “planned obsolescence” built in or not?
– David

You can’t really tell for sure, but there are a few things you can do to minimize or avoid it.

First, always check the reliability data of the item you’re looking at. Consumer Reports does a good job of surveying for reliability information. It’s not perfect, but I’ve found CR to be a good guide in that regard.

Second, buy things with a very strong warranty. For example, we have some Le Creuset pots that have a 101 (!) year warranty on them. They’re not going to fail on us.

I also pay a lot of attention to what works and what doesn’t in the lives of my friends. If they buy something and it breaks shortly after the warranty ends, I’m probably avoiding that product line for a while.

Q7: How to carry a wallet

What is the safest way to carry a wallet to minimize your chances of getting your pocket picked when you’re walking around in a big city?
– Andy

The best thing you can do is split up your money and items into several places. Keep some in your hotel room in a safe spot, but also keep some in one pocket and in at least one other place on you.

What other place? I highly recommend using a money belt for your key stuff. A money belt is a pouch that hides in the inside of your pants that gives you a hidden pocket to store stuff that’s basically impossible for a pickpocket to touch without his or her hand literally going down the front of your pants. I usually keep my credit cards and some cash in there, while keeping the cash I easily want to access in my shirt pocket.

That way, if a bit of cash gets stolen, it’s not a life-ending crisis. I just go to the bathroom and retrieve some more from the money belt.

Q8: Investing down payment

My wife’s grandfather recently passed away and my wife’s mother told her that she is going to give us $ 50,000 from his estate so that we can buy a house. My wife and I are a few years away from being ready to buy a house, so I’m wondering where we should keep the money until we are ready to go house hunting.
– Stephen

The problem with the “few years” timeline is that it is too short for an investment in stocks to approach anything close to a reliable 7% a year annual return. In a given year, the stock market can go anywhere between a 25% raise to a 40% drop. It’s only over the long haul that it averages out to around 7% or so. If you happen to invest at the start of a market dip, you’re likely to have lost money over the course of a few years.

In order to get a more reliable positive return (less risk, in other words), you have to go for a lower average return and put your money in something like bonds or even in a money market or savings account.

What you need to decide is this: is it more important for your home needs to have an amount very close to $53,000 or so in five years, or is a somewhat random amount in a range anywhere from, say, $35,000 to $75,000 acceptable? It really depends on your plan for the home, honestly.

Q9: L.L. Bean return policy

I bought a backpack about nine years ago from L.L. Bean and have used it regularly ever since. They have an unlimited return policy. Since the backpack is pretty worn out should I feel okay returning it to them to get another backpack?
– Elise

Their return policy is awfully open-ended. Here’s how the policy reads:

Our products are guaranteed to give 100% satisfaction in every way. Return anything purchased from us at any time if it proves otherwise. We do not want you to have anything from L.L. Bean that is not completely satisfactory.

For me, the question would come down to whether you were actually unsatisfied with the backpack. What did it fail to do that you would reasonably expect it to do? If you can’t think of anything, I wouldn’t use the return policy.

Remember, it’s worth buying stuff that does the job well. We want to give our money to companies that make good products, and a company with that kind of warranty is probably making good products. Abusing that warranty is a pretty good way to convince them to change their business model.

Q10: Handling big savings in budget

This year, we took our entire tax refund and used it to take care of some energy improvements in our house. We put in a programmable thermostat and installed a bunch of LED light bulbs and replaced our old giant television with a flat screen.

What we are wondering is how exactly this will affect our budget. Should we reduce our energy bill line item by how much we expect this to save us each month? Our figures show that our energy bill should go down by about $30 per month.
– Erin

I wouldn’t change your budget at all yet. Instead, I would start keeping track of your energy bills for a while.

Do you have last year’s bills? If so, start doing a year-versus-year comparison. What was last July’s bill like compared to this July’s? Do the same kind of comparison for August and September. Did they decline? How much did they decline?

You should see an average decline of some sort on your energy bill if you watch it for a while. That’s the amount you should adjust your budget by.

Remember, your energy changes may have shifted how you actually live. Do you leave the television or the lights on more or less now that they’re low-energy? Do you have the thermostat set any different than you would have done before?

The energy bill will show you the full truth of the matter.

Q11: The lessons of $2 bills

Regarding the rarity vs. scarcity of $2 bills, you got it right. One could easily walk into a bank and ask for $2 bills, or 50cent or any multitude of $1 coin variety as well. I get a kick collecting some and then spending them out in the world. Often a new sight for young cashiers!

One point I think you missed in your response however is that grandma’s misunderstanding on $2 bills can lead to good lessons for young children on money and saving. $2 bills can add up! And it’s great to teach kids that holding onto your money, any amount, is a good thing. Heck, ALL money is “rare” in my house!
– Fred

I agree with you completely on the value of using $2 bills as a tool to encourage saving, but I think you really hit the nail on the head with that last sentence.

$2 bills aren’t somehow “special” by themselves. They shouldn’t be saving $2 bills because they’re “special” – they should save them (and other money) because saving is a good thing to do that pays real rewards in the future.

If you tie it all to the “special” nature of a $2 bill, they’ll probably save the $2 bills they find in their future. Chances are, though, that they won’t find a whole lot of them in day to day life.

The lesson of saving should be broader than just $2 bills.

Q12: Taking gifts of help seriously

This past Christmas, my husband and I were both unemployed but we wanted to give thoughtful gifts to everyone. So, we made out gift certificates for most of our family. We gave certificates for things like evenings of babysitting and so on. We tried to come up with ideas that would be thoughtful for everyone.

July comes around and no one has used a single certificate. I finally asked my sister, who we gave a bunch of certificates for free babysitting to, why she had not used them. She said that everyone knew we were just trying to be nice at Christmas and that there was no reason to use the certificates.

We gave them with the intent that people would use them, so it kind of hurts that everyone just thinks that they aren’t really to be used. What exactly can we do here?
– Erica

If I were you, I’d send out an email to the people you gave certificates to and explain this. Let them know that you gave these certificates with the intent that they would be used, and you and your husband both spent a lot of time thinking about them and wanted to give something that each person would truly value.

Naturally, you can’t force them to use the certificates. You can, however, reinforce the spirit in which they were given.

After you send the email, though, I’d let the subject drop. It remains in their court as to whether or not to actually use those certificates you made.

Q13: College savings and discretionary funds

My wife and I are expecting our first child in January 2015 which is obviously a very exciting times for us. We are both 31 and work as lawyers with combined earnings of about $180k per year. Here are some our financial details. We have about $85k in our 401k’s and we each contribute 10% to the 401k (plus a 5% match each). We have invested $25,000 for a 1% stake in a local microbrewery (hasn’t produced any income yet but it’s in its first year of operation). We have about $27,000 invested in blue chip stocks that are “Dividend Achievers”. I started this after reading your article on passive income.

We have both of our cars paid off and they are good to go for a few years. We own a rental property with about $89k owed on the mortgage that rents for $1,250 per month and the mortgage is about $950 per month. We bought a house last year for $275k. We borrowed the 20% down payment from our family and are paying that back at $500/month. We have no credit card debt and about $10k in cash (probably should have a bit more cash in the emergency fund). I still owe about $3k in student loans at about 2% which amounts to about $77 per month.

So here is my question:

With the newborn on the way I’ve been thinking a lot about college education. I know costs are rising at an incredible rate and have become comparable to rising health care costs. The state of Florida offers a Prepaid tuition option that covers 4 years at a local university. The enrollment period is currently closed but I believe when it opens back up that it will cost about $30k to $35k. I think there are some other payment options including a 3 and a 5 year option.

I have been thinking about taking the $27k in stocks that I had bought and cashing that out and putting that towards the pre-paid college. I could always just start building that stock back up afterwards. I also had the stock sitting in a standard account versus a IRA so it may not make sense to keep it anyways. Should I go ahead and take care of the college education now. There would be some piece of mind knowing that this is taken care of (of course there are some expenses not covered such as room and board).

Most articles I have read have said to focus on retirement before saving for a kids college. We aren’t necessarily talking about digging into our 401k’s but diverting some discretionary funds.
– Adam

I am really, really hesitant to recommend the “prepayment” option when saving for college, for two reasons.

First, it locks your child into attending that university. The choices that they have in terms of where they go to school is drastically reduced. This is the biggest reason, for me.

Second, it relies on that university remaining open. That might seem like a given, but I’ve witnessed several schools disappear over the last decade or so because they couldn’t keep the doors open. That includes public schools, which might close due to a regent decision.

If I were you, I’d strongly encourage you to consider saving in a 529 account for your child. I also would not cash in those stocks right now to fund that account. Hold onto them for your own future.

Q14: Investing tiny amount in stocks

I have $100 and I would like to invest it in the stock market. What’s the best way to do that?
– Stephen

Honestly, you shouldn’t. The transaction fees alone at almost any brokerage will devour the gains you might make on almost any stock investment.

A much better approach is to take that $100 and stick it in a savings account. Whenever you can afford to do it, add $10 or $20 to that amount and let it build. When it gets to the $1,000 mark, start researching individual investments. I highly recommend looking at index funds from Vanguard.

Then, put all of that money into whatever you choose and sit on it. Don’t move it around – that will have tax implications and other problems. Just let it sit. Start saving again until you have another $1,000, and invest it in something different.

At the $1,000 threshold, you’ve reduced the impact of transaction fees by tenfold, plus you’ve usually got enough money to be able to buy into some of the better index funds. Most index funds through Vanguard have a $1,000 to $3,000 minimum purchase.

Q15: Frugally inadequate

Lately, I’ve been spending afternoons with several other stay-at-home moms on my block. We’ll get our babies together for a few hours and sit around and joke. Most of them are in a situation like we are where the stay-at-home mom decision was a real strainer on the budget so we all have to be careful with the money. Which is how I found The Simple Dollar.

Anyway, the stories the women share leave me feeling like I am not doing enough to trim our spending. They talk about which cashiers at the grocery store will hand coupons back to them and kind of make fun of each other both for spending too much and for being super cheap. I have fun, but I come away feeling like I’m not doing enough.
– Sandy

In my immediate circle of friends, we have running jokes about which one of us is the cheapest. No one takes it as an insult when they’re called a “cheapskate” because we all joke about it.

It really sounds like that’s what’s happening in your group. My guess is that most of these women are really putting forth a lot of effort to make their family situations work. They’re all friends, they’re all in the same boat, so they like to make jokes about the situation.

Every family situation is a little bit different. As long as you’re living up to your end of what’s expected in your marriage and in your parenting situation, don’t sweat it. If you can get a few tips from them, that’s not a bad idea, either.

Don’t sweat the joking and gentle teasing because, here, it sounds like it just comes from shared experiences.

Got any questions? The best way to ask is to email me – trent at thesimpledollar dot com. 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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