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. Children as insurance policy?
2. Exercise outside the gym
3. Installing solar panels?
4. Bank violation of privacy
5. A frugal society is bad?
6. Buy it for life: lawnmower
7. Ice packs or ice
8. Stolen item from Craigslist
9. Mom gave away life’s savings
10. Huge financial changes
11. Value of self-learning
12. Cheaper to buy?
13. College free in the future?
14. Positive financial heroes
15. Summer reading?
Being a freelancer is very, very different than most jobs in one key respect: you work whatever hours you want and the only thing that matters is getting the work done on time.
Most of the time, that’s a good thing. If something comes up during the day or in the evening, I can just go take care of it without worrying too much about immediate work.
However, there’s a flip side: you don’t really get a vacation in any way unless you essentially agree to a reduction in your income. You are constantly required to produce work, whether you want to be doing something else or not. Those deadlines don’t really care about weekends or holidays or vacations, and the only way to get breathing room is to work ahead.
In my eyes, freelancing can be wonderful for self-disciplined people who can work at home and still motivate themselves to get ahead in their work and produce quality work without someone breathing over their shoulder. The thing is… that’s not everyone. I’m not even sure it’s that big of a group of people.
The key for me is to just do something fun if you can find that opportunity, something you would do anyway but someone pays you for it. That’s how I feel about writing. It’s a mental release for me – I would almost need to do it anyway.
A good friend of mine once summed it up very well. He really, really appreciated the flexibility of my work and wished he had that flexibility… but he knew, at the same time, that if he had that flexibility, everything would crash and burn.
Last night I was sitting around with a bunch of my old college friends that I haven’t seen in years. Most of them are now parents with kids of varying ages. The topic turned to money and one couple was very loudly saying that they viewed their kids as their insurance policy because there is no way to save for any kind of retirement. Several other couples agreed but mildly so. What do you think?
It is nice to think that, if Sarah and I were much older and in a real financial pinch, we could rely on our adult children to help us out. However, we don’t expect such help and we’re not planning for such help.
For one, we want our children to achieve and enjoy financial and personal independence as early as possible. We want them to have their own lives with their own chase to fulfill their own dreams. If we drop in, we’re going to be altering that picture in a negative way.
For another, there’s no guarantee that our children will have that kind of financial success. The odds are that one of them will do better than us, one will do about the same, and one will do worse than us. And therein lies the problem – do we burden ourselves on that one child that did better than us? How is that fair to him or her?
We’re just not planning on any real financial support from our children at all and we don’t think it’s a sound financial move. My guess is that there was at least a little bit of tongue in cheek going on there. I hope.
Can you point me to some good free resources for exercising without a gym membership? I recently moved and the nearest gym to my house is about fifteen miles away so I am trying to come up with new ways to exercise.
My usual routine at the gym used to be about twenty minutes of jogging on the treadmill or track each day and then an exercise class 3-4 times a day.
I wrote an article about this very thing a while back. Here are the nine resources I shared:
- Neila Rey’s 100 No-Equipment Workouts
- Mike Rowe’s Burpees Workout
- Sheree Ransel’s Introduction to the “Diamond Dozen” (strength yoga)
- HikingGuide’s Get Ready to Hike Guide
- Nerd Fitness’s Playground Workout
- Fitness Blender’s Top 10 Best Fat Burning Exercises at Home
- Joanna Soh’s Beginner Fat Burning Workout
- Final Round Training’s Shadow Boxing Cardio Workout
- Scott Herman’s Muscle Gain Routines
In addition to those, I strongly recommend looking at the Lifetime Fitness Ladder, which has probably helped me more than anything else.
What do you think about installing solar panels to save money? Is it a good idea? Has it reached a point where solar panels will pay for themselves over time?
According to my math and the data I’ve seen about them, solar panels have crossed the threshold for being cost-effective for home use. Current-generation solar panels will end up saving you money after a number of years, that number being significantly less than the lifetime of the panels.
Having said that, I still might hold off a bit. Solar panels right now are changing and improving incredibly quickly. It seems like every time I look at them, there’s another leap forward in efficiency.
I expect, like any hot technology, there will eventually be a leveling off period, but right now it’s changing really quickly. I’d still hold off for a little bit, because although you can buy panels that will pay back your investment right now, it’s very likely that in two years you’ll be able to get panels that are twice as efficient, meaning your total cost could be cheaper if you wait two more years.
About six months ago, a friend of a friend got a job at my local bank as a bank teller. I didn’t think too much of it and was kind of glad to see a friendly face at the bank. We’d exchange some friendly small talk and stuff.
Anyway, about a week ago, our mutual friend stopped by my house and told me that this bank worker had been talking about my financial state to some people. She had made comments that revealed our approximate checking and savings account balance and had started spreading the idea that we were “rich.”
First of all, we keep a pretty healthy buffer in our checking account and we have a three-month emergency fund but I don’t think we are rich. But the real problem is her talking.
This has got to be some kind of bank law violation, right? I don’t know how it can be legal for bank employees to talk about your finances to other people.
I am stuck about what to do here. I am afraid that if I talk to the bank about it she might be reprimanded or fired and that would cause some real backlash. I am pretty sure that at least a couple mutual friends would be extremely negative to me if she got fired because of what I said.
What should I do?
If you’re worried about the negative social ramifications of reporting this, you should move your business to another bank immediately. I would do this anyway, regardless of what you choose to do about this specific employee. This way, that mutual “friend” can’t see what you’re doing with your money.
Beyond that, it’s up to you whether to report it to the bank. You’re correct that it may end up costing her job if you report it, but on the other hand, how many other accounts is she talking about? It’s not just an issue with you.
So right now prices stay low because of competition and because there are so many many customers out there buying stuff. If a town can support 10 pizza joints, they’re all going to compete with each other for a pool of customers that can easily support them all and that’s going to keep prices low most of the time.
But what happens when everyone is cheap and stops buying pizza? Nine of those restaurants go out of business, one pizza joint has a monopoly, and they jack up prices. Wouldn’t everything just get more expensive if everyone were cheapskates and don’t we need to spend to keep prices low?
Your idea makes a lot of sense in the short term. It relies on the idea that consumers are the reason for economic growth. But they’re not, at least not in the long run.
The reason for economic growth is increased worker efficiency, new ideas, and capital for investment. When those things are present, it isn’t long before economic growth follows.
The thing is that if everyone suddenly became frugal, that wouldn’t mean that everyone would stop spending. What it would mean is that people would buy a lot less consumer goods, which means that many of the companies pumping out consumer goods would suffer. However, the money spent on those goods wouldn’t disappear.
Instead, that money would wind up invested in companies that are creating products that would be of more interest and value to a society of more frugal people. Companies would beef up R&D labs and look for more energy efficient home improvements and other beneficial things. At the same time, fewer people would want to work for the companies that aren’t doing positive things for the world. Why would you want to work at a soul-eating job if you didn’t need to?
The road to that destination would be bumpy, but the destination would be great.
What’s the best lawnmower that will last for years?
Assuming you’re not looking for a sarcastic answer (a scythe), your best bet is to turn to the Consumer Reports recommendation for lawn mowers.
In their most recent rundown (a little over a year ago), they went strongly for the Honda 21″ variable speed mower that is currently sold at Home Depot, among other places.
However, Honda appears to be updating that specific model (HRX217K5VKA) soon, so the exact model number is probably changing in the very near future.
We own a slightly lower-end version of that same lawnmower (ours looks eerily the same) that we’ve used for five years or so and it works wonderfully.
We go on a lot of picnics during the summer when the kids are out of school. So we need to keep some of the food cool. Is it cheaper to just use ice in a Ziploc bag or to use reusable ice packs? Obviously ice packs have an upfront cost but are they cheaper to re-freeze?
Unless you’re looking at a 20- to 30-year timeframe, ice is cheaper than an ice pack assuming that you’re actually re-using whatever container you put the ice cubes in. For example, if you use a Ziploc bag, you need to re-use that Ziploc bag in order to create an actual cost savings.
If you just toss the bag afterwards, then an ice pack is way cheaper than ice cubes over even the course of a year or two with the kind of usage you describe.
We actually use ice packs ourselves for most cooling purposes, except for when we’re using a giant cooler and need to supplement with ice cubes to keep everything cool.
Recently I purchased a PS4 from Craigslist. There was a guy on there who said that he needed to sell his and had a pretty good price on it. When I bought it it seemed to be new and so I was happy with the price. I opened the box there and tested it out before I left and it worked so all was good.
A few weeks later, I found out that a friend of mine had also bought a PS4 on Craigslist from the same exact guy like a day later. My friend had a very similar experience in that the PS4 seemed to be new.
So now we’re thinking these PS4s are stolen. We did not know them to be stolen, but if we report them to the police, we’re likely to just be out $200 with nothing to show for it. What’s the right move here?
Obviously, the honest thing to do is to check with the police department and find out if they really are stolen. However, you’re also correct in that your item will be taken from you by the police and you’ll receive nothing in return for it. You might get lucky and get the item back at some point, but the odds are against it.
That’s a real problem, too. I understand why the police need to recover the item, especially if the original owner is discovered. At the same time, I also understand why a private buyer, who thinks they’re buying a used PS4 off of Craigslist, would basically feel as though they had $200 stolen from them if they report it. It provides negative motivation to report the crime.
One option that you can use to check whether or not your PS4 was actually stolen is Trace Checker, which enables you to check the serial number of your PS4 against a very large database of stolen goods. If you find that it is stolen, you are obligated to return it, though, and an item that isn’t in the database isn’t necessarily an item that wasn’t stolen.
I am stuck and I don’t know what to do so I hope you will have some words of wisdom for me. I am 54 years old and I have a younger sister age 48. When dad died several years ago he left behind a large life insurance for mom to live out her years on so she put it away in an investment that was supposed to give her enough to live on for the rest of her life. I did not know the details but I trusted her and she said she talked to a financial advisor about it.
So last week mom calls me and says that she has no money left. How is that possible I ask her. It turns out that she started tapping that money about three years ago and giving large chunks of it to my sister to start a business with. I don’t know where that money went but my sister certainly does not have a business. When I called my sister to talk about it she got angry and told me to f off and hung up on me and won’t answer calls now.
Mom asked if she could move in with us if she lost the house. I really don’t want this because my wife and her have never really gotten along and I am also mad at her because of the almost $1 million she just gave away to my sister for nothing.
Please help me. I do not know what to do.
Ignore your sister entirely. She is a woman who effectively stole hundreds of thousands of dollars from her elderly mother.
The question you need to ask yourself is that given your mother’s current financial state, do you want to help her? Ignore how she got there – that’s a horrible child acting as a predator towards a parent.
If you do offer help, I would insist on one thing. Your mother cannot give any more money to your sister. If she does so, she’s essentially taking money from you and giving it to your sister.
If you are paying for your mother’s room and board and then your mother gives money to your sister because she no longer has the burden of that expense, then it’s effectively the same as you handing that money to your sister. You need to make it clear that such things are unacceptable and if she has the financial wherewithal to do that, then she has the financial wherewithal to move forward without your financial help.
I became a widow in November 2014. My husband died from black mold growing in our attic. The air conditioner’s duct work had sprung leaks; thus causing condensation which was conducive to mold growth. We did not know it until the pot rack and half of the kitchen ceiling fell, nearly falling on me. The kitchen window leaked. He was age 67 and I am 61. The homeowner’s insurance refused to cover anything.
[Edit: Following this, the reader listed a long series of unfortunate events that do not need to be shared here, but ate through her emergency savings.]
Five months before he died, we bought a used minivan – payment: $319.
House payment: $464. Line of credit: $135 interest-only payment. Total owed on both: $112,000. House worth $135,000… on a good day. Real estate taxes, not escrowed: $800 per year. Homeowner’s insurance: $2,600 per year, not in escrow (penalty for living in Florida).
Income. It went down $1,000 when hubby died. I get his full pension for one year: $1,681 a month. SSDI payments total $1,769 monthly. My dad pays $700 a month. In December of this year, the pension will be cut in half and I will get that for the rest of my life. My dad is 83, so I can expect yet another loss of income, a big unknown.
Total of all income currently: $4,150 per month.
Credit card total owed: $15,465
Vehicle balance: $17,000
Regular monthly bills: $883
Mtgs & cc debt payments: $1,455
Monthly expenses: Approx. $1,763, food, paper products, pet, etc.
I don’t know what to do: Go bankrupt, lose my home, pay all my bills (all are current ), or save as much as I can. I am cutting all the expenses to the bone. I have not been able to cut my cable bill. To get Hulu or Netflix, I need a smart TV.
I cannot find anyone to help me with my situation. I built up another emergency fund of a thousand dollars.
First of all, it was not clear from your email, but if you have not contacted legal help regarding your insurance policy, you need to do so immediately. Never, ever accept their word in a situation like this without consulting legal help.
Assuming you’ve done that, you need to start cutting expenses sharply. For starters, you don’t need Hulu or Netflix or cable at all. Watch over-the-air television for free with a $40 digital antenna. Sell off your vehicle (if possible) and get a much lower-end one with the proceeds so you can ditch the car payment. Move to a different place if there are any available for a reasonable price that would lower your monthly expenses – you’re a single person, so you don’t need a large home.
You’re not doing too horribly if you were able to build up an emergency fund of $1,000, but you need to start addressing those debts as soon as possible.
What is the value of self-learning if you’re not building toward something to fit on your resume? I don’t get why someone who is not in business would get value out of learning MBA materials for example. What’s the point?
The value of self-learning and picking up more skills is to make you a more well-rounded person with a wide variety of knowledge and skills to bring to the table in a variety of situations. It also keeps your ability to learn as sharp as possible.
I’ve found that skills and knowledge unrelated to my job has often made me a more valuable employee. Being able to hold conversations with potential clients on a lot of topics has always been useful, for example, and being able to repair a toilet at work can be really valuable in a pinch. Skills and knowledge also open the door to side businesses and even career switches.
If you’re locked into a career and won’t even consider anything else and are so strong in your core career skills that you don’t need any supplemental skills and will never have to learn anything new, then don’t bother with self-learning. I’ve never met anyone like that.
Given your frequent advice to rent, what do you think of this map that indicates it’s cheaper to buy almost everywhere?
It really depends on the options you choose. I don’t think the initial options on that chart are really representing a good average picture of home ownership – they’re skewed toward a situation where home ownership is good.
For example, most Americans don’t itemize their tax returns, yet the default choice on that chart is that a person does itemize their taxes. If you move that option to “don’t itemize,” the chart changes quite a bit.
My advice still stands – don’t bother buying at all if you’re staying there less than three years, and only buy if the monthly cost of home ownership is less than the monthly cost of renting, including all factors (mortgage, rent, insurance, association fees, property taxes, etc.). That chart just reinforces my view that for most people, renting is better, but there are many situations where ownership is better.
Do you think that at some point the price of college will drastically drop or become free? It seems to me that college becomes more of a requirement each year and also becomes more expensive each year and as that impacts more and more people we’re going to see major change.
I think it’s possible, but I wouldn’t ever bank on that.
Here’s what I think will happen. Some companies will use a degree as a bit less important in the picture of hiring people. At the same time, more universities will share their course materials online. Together, this means that highly self-motivated people will be able to still find good technical jobs without a degree, but there’s some risk involved there.
Still, institutions will need revenue to keep their doors open, and I don’t see a radical shift in how institutions will acquire that revenue. I don’t see states or federal sources drastically increasing funding, and only a few institutions have endowments big enough to forego tuition expenses.
Are there positive financial heroes or role models out there? I am looking for people who accumulated wealth without exploiting others and maybe did something humane with it.
Most of the real heroes aren’t famous. They’re found on the local level, doing things like quietly running the local food pantry or organizing Habitat for Humanity builds.
Almost everyone that became famous because of their business acumen or wealth did something rather exploitative at some point during their business career. That’s just the breaks of business. If they didn’t do it, someone else would have.
I think the best business “heroes” are the ones who moved on to doing other things with their life after making their bones in business. Bill Gates comes to mind here.
The last four or five years I have wound up reading a couple of your summer reading picks. Got any to share this year? What are you going to be reading?
I can’t help but be really curious about Harper Lee’s second novel, Go Set a Watchman. I truly loved To Kill a Mockingbird and I basically figured she would never publish anything again. The weirdness and mystery behind why this book is being published simultaneously makes me not want to read it and also makes me more curious about it.
I love high fantasy, so I’ve been looking forward to The Grace of Kings by Ken Liu for a while. He’s an amazing short story writer and this is his first attempt at a novel-length book – I’m really looking forward to it popping up at the library.
I’m also planning on reading The Theft of Memory by Jonathan Kozol, which is about his father’s final years as he descends into Alzheimer’s and how Kozol dealt with it as a son. This topic is starting to really strike home for me as my parents advance well past retirement age, and I have a lot of respect for Kozol as a writer.
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.