Questions About Multitools, Insomnia, Certifications, Jason Mraz, 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. Inheritance advice
2. Professional certification questions
3. Cheapest healthy foods?
4. Swapping “circles” with friends
5. Time to ditch a car?
6. Too cheap?
7. Frugal insomnia cures
8. Talking to brother about money
9. Buy it for life: multitools
10. Credit building after college
11. Inflexibility of retirement accounts
12. Taking job outside of career
13. Fixed rate lines of credit
14. Jason Mraz
15. Books for eight year old

Over the years, I’ve tried a number of approaches at making changes in my life. I’ve tried slowly changing behaviors. I’ve tried making big changes at once. I’ve tried hard changes and easy ones.

What I’ve found is this: every time I’ve made a sustainable change in my life, it’s usually been a “cold turkey” change and it’s usually come after a moment where I’ve really seen the negatives of my previous path. I also usually need a clear new way of doing things, mostly in terms of a clear “rule” to follow in my head that doesn’t leave any ambiguity, like cutting personal spending to a certain amount each month or going vegetarian.

Gradual change rarely works for me. I find that I eventually just go right back to where I started, no matter how much I believe in that change.

Q1: Inheritance advice

My father unfortunately passed away earlier this year. He was generous enough to leave a sizable amount in inheritance money to me and my three siblings. The breakdown is as follows: $75K each in inherited IRA’s and another estimated $75K each in cash assets once all medical/funeral/legal costs have been paid.

I wanted to let you know what I plan to do with the money and ask if you have better recommendations.

First of all, a look at my financial situation: I paid off my car and student loan March of this year and have been trying to build my savings back up since then. As of now I have $10K in savings/checking, $3K or so in a Roth IRA I opened this year, and maybe $12K or so in an IPERS account. Not an impressive list of assets, but at least I’m debt free. I net about $3,000/month and pay $571 in bills (rent, cell, gym membership, car insurance). After that immediately put $1000 in savings and allot $500 for everything else (food/gas/entertainment/etc). With this model, I still have money leftover at the end of every month which just stays in my checking account.

I’ve read enough similar reader mailbags to know your first question for me would be about my goals. First and foremost, I need some money for a wedding. I have a feeling my boyfriend will be proposing within the next few months. My mom is contributing about $5K but I estimate I will need an additional $15K of my own funds. Aside from the wedding, I would like to fully fund my emergency and savings accounts. Those are my immediate goals.

Past that, I would like to fully fund my Roth IRA every year going forward and invest in mutual funds so I will have over a million by the time I retire (with continued contributions, of course).

With that in mind, I was intending on doing the following:

As I understand, the IRA’s can either be taken out as either a lump sum or 5 equal payments over 5 years (or my entire life, but I’m not thrilled about that option). I want to take it out as a lump sum, which would move my income into the 28% tax bracket versus 25%. According to the numbers I figured (and they could very well be wrong), I would only be losing $2,250 more in taxes with the lump sum option. Is this correct? If so, that would leave me with approximately $54K. I would take about $10-15K out for a wedding, about $10K out for my emergency/savings, and then put the rest in an account to contribute to my Roth IRA.

When the remaining $75K comes in sometime next year, I was planning on investing it all.

Do you have any suggestions?
– Monica

This seems like a reasonable plan, except you have the “five equal payments over five years” option a bit wrong. There’s only a five year option like that if you’re moving money into your own IRA. The same is true if you’re spreading out the distribution over your entire life. Assuming you want the cash in your hand, your only option is the lump sum method. Charles Schwab explains this well.

Really, your options are to take a lump sum out in cash form, for which you’d have to pay income taxes, or else transfer the name of the IRA to yourself and use it as retirement savings, in which case you could probably skip your own Roth IRA contributions for a few years while you pay for the other things.

Since your only real expense is a wedding, if I were in your shoes, I’d probably not touch this IRA. I’d just transfer it to my own name, count it toward retirement savings, and then not contribute to my own Roth for the next two years or so, using that money to pay for the wedding. Then, after the wedding, go back to Roth contributions. I think it’s the best solution for everything you’re trying to do.

Q2: Professional certification questions

At my job, there are several newer hires that have a number of professional certifications – PMP, CAPM, MSCE. Do you have any insight as to whether these are worth getting if you’re already employed in the field?
– Sam

It really depends on your specific field and the specific employer. Some fields and employers really value certifications, while others do not.

Since I don’t know exactly what field you’re in nor who you’re employed by, I can only guess. You would have a much stronger sense of this. Look at what kind of hiring notices your company is putting out for positions like your own or positions you’d like to have. Look at what the competition is seeking in terms of jobs like yours or the jobs you’d like to have. Are those hiring notices looking for those certifications?

I generally think certifications are a good thing as long as they’re not overly expensive – and in some jobs you can request that your employer pays for (or helps pay for) certifications that are highly relevant to your position. They’re valuable not only for the piece of paper, but for the things that you learn. If you can get a useful certification at a low cost (ideally free), you should get it.

Q3: Cheapest healthy foods?

I enjoyed your recent post on cheap and healthy foods. It was really helpful. In our family with one adult unemployed and the other working part time, we are really focused on the cheap. What are the cheapest healthy foods? I don’t mind repetitive meals as long as they are really healthy and cheap.
– Eric

In my experience, four foods really stand out in that regard: rice, beans, oatmeal, and peanut butter.

All four of those things can be had for an incredibly cheap rate per calorie, especially if you buy them in reasonable bulk. Rice, beans, and oatmeal are all dried foods that last for a really long time, and peanut butter can last for a long time in an appropriate container, so you can buy them all in bulk without too much worry.

All of them are reasonably healthy. All of them are filling. All of them are easy to prepare. All of them are insanely cheap per calorie.

You can also make a wide variety of meals out of those items, especially with a few seasonings and seasonal fruits and vegetables.

Q4: Swapping “circles” with friends

When I was a homeschooling mom, I started something like this with our homeschool support group. First it was books. A day was assigned. You got to take away as many books as you brought in. Leftovers were donated to Goodwill. It worked beautifully.

Then we did it with toys. Again worked well.

Then we did it with kids clothing and it worked well for that also.

Whenever a group of friends are in similar circumstances, the swap idea is a great way to get ‘new’ stuff without any cost and minimal work involved.
– Jenna

This is just a great idea for any group that you’re involved with, not just children’s stuff. Why not swap old stuff in this fashion?

In fact, I actually just suggested this idea to my wife for her book club. This idea really seems like something they would do.

If you have friends that have children or if you have friends with similar interests, this type of swap meet seems like a great idea for everyone involved.

Q5: Time to ditch a car?

When is the right time to get rid of a car? I have a 1999 Honda Civic with almost 200K miles on it. I have been driving it for almost eleven years. I do oil changes myself but save bigger maintenance tasks for a mechanic I trust. He told me after my last change that several things in it were just wearing out and I should consider switching cars soon.

The cheapskate in me wants to keep using it until something fails so I can squeeze every mile out of the car. The rest of me says to get rid of it now and move to something that’s reliable. Which side should I listen to?
– Emily

Here’s the question you need to ask yourself: what is the financial cost to your life if you wake up one morning and your car doesn’t start? Do you endanger your job? Do you have any other method for reliably getting to work? Do you fail to get a child to school?

The worse that situation is, the more you should think about getting a new car now. If you could ride through that situation without any real problems, then I would wait until a failure to seek a replacement. If that situation sounds like it would cause disaster in your life, then I’d replace the car now.

If a car doesn’t come through for you when you absolutely need it, then it’s not worth having.

Q6: Too cheap?

When I read your website, about 75% of the things make sense to me. The other 25% just seems crazy cheap to me. It’s like most of the time you’re a sensible person and every once in a while you lose your mind for something cheap.
– Ben

When I read most personal finance sites, about 75% of the ideas make sense to me. The other 25% seem crazy to me. They don’t fit my life at all. It’s like most of the time those authors are sensible people but every once in a while they start talking about something that is completely out of the realm of what I can relate to.

Why? It’s because we’re different people who value different things.

I don’t begrudge other writers the differences between our lives, our interests, and our values. What I try to look for is where we overlap, because when they have great ideas in those areas of overlap, I can use them. We’re never going to agree on everything. I’m never going to find every tip of theirs useful. Sometimes, I’ll find some of their tips crazy. But if I find a healthy number of them useful, then I’m going to keep going back.

Q7: Frugal insomnia cures

Any advice on how to deal with insomnia? I’ve been a bit stressed out lately and I find it hard to get my thoughts to stop racing through my head. Either I lie in bed for an hour until I fall asleep or I wake up in the middle of the night and can’t get back to bed. Sometimes it’s a combination of the two.
– Karen

My usual solution for insomnia is to wear myself out. If I had insomnia the night before, I usually do some vigorous exercise in the morning and then some more in that gap between the end of the workday and dinner.

Another strategy that works well is to make your bedroom pitch black. If you have a television in there, move it out of there for a while. Close your curtains tight. Get rid of any and all LED lights in there. If you have a hall light, turn it off.

I also find that eating better helps. Try to stick to a diet of basic fruits, vegetables, meats, and so on – the less processing the better.

Try those tactics for a while and see if things get better for you!

Q8: Talking to brother about money

When I was 15, both of my parents died in an automobile accident. My older brother who was 18 at the time and just graduated from high school moved back into the house and basically took care of things while I finished high school.

We kind of developed a dynamic where he was almost as much of a parent as an older brother to me. But now we are both out of college and both have good jobs.

The problem is that my brother is now buying tons of stuff. He’s kind of having those “big spending” years that he never really had when he was taking care of me. I am worried that he is burying himself in debt. He has bought a brand new car and a huge television and a bunch of other stuff in the last year.

I want to talk to him about this but I am afraid it will not go well. Do you have any suggestions on how to talk to him about this?
– Daria

I know you’re worried about him and that’s a good thing, but I don’t think an “intervention” is the right tactic here.

If I were you, I’d address it more casually. I’d just ask him how he’s able to afford all that new stuff. I’d also encourage him to do things that don’t cost much money.

You also might simply be seeing his handful of new things and not looking at the full picture of his life. Is he spending more in every area of his life? Or is he still eating the same and socializing the same with just a few new things?

I’m just generally opposed to financial “interventions” unless it’s directly affecting your financial future – and in this case, I don’t think it is.

Q9: Buy it for life: multitools

Do you have any suggestions for a long-lasting pocketknife that will last for many years and has several functions on it? Do you use anything like this?
– Adam

I received a Leatherman Wave as a gift about ten years ago and I absolutely love the thing. Except for a few times when I’ve misplaced it (usually due to using it and forgetting to put it back in my pocket), I’ve constantly had it around ever since. The only complaint I have about it is that some of the inner tools are sometimes hard for me to pull out with my large hands.

If you’re looking for something smaller, two of my friends swear by their Leatherman Wingman. It’s much less expensive and still has a pretty good blade and selection of tools in a smaller body.

If you’re looking for items besides Leatherman, the Swiss Army knives from Victorinox are very good items. You’d want to study those carefully and choose the one that had the types of tools you actually want. I have several friends that have recommended them, though my actual usage experience is almost entirely with the Leatherman Wave and Wingman.

Q10: Credit building after college

I’m a year removed from my undergraduate degree currently working at a company. My credit score is low from what I understand (590) and I’m stuck on how to raise that. I don’t have any credit cards due to the family discouraging it (I come out of poverty so credit cards aren’t really understood). I put myself through college with a job and loans, and I owed $40,000 upon graduation. I’ve been making on-time payments since beginning repayment, along with my car loan ($6,500 to go there).

I applied for a couple of credit cards but didn’t get any traction. I’m worried applying for more than the two that I applied for last year will hurt my credit (although truthfully I’m not completely sure of how that works). I don’t know what to do to help my credit score, as it seems paying the payments on my loans isn’t doing anything. Am I missing something? And if a credit card is the most immediate way to begin building credit and I’m being denied on my applications, what is my best course of action?

The only thing I can think of is going for a secured credit card, but I’m skeptical of whether that’s a good use of my money.
– Denise

Your credit score seems low for what you describe as your credit history. If your only debt is your student loan and a car loan and you’ve never missed a payment on either one, I would expect your credit score to be above 600 at least.

If I were you, I’d take a look at your credit report, which you can get from the federal government at (here’s the FTC’s explanation of the site). See if anything on there is surprising to you and, if it is, start working to get rid of it.

If you do have some missteps in your credit history, give it some time. Those mistakes will heal themselves over time but your positive payment record with your current debts will stick around. The end result is a better credit score for you.

Q11: Inflexibility of retirement accounts

I understand the financial benefits of using retirement accounts to either delay or avoid taxes altogether, but it seems to me that you lose something when it comes to flexibility. Even with a Roth IRA you can’t touch your gains without a huge tax penalty until you’re almost 60. That seems like a huge drawback and is a good reason to invest in normal investment accounts. Am I right?
– Derek

If you’re saving money for retirement, it makes sense to put it in a retirement account. The tax benefits completely work in your favor.

If you’re saving money for other things, then it doesn’t (usually) make sense to put it in a retirement account because it’s locked in there until retirement age.

That’s why it’s important to establish why you’re saving. Goals are the most fundamental part of investing. If you don’t have a goal, then you’ve got a good chance of doing the wrong thing with your money.

Q12: Taking job outside of career

I have been a software engineer since 1996. I have had various jobs in the field, but in 2011 the company I was working for at the time folded and I haven’t been able to find consistent work since. I lived off of my emergency fund at first while I looked for work then I tapped my Roth IRA balance which is about gone.

I think I can still find work in my field. I keep my skills up by working on open source projects and keeping my name out there on Twitter and Linkedin but I am now wondering whether it makes sense to just find work in another field even an entry-level or part-time job.

Should I make that move yet?
– Mel

You need income here, period. If it means taking a job outside of your career path, then do so.

However, if you like your current field, there’s no reason you can’t continue the steps that you’re on. Keep going on Twitter and Linkedin and keep contributing to the open source projects in your spare time. It keeps your name out there. Don’t be afraid to keep applying for jobs, either.

Think of your new job as simply a way to get money in the table. Devote your real heart and soul to keeping on the career path you really want.

Q13: Fixed rate lines of credit

We live in Manhattan and want to apply for a home equity line of credit on the coop apt. we own outright. There is no mortgage. It is our understanding that the US government now requires that lines of credit have a FIXED interest rate. Yet, when we have approached Chase and Bank of America, we have been told that the interest rates on lines of credit are VARIABLE. How can we find a local bank that offers fixed rates on lines of credit? Does the government require that lines of credit have fixed rates of interest or is this a fallacy?
– Jim

I’m unfamiliar with any laws like you describe. The federal government has traditionally been very hands-off when it comes to the types of loans that can be offered from banks to consumers. Some states have somewhat more restrictive rules, but I don’t know of any areas that behave like you describe and outlaw variable interest lines of credit.

The closest thing I can think of to what you describe is that banks cannot adjust rates upward except in a few cases: when a promotional rate expires, when the variable indexed rate increases, or when you’re late by more than 60 days. In other words, they can’t crank your rate upward whenever they feel like it.

Most banks prefer to offer variable rate lines of credit even with those restrictions because it ensures they’ll make money even if the credit market changes.

Q14: Jason Mraz

Did you see this article about musician Jason Mraz? He is planning to retire at age 40 which is an ambitious goal. Seems like a guy in line with your thinking!
– Nora

It seems to me like Jason Mraz has a pretty good plan for the future. Good for him.

I wish that everyone who has exceptional opportunities like he has had would take advantage of them like he has.

Q15: Books for eight year old

Would you mind sharing some books your son is into these days? I think my son is about the same age (almost 8). I have never had trouble finding things to read to him before, but he started really reading on his own this summer after getting into the Diary of a Wimpy Kid series, and now we can’t seem to find anything else he wants to read!
– Sandra

To answer this question, I asked my son to name his three favorite books. He named the following:

The Jack Stalwart series by Elizabeth Singer Hunt
The Redwall series by Brian Jacques
The Magic Treehouse series by Mary Pope Osborne

I think that naming three series was his way of cheating a bit. I then asked him to name his favorite standalone book and he said The Best Christmas Pageant Ever by Barbara Robinson.

I can definitely say that he’s enjoyed all of those as they’ve come up in dinner conversation many times. I think that the Redwall books are right at the very upper edge of his reading ability at the moment; he’s managed to read through chapters on his own, but they’ve mostly been enjoyed as bedtime books. On the other hand, the Magic Treehouse books were probably a stretch for him a year ago, but might be a little below his reading level right now and I don’t think he’s read one in a while. He tends to really get into series at the local library, burn through a ton of them, then move on to a new series.

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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