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. Investing and taxes
2. Ethics and class action lawsuits
3. First adult bicycle
4. Cheap versus frugal
5. Disney Cruise suggestions
6. The value of staying put
7. Going back to school
8. Poisonous coworker
9. Unsure where money is going
10. Finding specific free online classes
11. Learning the names of clients
12. Reading philosophy
When I think back on the times that I was happiest in the last year, I’ve come to realize that the list of “happy moments” doesn’t match up well at all with the things that seem to make me happiest as I’m doing them.
Most of the things that still bring joy today are social things. They’re creative things. They’re family things.
The things that seemingly bring me happiness in the moment are consumption things, like watching a movie or tasting a delicious home brew.
Those things just don’t cross over onto the list of things that bring lasting happiness.
The home brew thing is a good example. I love making my own beer at home – it’s a hobby of mine. In the moment, I really enjoy tasting that beer. Yet, when I look back, the thing I remember the most and the thing that makes me feel good is the process of making it, usually with the aid of my wife and sometimes with the aid of friends and other family members. I’m making something and doing it socially.
Think back. What from the last year has brought you happiness that you can still feel? Does that joy come from something you bought or something you consumed? Or is it from the effort you put out or from the relationships you’ve cultivated.
Seems to me that there’s a recipe for happiness in there somewhere.
Q1: Investing and taxes
I’m at the point where I’m interested in starting to invest a little in something like Vanguard index fund, but I can’t find anywhere what this would mean for tax time. Are there separate taxes to pay on investments come April 15, if my whole goal is to just put money in and leave it alone?
– Juliette
It depends on how you invest.
If you invest using a normal, taxable investment account and then do not sell or “cash out” your investments before the end of the year, the only thing you will owe taxes on are any dividends that you might have earned (you can think of dividends as being much like interest in a savings account – you’ll earn a little if you just let your money sit there). You’ll probably earn about 2% of the account balance a year if you’re in a broad-based index fund, and then you’ll owe taxes on that amount. On an investment of, say, $1,000, you would probably owe somewhere around $4 in taxes on it at the end of the year. If you chose to reinvest your dividends – which is probably what you should do – that $4 would have to come out of your pocket. If you just collected your dividends, you could use part of them to pay the taxes.
If you sell your investments before the end of the year and “cash out” of this normal, taxable investment account, you’ll also owe taxes on any of your gains. If you invested $1,000 and it went up to $1,050 in value by the time you sold it, you’d owe taxes on $50 worth of income. Since you bought and sold so quickly, it would probably be taxed as normal income (you get a better tax rate if you’re selling an investment you’ve held for a while).
However, if you want to avoid this entirely, you can invest in a tax-advantaged account, like a Roth IRA (which has advantages for retirement savings) or a 529 (which has advantages for educational spending). Money put into these accounts don’t generate any tax bill at the end of the year, as dividends earned stay in the account (you still have to report the account activity, but you don’t owe any money). You may owe taxes when you finally do withdraw, but if you follow the rules of each account, you probably won’t even owe taxes then.
In other words, provided you don’t withdraw the money before the end of the year, you won’t have much of a tax bill at all no matter what you do with it.
Q2: Ethics and class action lawsuits
I don’t know if you heard about this but there was this class action lawsuit against Starkist and if you bought tuna from Starkist between 2009 and 2014 you are due to receive some tuna coupons. http://ift.tt/1Lwe77a .
Anyway the reason I’m writing is what do you think about this. My brother who I don’t believe has ever bought a can of tuna filled out the claim on this class action suit. I asked him if he ever bought tuna and he just laughed about it.
I hate it when people scam the system like that.
– Neal
I included this question for two reasons. One, if you bought Starkist tuna anywhere between 2009 and 2014, you should probably check out that website. They’re going to send out vouchers to reimburse people for tuna purchased in that timeframe. This lawsuit was due to Starkist deliberately underfilling their cans during those years, meaning if you bought a 5 ounce can, for example, you were getting substantially less than 5 ounces of tuna.
The second part of Neal’s email deals with the ethics of his brother – and it’s pretty obvious that his brother has some seriously questionable ethics. This lawsuit is meant to compensate people who paid for tuna and got less than they paid for, not to be a bonanza for anyone who wants coupons.
Beyond that, the claim does state that, by submitting it, you’re stating under penalty of perjury that you did buy tuna during that time frame. For me, at least, I’m pretty sure I could actually produce a receipt if needed, but they’re not requiring that.
There’s not really too much that could be done here. If you wanted to go the extra length to report your brother as potentially committing perjury, you could, but it’s honestly probably not worth the time and money for Starkist to go after your brother even if you did report it.
Don’t be a jerk. If you bought tuna in that timeframe, by all means fill out a claim. If you didn’t… then that means you weren’t harmed by the underfilled tuna cans, so don’t fill one out.
Q3: First adult bicycle
I am 31 years old and haven’t owned or really used a bicycle since I was about 15. I am thinking of buying one now that I live about 2 miles from where I work and there is a grocery store literally across the street. The weather is nice 11 1/2 months out of the year too.
Catch is, I don’t know what to buy. If I read the advice articles online, they give all kinds of expensive suggestions and I know I’ll pay a lot if I go to a bike store. What’s the best “entry level” way to get into this? I realize I’ll probably upgrade if I get into biking, but I want an inexpensive one to test the waters.
– Colin
If I were you, I’d buy a used bike. I’d start by looking on Craigslist, but you may still end up going to a bicycle shop. Keep in mind that you’re looking for a commuter bike, as that’s the style that will fit your needs the best.
When buying a used bike, there are a few things worth looking for. I wouldn’t buy any bike with visible rust on it, as that’s a sign that the frame may be weakening and will be more trouble than it’s worth. Look at the wheels carefully for any signs of unevenness or previous bends in the tire – is it flat? Are there any dent-like spots? If it passes those two quick tests, take it for a quick ride. Make sure that it brakes well – does it stop you without completely throwing you off of the bike? (Obviously, there are many things you can look for, but they’re more trivial for a first time bicycle buyer.)
Assuming you are carrying a bag back and forth to work, I’d strongly encourage you to get a bike rack for it to which you can easily attach a bag.
Q4: Cheap versus frugal
Why is “cheap” considered bad and “frugal” considered good even when they mean the same thing?
– Ainsley
They don’t mean the same thing, that’s why.
“Cheap” means that your primary consideration in the things that you do is how much you have to spend. A “cheap” person will buy a junk kitchen knife for $8 rather than spending a little more on one that will actually cut vegetables for more than a year.
“Frugal” means that cost is just one of the largest considerations in a purchase. It means that you’re trying to seek out the purchase that provides the most value to you for the dollar. A “frugal” person will do some research into kitchen knives and look for the one that provides the best “bang for the buck,” as it’s a tool that will be re-used quite often.
Another example: a “cheap” person, when given a list of items ranked by Consumer Reports, will look immediately for the least expensive item. A “frugal” person, seeing the same list, will look for the one that Consumer Reports marked as a “Best Buy” and consider that one, too.
They’re not the same thing, not at all.
Q5: Disney Cruise suggestions
My parents told us recently that they wanted to pay for our family to go on a Disney Cruise next summer. We have a six year old and a four year old (who will be seven and five next summer) and we have never taken them on any sort of trip other than a camping trip.
My parents are paying for all of the big expenses – the flight and the cruise itself – but the incidental expenses and things are up to us. So we have started saving.
We think we will have about $1,200 saved by the time of our cruise.
We are looking for tips on how to maximize that money. We have read a lot of articles about cruises but they all seem to be about saving money on the flight and the cruise itself.
Do you have any strategies that help with the incidental costs of cruises especially Disney Cruises?
– Charlize
One, arrange your own transportation from the airport to the cruise terminal and back, unless your parents are covering this. This can cost as much as $100 each way. Use public transportation if you possibly can.
Two, if you plan on drinking alcohol on board, take your own. Pack a bottle of wine or two into your bag so that you’re paying lower prices than the prices on board.
The vast majority of things on board are included with the price of the cruise, so take advantage of that. Get on board as soon as you can (and eat there) and get off as late as you can (and get a last meal before you leave).
My guess is that with the cost of the cruise and the flight already covered, you should be fine with that level of savings for the trip, provided you don’t buy mountains of souvenirs or demand many, many gigabytes of data on the ship.
Q6: The value of staying put
I really liked your article about not worrying about stock market volatility and looking at it solely as a long term investment. The one thing I don’t think you emphasized enough is that it saves so much time and energy if you just don’t worry or think about it and trust your strategy. Only sell when it comes time to need the money and don’t worry or even think about it. You save so much time and energy doing that compared to watching the market every day.
– James
Absolutely!
Honestly, I rarely look at the stock market. I don’t even think about it most days, even when it’s jumping up and down like a high jumper on a pogo stick. It’s just not relevant to my day to day life.
I don’t spend much time at all thinking about my investments. They’re all automatic, and they’re just sitting there for the day long down the road when I need to use them. (If I were to suddenly die, they pass to my wife or to my kids or to a charity, and I’m fine with all of those things.)
Thus, I don’t spend time on it, and I don’t spend worry on it. I spend my worry on other things in life, like whether my kids are getting a good education.
Q7: Going back to school
How exactly does an adult go about going back to school? I got a job directly out of high school and have worked there for twelve years. I got good grades in school but didn’t see the point of more schooling but now I do. I’ve read some websites about college admissions but I really don’t know where to start.
– Tanner
Your best bet is to contact the admissions office at some of the schools you’re interested in and discuss your situation with them. They’ll give you some clear advice.
However, my biggest suggestion for you is to take some courses at a local community college first, preferably one that has credits that transfer to other universities. This will serve a lot of purposes. It will save you a ton of money. It will get you back in the swing of classroom learning. It will also give you time to figure out what you need to do.
Remember, a four year university degree is expensive. If you can take steps now to trim that cost while also earning a few credits and figuring out a smart game plan, you should do so.
Q8: Poisonous coworker
How do you handle a poisonous coworker? One of the other people in my office spends all of her time badmouthing almost everyone and delivering withering reports about everyone to the boss. She doesn’t seem to do much work herself either. It’s really hard to trust her or even be around her and she just adds a bad tone to the whole office.
– Amanda
I was once in this situation with a coworker. She worked in an office with myself and one other fellow. She did very little work, but she did her best to try to seem like we were undermining what little work she was producing. In truth, neither one of us had any idea what she was even working on, as she spent as much time as possible away from her desk and didn’t communicate with us much at all.
What solved our problem is that we had a big meeting where we all had to present our work and she literally had nothing functional to present. The others in attendance at the meeting were stunned. Luckily, my other office mate and I were competent and had plenty of material to present. This turned out to be her last week on the job.
My suggestion? Give her lots of rope to hang herself. Encourage the boss to give her situations like this where she can either sink or swim, and also put her on the spot sometimes.
Q9: Unsure where money is going
I am trying to figure out where all of my money is going. I bring home about $2650 a month.
Right now I have these fixed expenses:
Rent $585
Internet/cable $65
Electricity $180
Bus pass $20
Credit card payment $250
Student loan payment $350
This leaves me $1,200 a month just for food and entertainment. I don’t eat real extravagantly and mostly at home. But at the end of the month I have nothing. Help!
– Dana
My guess is that you have a ton of little money leaks throughout the month as you spend your money on food, entertainment, and other incidental expenses.
One thing you can do is simply go though your credit card and bank statements, transaction by transaction, and group them up. Was this expense for food? Was this expense for entertainment? Then, total those categories up. I’m willing to bet that their combined total is somewhere around $1,200 each month.
If you’re struggling with that kind of spending and you have outstanding credit card debt, it’s time to take a break from credit cards. Cut up your card and live out of your checking account only for a while. Make ends meet with just the cash you have. Then, bump it up a notch – start making bigger credit card payments each month and leave less in checking for these kinds of expenses.
Q10: Finding specific free online classes
What’s the best way to find specific online classes? Is there a central place to find them or do you just have to Google?
– Mark
Google is probably your best tool here, but there are a few central clearinghouses for most online courses if you’re okay with doing some browsing through class lists.
The two best central clearinghouses for free online college classes are edX and Coursera. You can probably find a class close to what you’re looking for using those two sources.
If you can’t find a course on your subject at those places, then you should probably turn to Google. Many universities do offer online materials and lectures for all kinds of classes, but many don’t participate in those two clearinghouses. So, just use a well-formed Google search regarding your topic. “online course bioinformatics,” for example, or “online course world war I.” You get the idea.
Q11: Learning the names of clients
After spending several years primarily as a software engineer, my boss has decided that I have “people skills” and has moved me into a position that’s perhaps 30% sales. My job primarily is to touch base with a big list of clients and find out what their needs are regarding our products.
Mostly, I use the phone and email for this, but several times a year I visit various companies and meet with teams of people. Over time, I’d like to be able to know those core people by name, but my memory for that kind of thing is terrible.
Do you have any suggestions for learning the names of clients and associating them with their faces?
– Billy
Back when this was a part of my career, I used electronic flash cards for this. I would collect the business cards of people and then look for pictures of them online, then I had a website that I made myself where I could see pictures of people and then after a few seconds their name would appear. (I actually had forgotten about this and just remembered it when I read your email.)
Anki is a free software package that does this type of thing for you these days.
Another strategy for learning that person’s name on the fly is to spend time when you’re not directly conversing with people or don’t need to invest your full attention simply running through the names of people in the room. Look around the room from person to person and try to come up with their name. Then loop back through everyone. Try to remember people based on their distinct features – that always helps me.
Q12: Reading philosophy
Congratulations on your study of philosophy! It is a wonderful subject to study not so much because of what you learn but because it forces you to think hard about core elements of what it means to be human.
Having read many of your posts over the last several months, I have a few books to suggest. I would recommend that you read Letters from a Stoic by Seneca, because many of the things you write about are right in line with a stoic philosophy. You should also read The Art of Happiness by Epicurus.
But more than anything else, you should read a big collection of Emerson. I would suggest starting with the huge Library of America volume of his essays. I think you would find much to agree with and think about in his writings.
– Carl
Thank you so much for your suggestions, Carl. I am familiar with the stoics in a limited way and with Epicurus in an even more limited way, so those are definitely books to add to my reading list.
However, you are spot on in figuring out my love for Emerson. He is perhaps my favorite writer of all time, and I even wrote a three part series of articles for The Simple Dollar discussing just his essay Self-Reliance, which is one of the most powerful things I’ve ever read. Here’s part one, part two, and part three of that series. It is such a powerful essay and one that echoes strongly through the challenges of modern life.
I have largely been using Bertrand Russell’s A History of Western Philosophy as a guide through all of these things. It’s a good guide, but Russell seems pretty opinionated in places. It also doesn’t cover Eastern philosophy much at all, which makes sense given the name.
There is so much good stuff to read out there.
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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