What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. Insurance billing issues
2. Cheapest city-to-city travel
3. Buying new for baby?
4. Husband too frugal
5. Other people’s situation as inspiration
6. Emptying out 401(k)
7. Concern about national debt
8. Burning out on financial improvement
9. Cold brew coffee advice?
10. Roth 401(k) question
11. Money talk at Thanksgiving
12. Thanksgiving leftovers
Like a lot of Americans, Sarah and I and our children plan on sharing a big meal and a lot of quality time with some of our extended family in the coming days. It’s a great opportunity to spend quality time with people that I love but don’t get to see as often as I’d like.
I hope that you have the same opportunity in the coming days. There are times when such gatherings can be challenging. Rather than looking at differences, put them aside for a day or two and look for things you have in common. Everyone wins when we do that a little more often.
Q1: Insurance billing issues
My wife and I each have a term insurance policy with [a particular insurance company]. We also have a whole life policy for my daughter. We pay the bills as they come in but all three of us are billed on different cycles. We have tried again and again to get the company to put us all on one billing cycle and customer service says they’ve done it and then we’re still on irregular cycles. I don’t know what to do.
– Charlie
Call their customer support again and immediately escalate to a supervisor. Be extremely clear on exactly what you want – you want one bill on a regular basis for all members of your family. Tell the person that you’ve contacted customer support several times and they’ve failed to do this despite promises to the contrary and you are considering cancelling the term policies and taking them to another insurer.
If it doesn’t happen again, follow through on that threat and start shopping for a new term policy for you and your wife. If they’re this sloppy with their service in this regard, they’re likely being sloppy in other areas, too.
You may want to leave your child’s whole life policy in place, at your discretion.
Q2: Cheapest city-to-city travel
What’s the cheapest way to get someone from New York to Chicago for several days and back again?
– Darren
You’ve really got to price watch to figure this out. It’s going to depend on if you’re at the right place at the right time to get a good discount.
I wouldn’t just look at airlines, either. I’d check Greyhound (bus) and Amtrak (train).
I priced out several different options and found that a roundtrip Greyhound from NYC to Chicago near the end of December is going to run about $200 round trip, and Amtrak ran about $220.
Looking at airline tickets over a similar timeframe, they were all coming up with a regular price between $400 and $500, with a few in the $300 to $400 range.
My guess is that if you carefully watched some travel websites for discounts, you might be able to get an airline ticket for something approaching the cost of bus or train fare. Note I said “might.”
If I didn’t have time to watch airline tickets like a hawk, I’d probably just book Amtrak, honestly. It’s a pretty pleasant ride.
Q3: Buying new for baby?
Having a baby in January and trying to keep costs low while stocking up before baby arrives. What things must be bought new and which things can we buy used?
– Jenny
The only thing I’d absolutely buy new is a car seat. Car seats typically have a lot of plastic components that can become weakened after a lot of exposure to sunlight, becoming a bit brittle and potentially putting your baby at risk. A nice car seat is a great thing to request at a baby shower.
You may need to buy a crib new. If you’ve found an older one, figure out what model it is and research it using Google to find out if it’s well made and up to current safety standards. Older cribs have some serious potential safety issues, depending on the model.
You’ll probably have to buy consumable stuff new – things like formula and baby food and diapers. We did use cloth diapers with our kids, only keeping some disposables on hand for emergencies, and we did this while both of us were working full time, so it can be done.
Baby clothes and blankets should all be bought used unless they’re gifts, in my opinion. You can buy things like baby bottles used as well – just clean and sterilize them thoroughly before using them.
So, basically, the only thing I’d absolutely buy new is a car seat and also the disposable/consumable items. I might buy a crib new if I wasn’t sure about the safety of any used cribs I could find. Aside from that, go used for everything.
Q4: Husband too frugal
My husband and I have been married for twelve years. For the first five or six things were pretty great. We’re both fairly frugal and read personal finance sites like The Simple Dollar and talk about our plans and strategies. Over the last few years my husband has gotten more and more frugal to the point of being uncomfortable. He refuses to ever go out to eat ever even if friends invite us. We’re both readers but he gets really upset if I buy a book and now he won’t even go to the used bookstore across town. We save every scrap of food even stuff that’s basically inedible. I feel like every aspect of our life is obsessed with every penny and I’m pretty careful with my money. It’s all he talks about. I’m not sure what to do. Hoping for advice.
– Kim
If you are genuinely made uncomfortable by his behavior, you should talk to him about it. If he persists in that behavior without compromise or any attempt to shave off the rough edges, then you have to make a decision as to whether you can tolerate it going forward or not.
It really does start with a conversation, though. You’ve got to tell him how you feel about how he’s behaving regarding his extreme frugality. If it’s making you uncomfortable and you feel it’s damaging relationships, you need to make that clear to him.
Although I’m not there to see what’s happening, it may be possible that there is a medical concern going on here. You may want to encourage your spouse to visit their doctor or to schedule a medical visit together, or at the very least, you may wish to consult with someone about his specific behavior.
Q5: Other people’s situation as inspiration
Do you ever see someone else’s financial difficulties as inspiration to keep improving your own situation? I kinda feel like that when I read the mailbag sometimes.
– Jess
There was a time where seeing other people struggling with their finances drove me forward. Mostly, it would be a stark reminder for me that I never, ever wanted to return to that situation.
Over the years, though, that sense has faded. While some people wind up in financial despair through their own bad choices, there are a lot of people who wind up there due to a series of unfortunate events. Some people simply value things differently than I do – they don’t feel as impacted by their financial state and have less interest in financial independence or security.
I’m still glad I’m not in debt and I still see others as motivation to improve my financial situation, but I see now that it’s often not the result of their own mismanagement, and I also see that other people simply place priority on different aspects of life than I do, and that’s okay.
Q6: Emptying out 401(k)
What are your thoughts on taking money out of my 401(k) to pay off credit card debt? Seems like the 30%+ interest rate on credit cards is a lot higher than the 5-10% I might earn in my 401(k) and even after the tax hit I’m money ahead.
– Alex
This is just an awful idea. Never, ever take money out of your 401(k) to pay off a credit card. Depleting your retirement savings to eliminate non-collateralized debt is bad enough, but given how easy it is to just get into more credit card debt, it’s very likely that you wind up right back where you were with your 401(k) emptied out to boot.
You need to focus on getting rid of your credit card debt without tapping your 401(k). It probably seems hard, bordering on impossible. That just means that there are some big lifestyle changes that you need to make that you’re going to have to think about and tackle.
Treat your 401(k) as off limits. Focus on figuring out how you need to change your lifestyle to make debt elimination possible. If you “can’t,” then paying off your credit cards is useless because you’re going to quickly be right back where you started.
Q7: Concern about national debt
With the US National Debt approaching $22 trillion dollars (https://ift.tt/s7OFL1), I never see anybody write about the implications of our country’s growing debt. In our personal lives this would be disastrous, but our country seems to be OK with it. What are the consequences? Should we care if it goes as high as $40T, $100T or even more?
– Daniel
I think that looking at our national debt in pure dollars is misleading. Instead, I usually look at our national debt as a percentage of GDP. GDP is short for gross domestic product, which is the total value of goods produced and services provided in a country during one year.
The reason I like that comparison better is that GDP is somewhat comparable to a nation’s salary, and someone who makes $15,000 a year and has $100,000 in debt has a major problem on their hands, while someone who makes $1.5 million a year and has $100,000 in debt will be able to pay it off within a month or two. In other words, how much income you have has a lot to do with how big of an impact your debt has on you.
If you look at our national debt as a percentage of GDP, which you can see on this graph with a data-filled chart below it, our percentage of debt has held pretty steady since about 2010 and it was much higher in the 1950s, though it was substantially lower in the 1970s. It should be noted that it bottomed out in 1981, just as Reagan took office, and has largely trended upwards ever since, excepting a dip during the Clinton presidency.
I should point out that I think it’s a good idea for the nation to have some debt, as it gets investors to buy our treasury notes and thus be invested in the US dollar. I think as long as we stay below historical highs of debt compared to GDP, we’re okay in terms of personal finance.
Q8: Burning out on financial improvement
Three years ago I had a “financial armageddon” kind of like your own. I had two kids and lost my job and although I got another one a couple of months later, those months were on the precipice of complete disaster. I was stressed and scared and never wanted to be there again so I went Googling and found your story and your advice.
Last three years my wife and I buckled down. We lived on less than 40% of our savings. In 16 months we paid off all outstanding debts. Six months ago we reached 20% down payment saved up for the house we wanted and started shopping for one and moved in August.
Things are great financially. Only debt is our mortgage with a good interest rate.
But I am burning out. I’m just tired of looking at and thinking about prices all the time and just not doing lots of things I want to do because it costs money. I don’t want to go back to the way things were. I want some balance. But I am afraid that if I cut back on discipline I’ll go right back to how things were.
Did you go through this, and how did you handle it?
– Tom
I most definitely did go through this, and it was at a similar timeframe when you did. I felt burnt out on our financial journey and I wanted to spend freely again, like I used to.
What I did is that I sat down and made a list of things that I really wanted to spend money on that I was keeping myself from spending money on. I missed going to bookstores – that was the big thing for me.
At the same time, I made a list of spending changes I’d made in the last few years that I didn’t regret at all. For example, I didn’t regret switching to store brands for a lot of the things I bought. I didn’t regret giving up golf – I basically realized I was doing it for social camaraderie, which I found in other things.
When I looked at the two lists, I realized that there were an awful lot of changes that I was happy about and a relatively small number that were bothering me. So, I decided that I would basically relent on the things that were bothering me, with the idea that I would be conscious about it and try to spread out my indulgences.
That’s what I’ve done, basically. For me, it’s really key to spend some time reflecting on what I’ve spent. I spend money sometimes in the moment, but then I look back later on when I see that bank statement or credit card bill and I ask myself if that purchase was really fulfilling or not. Am I still glad I did it? Thinking about that has helped me really hone my spending on “wants” down to the point where I’m really in touch with what spending matters and what spending does not. I mention journaling a lot on this site, as well as time spent reviewing purchases and doing mental “after action” reports when I’ve got some downtime (like when I’m driving to pick up my kids from something) and doing “weekly reviews” on Sunday morning. That’s when I do this kind of thinking and review.
Q9: Cold brew coffee advice?
Tried some cold brew coffee at my sisters and it was great. Mellow but still really caffeinated and strong. I want to make it at home but I already have a drip coffee maker and the cold brew stuff at Target was all $30 at minimum. Suggestions?
– Alex
You don’t need to buy special equipment to make cold brew coffee. It’s pretty easy, actually. You just need a pitcher and a rubber band in addition to stuff from your own coffee setup.
Just take one of your coffee filters, put about half a cup of ground coffee in the middle of it, then wrap it up and tie it off with a rubber band, turning it into a tea bag of sorts. Make sure it’s nice and tight. If you’re grinding the beans yourself, set your grinder to “coarse.”
Then, put four cups of water into a pitcher and put your “tea bag” in there. Cover the pitcher and put it in the fridge. Wait 24 hours. Remove the “tea bag” and you have cold brew coffee.
Basically, the only advantage of a fancier setup is that you’ll no longer need the filter and the rubber band. They usually just come with a metal filter that you pour the ground coffee into and then you wash everything in the sink or dishwasher when you’re done.
This is pretty much the only way I’ll drink coffee. Most coffee tastes too bitter for me, but I really like dark roast Arabica beans used as a cold brew. It’s really mellow.
Q10: Roth 401(k) question
My new job offers a Roth 401(k). Or regular 401(k). Either way matching funds go into regular 401(k). Investment options are the same. Which should I choose?
– Devin
Assuming that you don’t have significant additional retirement savings in place, I’d go with the Roth 401(k). That way, you’re balancing your pre-tax and post-tax savings for the future.
You have to pay taxes on the money you put into the Roth now (it’s handled automatically with your check), but all of the money in your Roth will be able to be withdrawn tax free in retirement – even the money earned by your investments while you continue to work. You’ll have to pay taxes on the money in the normal 401(k) when you withdraw it.
While I don’t have a crystal ball, I’m very confident that putting money into a Roth is almost never the strictly wrong choice.
Let’s finish this mailbag with a couple of Thanksgiving related questions.
Q11: Money talk at Thanksgiving
At my husband’s extended family Thanksgiving meal, people sit around after the meal and talk about their investments, with a lot of people dropping actual numbers and doing financial planning together. I feel really uncomfortable with this. My husband respects my discomfort and doesn’t talk about our money with them but I can tell that this makes him feel awkward. Our numbers are on par with others and to be expected. I am considering letting him talk about it while I excuse myself to do other things. Thoughts?
– Kelly
This is more of a marital issue than a financial one. A family that talks about their finances so openly without hard feelings is one with a pretty strong dynamic and I can understand why your husband wants to be able to take part in it fully.
If this is a compromise you feel happy with, then it seems reasonable to me.
I can just say that such conversations would never happen with my extended family and, if they did, it would devolve into arguing and other negative feelings.
Q12: Thanksgiving leftovers
How long is it okay to save Thanksgiving leftovers for? I get different answers from different sites.
– Dennis
In general, I’m willing to keep things in closed containers for three days in the fridge. Anything past that makes me wary.
In the freezer? If it’s well-sealed, it can last a very long time in there, until freezer burn damages it.
If I were in your shoes, I’d eat what I could in the first two or three days after the big meal, then freeze the rest. Ideally, I’d use as much of the remaining ingredients as I could to make a big batch of soup and store it, because frozen soup thaws really well.
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.
The post Questions About Insurance, Marriage, Coffee, Thanksgiving, and More! appeared first on The Simple Dollar.
Source The Simple Dollar https://ift.tt/2KhIJz5
ليست هناك تعليقات:
إرسال تعليق