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. Family doesn’t save or plan
2. Note about used cars
3. Getting small windfall into retirement
4. Staying motivated in retirement
5. Real vanilla extract worth it?
6. Soup freezer containers
7. Sharing cost of holiday meal
8. 401(k) aggressive investing?
9. Sports and trading cards?
10. Worried about hack
11. Recommendations for travel toiletries
12. More on “black belt” theme
I dislike everything about the switch back and forth between Daylight Savings Time and regular time. Just end it, please.
On with the questions.
Q1: Family doesn’t save or plan
I’m 36/M married to 32/F. My parents died when I was young and I essentially don’t have any family. My wife’s family more or less “adopted” me when we started seriously dating and now I’m basically a full-on part of their family. Great in most ways, but they’re all struggling financially, every single one of them. They don’t save for the future and don’t plan. When I suggest making financial plans to my wife she goes along with it as long as they’re vague but when I start talking about actually doing specific things she puts the brakes on immediately. We’re not in any financial trouble right now but we have very little saved for retirement. We use credit cards for an emergency fund. I signed up for a 401(k) on my own last year and contribute 4% to get 4% of employer matching and my wife was actually kind of annoyed by it and only begrudgingly accepted it when I pointed out my contributions were doubling. Not sure how to convince my wife to save, even for retirement.
– David
The thing is, you’re probably not going to be able to “convince” her. I’ve found, over and over again, that making smart financial moves is usually something that people have to come to on their own and when external forces are trying to push them there when they’re not ready or not interested, it’s a waste of time.
Rather, I would encourage you to approach this from a “this is important to me” angle. Make it clear that this is something you believe in strongly and that you want to do it.
There will come a point – maybe not tomorrow, but at some point – where the lightbulb goes off for her and she understands the value of what you’re doing. It’ll probably be at that point when she’s thinking ahead to the future and realizes the only way that you’re both going to be able to retire before your mid 70s is due to the money you’ve been socking away for retirement. Obviously, the younger this realization comes to her, the better, because she’ll be much more on board with the savings and you’ll have more years to rapidly build your nest egg before retirement.
For now, just ask for her trust in doing this, that it’s important to you to do it. Let it build, and then when the light bulb clicks on for her, she’ll be glad you did it.
Q2: Note about used cars
I agree with most of what you wrote about how used cars are not the great deal they used to be, but I wanted to fill in a reason why: there aren’t as many used cars as there used to be. The truth is that in 2008-2010 the car makers simply didn’t make as many cars because of the economic crisis. That means in the last few years there haven’t been many cars in the ~10 year old range that you could sell for $5-$8K. This means people are either holding onto cars for longer or buying more recent used models. People are trying to get a 10 year old car for $5K like they used to and they simply don’t exist so they decide to either buy something newer usually with a loan or keep driving what they have. So the newer cars have more buyers and that always pushes the price up when you have more demand and equal supply and because of that used isn’t a big bargain right now. I think that it’ll rebound in 3-5 years when the 2012-14 models reach that age as those are around in much more abundance. I think things will go back to something like they were and used will be a bit of a bargain again.
– Shaun
Great insight! I hadn’t thought about the used car market in that way before, but it certainly makes sense.
I went and looked at a few dealer websites and, sure enough, there were very few cars in that 2007-2010 model year range. There were a few, but not many at all. There were more cars on the old end of that range being sold for around $4,000 than ones in that range. It’s almost like a chunk of the market is missing.
So it makes sense that people are either waiting for a while longer or buying something more expensive if there simply aren’t any cars at the age that they’re looking to buy in. If you have people buying the 2012-2014 used instead, then that market is emptier, and that drives people who would buy those to even newer used models, and when you have more buyers than cars, the prices go up.
It completely makes sense. Thanks for the insight!
Q3: Getting small windfall into retirement
I received about $50K from my grandfather’s estate when he passed away. There were only two grandkids and everything was split up evenly among all descendants. I am 28 and I would like to get that money into retirement savings as I think that would be what he would want, as he told me again and again over the last several years that I should be saving for retirement. I almost feel like that’s why he gave me this money so I would be 65 and have a good life and would remember him.
How do I do this, though? How do I get that $50K into a retirement account? I looked at a Roth IRA but you can only contribute $6,000 a year. Are there other options?
– Max
A Roth IRA is probably the best option for you. I’m assuming that you’re already contributing to a 401(k) or something similar at work if it’s available to you.
If I were you, I’d open an account with an investment firm that you trust – say, Vanguard or Fidelity. Put all of the windfall in there – $6,000 of it into a Roth IRA and the rest into a normal taxable investment account. Put all of the money in the Roth into a Target Retirement fund aiming for your retirement year. Put all of the money in the normal investment account into something aggressive that you can just sit on and forget about. I’d probably put half of it into a total US stock market index fund and the other half into a total international stock market index fund, and set it to reinvest your dividends. Then, just let it sit.
On January 1 of each year, move $6,000 from the taxable investment account into the Roth IRA. Each year, you’ll have a small amount of taxable growth in your normal brokerage account – probably on the order of $1,000 the first year and progressively less each year after that as the money moves into the Roth IRA. You’ll have to pay taxes on that, which will be a couple hundred dollars at first (probably just a couple hundred dollar reduction in your tax refund) and progressively less each year.
Eventually, all of it will be in the Roth and then you just sit on it until retirement. It’ll grow and grow and grow, tax free, as long as you wait until age 59 1/2 to withdraw.
Be sure to keep an eye on the income limit for a Roth IRA. Once you start getting north of $100,000 a year in income, you start to run into limits on how much you can contribute to a Roth. In those situations, consider instead bumping up your 401(k) contributions at work and then using the taxable money for living expenses if needed.
Q4: Staying motivated in retirement
Can you offer some advice on staying motivated after retirement? I started reading The Simple Dollar in 2008 and you encouraged me to live a little leaner and save more for retirement. When I retired last year I had a lot more in retirement than I expected and the actual financial part has been easy. My retirement fund is actually bigger now than when I retired.
The problem is I don’t feel motivated to do anything. I mostly just putter around the house and read magazines and watch television. I go on a walk once a day. I call my kids sometimes. I don’t feel motivated to do much of anything any more.
What can I do to find that motivation? I don’t want to just sit here and wither but I don’t really have a reason to do anything.
– Max
For many people, motivation comes as a result of responsibility and commitment, and it sounds like there isn’t much responsibility or commitment in your life right now. People are motivated because they’re responsible for their kids or they’re responsible for a work project or because they’re committed to something they agreed to do. My list of commitments and responsibilities is comically long if I were to list it out, and I feel pretty motivated each and every day.
My suggestion would be to find something for your idle hands to do and then commit to that. I think volunteer work is a great opportunity for this. Are there volunteer programs in your community that you could sign up to help with regularly? Are there committees you could serve on and help make decisions? In most communities of any size, there are tons of opportunities out there if you dig a little bit. You could be doing anything from being a school crossing guard to helping shelve books at the library or delivering flowers at a hospital or helping build a Habitat for Humanity house or participating in a political campaign for a candidate or cause you believe in.
Agree to bite off a big commitment with whatever it is you’re doing and you’ll likely find motivation starting to grow again. The difference is that you have a lot of options before you and you can choose the option that really matters to you based on what you personally value.
Q5: Real vanilla extract worth it?
Found an old article of yours where you talk about making vanilla extract with vanilla beans and vodka and letting it sit for a very long time. Seems good in principle as you’re basically making vanilla cordial which would work great in baking and most uses. My grandma used to make peppermint cordial doing the same thing with a bunch of peppermint candies. Anyway I was thinking about making some homemade because the price of real vanilla extract versus artificial at the store was huge, but the price of vanilla beans is really high too. Trying to decide if it’s worth it or not.
– Daria
My understanding is that different people taste different things from vanilla extract, much like how different people taste cilantro differently. Many people think that artificial vanilla and real vanilla extract taste basically identical, while others report a huge difference.
I’m somewhere in the middle. I can tell the difference at room temperature and when it’s used in cold things, like ice cream. However, when it’s baked, I usually can’t tell the difference or, if I think I can, it’s pretty subtle. That being said, there have been a few specific kinds of artificial vanilla that have tasted awful to me, something I attribute to some ingredient in the mix that’s not the actual vanillin.
If you plan on using it mostly for baking and the people you’re baking for can’t tell the difference, use the artificial as it’s much cheaper. If you plan on using it for a variety of things, including things like ice cream, I’d make my own.
Q6: Soup freezer containers
What is the best way to freeze soup without making a mess? Tried Ziploc freezer bags but it was real messy!
– Brenda
I’ve tried a bunch of different containers and I think these are the best ones I’ve tried. They come in 32 ounce and 16 ounce sizes depending on what you want (16 ounce is good for a large individual serving, 32 ounce when full works well for our family), you can freeze them and microwave them and wash them in the dishwasher with no problem (though you’ll want to have them in the top rack), and they seem to last and last.
I agree with you that Ziploc freezer bags can be tricky with soup. I tried using them for a while but there were so many incidents of spillage if I was trying to fill them myself that I stopped using them pretty directly for soups.
That being said, good on you for trying to freeze soups. I eat soup that’s been reheated quite often and it’s delicious and quick.
Q7: Sharing cost of holiday meal
I have hosted our extended family Thanksgiving for 12 years. That includes putting up several people for three or four nights, feeding everyone countless meals, and putting on a huge Thanksgiving dinner with homemade sides and all of the trimmings. It often costs $200 to put on the big meal alone and hundreds more to host everyone. I asked my siblings to each chip in $50 this year to help offset the cost and now I learned that they are all calling me “cheap” behind their back. I have never even stayed at most of their houses ever. Am I wrong here or are they just a bunch of selfish jerks?
– Carrie
It’s hard to tell 100% from this story what is going on. Quite often, situations like this are borne out of a misunderstanding or out of something said in frustration that was taken the wrong way.
It’s very likely that the manner in which you requested the money was taken with an intent that you didn’t want. They perhaps felt like it was a demand, or that you were holding the family Thanksgiving holiday “hostage,” and that often doesn’t sit right with people. This is particularly true if it’s perceived that you aren’t really struggling financially at all.
If you want others to pitch in, your approach shouldn’t be tied to a dollar amount or anything like that. Rather, you should simply say that the expense is becoming difficult to manage and that if anyone can offer a little bit of help with the groceries, that would be greatly appreciated.
At this point, I would probably issue a clarification and roll back your request to something like that. Just say that your first message might not have been clear. Don’t demand a specific amount and make it clear that this is about you struggling financially, not about an ultimatum regarding ending Thanksgiving dinner.
Remember, you can only control what you do, not what other people do. These are things you can control.
Q8: 401(k) aggressive investing?
I am 26 years old and have started contributing to the 401(k) plan at work. I am putting in 8% of my pay and my employer is matching 4% so 12% is going in which is good. I have been looking at the investment options and I don’t think the Target Retirement Fund is aggressive enough for someone as young as me. Even the one matching my retirement year still has money going into bonds and cash. I think for me something that’s pure stocks or maybe stocks and real estate is better until I’m maybe 45 or so and then I just move everything back into the target retirement fund. What do you think?
– Brian
I think that if you’re aware of the risks with taking an even more aggressive stance, then that’s perfectly fine.
The big reason many Target Retirement Funds have at least a little bit of bonds and cash, even when they’re 35 or 40 years from their target date, is that they don’t want people logging onto their 401(k) accounts in the midst of a downturn, seeing a huge loss, and bailing. Rather, they want people to see a loss but not a huge one, not quite as big as they heard on the news, and they feel a bit of relief and keep on trucking. The drawback, of course, is that the gains won’t be quite as big, either.
Over long time periods, the gains should notably outweigh the losses and thus an even more aggressive investment strategy can pay off. It does throughout the historical data, though that’s absolutely not a guarantee going forward. You just have to be able to stomach some pretty big downturns when the stock market goes south.
Q9: Sports and trading cards?
What are your thoughts about investing in sports and trading cards? I have seen data that says you can easily make a 30%-40% return annually on them.
– Eric
There are a ton of caveats with those kinds of numbers.
First of all, you have to know the market you’re investing in. You need to know exactly what you’re investing in and which products are going to retain value and grow. That requires a lot of learning and domain knowledge and perhaps most of all separation of your personal emotion from the investments.
Second, there’s a ton of risk baked in, as trading cards and sports cards are entirely luxury goods bought by people who do it for pleasure. If times get tougher, people will stop buying. If tastes change, people will stop buying. A trading card does not address any sort of fundamental need – it aims entirely at entertainment and pleasure, and those things are fickle.
I don’t see any problem with having a hobby budget where you invest in these things and then try to flip them for a profit. I have a friend who does exactly this – buying and selling Magic: the Gathering cards is his hobby and it’s a profitable one. It’s fun for him in many ways, and he’d just stop doing it and sell everything if it stopped being fun.
Treat it as a hobby. Set a fixed monthly budget for yourself, an amount you don’t mind losing, and use that to buy and sell to your heart’s content. You might make money. You might lose your shirt. In either case, you’re doing it because it’s enjoyable.
Don’t put your retirement money into baseball cards or Magic: the Gathering or Pokemon cards.
Q10: Worried about hack
The other day I got an email that appeared to be from myself. It said that someone had gained access to my email and other accounts and that they gave me seven days to pay them or else they would drain my bank accounts. I don’t know what to think.
– Brian
This is a junk email, a waste of your time. Just delete it.
Someone spoofed your email address making it appear as though they were sending an email from your own account. They have a program that lets them send emails to people with a fake “From” address so that it looks like it comes from whatever address they want. To spook you, they made it look like it came from your address.
Most likely, they just bought a huge list of email addresses from someone and sent the exact same message to everyone on that list, spoofing the “From:” address on each one to make it appear as though everyone on that list was getting an email from themselves.
It’s an extremely low effort way to try to get people to send them money via Venmo or Bitcoin or whatever. Ignore it. They’re trying to scam you.
Q11: Recommendations for travel toiletries
How do you pack toiletries for travel? You can’t take anything big through airports or they’ll confiscate it. I use to put stuff in my suitcase and check it but I have had two different items explode and make a huge mess recently.
– Bonnie
Personally, I usually stop at a Target or something at my destination and pick up a few essentials or use what’s available for free at the hotel. I rarely pack much for toiletries, particularly anything that won’t make it through security screening.
When I’m traveling, my goal is to be clean and hygienic and odor free and clean shaven. What do I minimally need to accomplish those goals? Soap and shampoo are usually free at the hotel. I can usually request a small tube of toothpaste, too. I take a toothbrush and a small deodorant stick through airport security. I can pick up a razor at the hotel or, if they don’t have anything I like, I grab one at Target for a few bucks that will work for the length of the trip. That pretty much covers it – it’s one or two things in my carry-on, a few free items at the hotel, and maybe one or two items from a store at the destination. Just buy any consumables in their smallest possible form.
It can get trickier if you have more esoteric or specific needs, but that’s what I do.
Q12: More on “black belt” theme
You wrote recently that your theme for 2020 was “black belt” in that you wanted to get a black belt in taekwondo but that there were other reasons too. Would you mind sharing what that means?
– Adam
Sure. I actually wrote a little more about it in an introduction to the mailbag a couple of weeks ago, which I’ll share again here:
My theme for 2020 is “black belt.” A big part of the reason for that is that, as I’ve mentioned a few times, my family gradually joined a community taekwondo class several years ago (some of us joining before others) and I’m aiming to be able to test for my black belt in December 2020 (possibly February 2021). That will require a lot of work and practice throughout the year.
The theme goes deeper than that, though.
I’ve realized in the past few months that there are several things in my life that I do well, but I could do much better if I “leaned in” on them a little and improved with some deliberate practice and care and thoughtfulness. Personal communication with others is definitely one, as are some spiritual and meditative practices, some dietary practices (mostly eliminating some bad things from my diet), and a few other specific things. I want to lean in on those things in the coming year in a deliberate and careful way so that I can be even better at them.
Basically, I want to improve on a number of things I’m good at with deliberate practice so that I’m great at it. I think I’m good at communicating with others, but I want to work toward being great at it. I think I have a good set of spiritual and meditative practices, but I want them to be great. I think I’m good at eating healthy foods, but I want to be great at it.
This boils down to a list of four big goals for the year:
1. Black belt fitness and preparation
2. Adopt a maximally healthy and still sustainable permanent diet
3. Deep study of life philosophies and religion through reading and meditation and reflection
4. Improve personal communication and relationships – improve or rebuild every significant relationship in my life via better communication
Each one of those fairly neatly breaks down into some daily steps and daily deliberate practice and habit building, and that’s what I want to fill 2020 with.
The first one is all about taekwondo. I have a training regimen, both inside and outside of class, that should have me ready for my black belt test later in the year. It involves a lot of stretching, a lot of kicking, and a lot of building of core strength.
The second one is mostly about a careful analysis of what I eat and drink. I mostly eat really healthy stuff, but I think I mostly eat too much of it and I want to dig to the bottom of that. I’m going to try a number of different practices to see if I can figure out the best possible permanent diet for me that’s really simple to follow and doesn’t make me crave stuff. My focus is health, not hitting a particular weight.
The third one is about finding more contemplative time and better practices within it. Meditation has been a life-changer for me over the last few years and I want to explore more avenues and practices. I want to read a number of challenging books within the realm of philosophy and theology and religion as I’m pretty passionate about those areas right now. I feel like this is my own riff on a “midlife crisis” (I don’t know if I’m too young for that or not) but I have this strong sense that I’m kind of in the process of carving out who I want to be for the rest of my life.
The final one is about improving my personal communication skills, particularly face to face communication but also using digital tools, and making positive improvement to every meaningful relationship in my life. I’m going to try to consciously reconnect with a lot of people throughout the year and work on being a better listener and friend. Again, this is something I think I’m good at but not necessarily great at.
(I do have a fifth goal, but it’s highly personal and tied to some specific people in my life who probably don’t want things in their life shared on a popular website.)
So, overall, it’s really about leaning in to some things I think I do well, but that I’d like to do very 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 Used Cars, Small Windfalls, Vanilla Extract, Motivation, Soup, and More! appeared first on The Simple Dollar.
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