الاثنين، 29 يوليو 2019
Questions About MLMs, Safe Deposit Boxes, Package Theft, Clark Howard, and More!
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. Spouse withdrawing tons of money
2. Small benefit insurance
3. Nudging child out of nest
4. Getting out of Scentsy / MLM
5. Thoughts on safe deposit boxes
6. How to stop package theft
7. Clark Howard radio show
8. Borrowing money to invest
9. Elderly parent in decline
10. Easiest pasta at home?
11. Computer games?
12. Books with Impact suggestions
For a week each summer, our children go away to visit their grandparents, splitting the week between Sarah’s parents and my parents and effectively giving Sarah and I a child-less stay-cation for a week.
It’s incredibly enjoyable to not have to worry about them for a few days and to have some time alone with my wife. We’ve had children at home for more than a decade and we’re going to have at least one child at home for at least the next decade going forward.
At the same time, there’s a bit of an underlying realization that this is what our house will always be like when they move out. It will be much quieter and less lively. I suspect that Sarah and I will host a lot of dinner parties and game nights and get more involved in community groups when they move out, just to keep up the liveliness.
When I was younger, I never quite got why my parents and Sarah’s parents always seemed so genuinely happy when we would visit for a weekend or for the holidays and why they’d rush around and make our favorite meals. I love going to visit them, but it never quite clicked why that was the case.
Now I get it. There’s going to be a time eventually when the house is quiet and I’ll give anything for it to be lively again with our three kids there.
On with the questions.
Q1: Spouse withdrawing tons of money
Recently found out that my wife has been withdrawing about $500 in cash per week from our checking account. I have no idea what she’s doing with it. Initially very angry but decided to wait before confronting her. What should I do?
– Marcus
Remember, you don’t know for sure where this money is going. Some of the answers can be relatively innocuous – perhaps it’s being used in large part to pay for ordinary things or even being used in a productive way. Some of the answers can be more troubling. Whatever the reason, you don’t know what it is yet, so don’t jump to conclusions.
At some point, you need to bring this up in a non-angry and low confrontation fashion. Your best approach would be to gather up recent bank statements, whether printed off or elsewhere, highlight all of these withdrawals, and simply ask where this money is going.
Your spouse is likely to respond in an emotional way, with defensiveness or anger or sorrow. Expect that this will happen and don’t elevate your own emotions. Instead, when you figure out what the source is, give yourself some time to figure out what comes next. Don’t escalate your own emotion along with hers. Keep calm, gather information, then take some time to think about what comes next.
It may be that there’s a reasonable explanation and no changes are needed. It may be that some changes are needed in how you guys handle your finances. There may be other challenges. The point is, you don’t know, and the first thing you need to do is gather information, and you need to do that as calmly as possible.
Q2: Small benefit insurance
I have a question about paying for things like short-term disability insurance and accident insurance. Paying a monthly premium for an event that may or may not happen has never made sense to me. If I pay $15/month premium for the unlikely event that I might break my arm or end up in the hospital, I might get $500-$1,000 payout, but wouldn’t I have been better off just saving $15/month and having an emergency fund? There’s no guarantee that I’d ever have an accident, and I could be paying hundreds or thousands into insurance premiums over the years to never see a dime paid out or to not get the amount paid out that I had paid in. How do you assess the risk vs. the benefit and justify paying for insurance plans – or not? Aren’t we better off just keeping an emergency fund?
– Anna
Insurance is only valuable in terms of the negative consequences of an unexpected event that it protects you from, and that varies a lot from situation to situation and from person to person.
For example, if you have a policy that only pays out $1,000 in a specific uncommon event and it has a less than 1% chance of occurring to you in a given month, then you’re better off putting $15 per month into an emergency fund. That’s basic math.
In general, insurance is most valuable when it protects against something catastrophic, like the death of an income-earning spouse or parent, and the policy provides enough of a payout that it makes up for at least some of the shortfall, preventing a disastrous financial situation for the survivors. If you can easily afford the financial consequence of that situation out of pocket, insurance doesn’t make much sense.
Where it does make sense is in situations like that death of a loved one. Imagine that you’re married with a couple of kids and your spouse makes as much as you do. One day, your spouse suddenly and unexpectedly dies. That’s going to have a very bad impact on your finances and standard of living beyond just that of losing a spouse unless you happen to have enough cash sitting around not earmarked for anything that could make up for your partner’s income for many years. Very few people have that, so life insurance makes sense.
Yes, most insurance policies only pay out in rare circumstances, but people buy insurance because those circumstance are dire and they’re still common enough that they do regularly happen to people. If those circumstances aren’t actually dire for you, then you don’t need the policy.
For small policies like the ones you name, if you have more than enough in your emergency fund to handle the expenses related to the event that would trigger the policy, you probably don’t need the policy.
Q3: Nudging child out of nest
We have a 20 year old son who lives at home while he goes to nearby university about 15 miles away. He has a part time job on campus there. We don’t have any conflict with him living here but we have a strong sense that after graduation he intends to keep living here, and we don’t think that’s a good idea long term for any of us. We are looking for simple ways to encourage him to get out of the nest when he graduates or even before. Do you have any suggestions?
– Adam
One of my college friends lived at home and her parents had what I considered to be a really good arrangement with her. While she was in college, each month they put some amount into a “moving out” fund for her. When she graduated, she was welcome to stay at home, but each month she did so, they put less into the fund. After six months post graduation, they stopped contributing to the fund and in subsequent months they started to take money out of the fund to pay for some of the costs of her continuing to live at home.
In other words, a couple of months after graduating, it quickly became a matter of diminishing returns for her to live at home. If she moved out then, she basically had a year’s worth of rent covered. The longer she stayed at home, the less and less rent was covered, and if she had stayed at home for a couple of years, the fund would have entirely vanished.
This motivated her to move out quite effectively.
Aside from something like this, I think the best tool in your arsenal is communication. Talk to your partner about what kind of timeline and what situations you’d like to see for your child to move out, then once you’re on the same page, open up those discussions to your child and make it clear what you have in mind before it ends up being a difficult situation.
Q4: Getting out of Scentsy / MLM
My sister has sold Scentsy rather aggressively for the last two years but recently said that she is thinking about getting out of it but doesn’t really know how. Do you have any advice?
– Erika
I don’t know the absolute specifics of how the Scentsy program works, but almost all MLM programs work along the same lines.
The first thing she needs to do is to cut herself off from her upline or sponsors. Delete group chats, block those people, ignore and block their texts. They’re going to apply a lot of pressure to keep her selling Scentsy, so she needs to cut them off.
If she has any automatic shipments of Scentsy products, she needs to cancel them immediately. She should also look into whether or not there are any buyback or return policies; I poked around the Scentsy website but couldn’t find any. If she has stock that isn’t already sold, she should tell people that she’s ending her Scentsy “business” and is selling what she has at a discount.
Beyond that, she should spend some time talking to anyone in her personal life that she used aggressive selling tactics on while selling Scentsy. MLMs damage relationships and they have to be repaired. This can be hard.
If she has any downlines or people she’s sponsored, she needs to have a chat with them, too. Keep it simple, though – she doesn’t have to reveal everything about her life.
The hardest part is going to be ignoring the pressure from the upline/sponsor to keep selling. They have a basket of tactics to use to keep their downlines in line and they will use them. Be there for your sister, because this will probably be hard for someone who was really into selling just a short while ago.
Q5: Thoughts on safe deposit boxes
Do you still recommend safe deposit boxes as a place to put valuables? https://www.nytimes.com/2019/07/19/business/safe-deposit-box-theft.html
– Erik
After reading this article and doing some homework, there are three things worth pointing out.
First, anything you put in a safe deposit box should be insured. Check with your homeowners insurance to see whether coverage is extended to the contents of such a box and, if not, whether it can be extended to it. You may have to take out a separate policy for a valuable collection, but the premiums on a collection stored in a bank vault are pretty low.
Second, the contents of a safe deposit box are much less likely to be broken into than your home. They’re also much less likely to be damaged in fire than your home. That does not make them riskless. It simply means the risk is much lower.
Third, a safe deposit box is a good place to put documents that aren’t significantly valuable on their own but could be really difficult to replace, like deeds and Social Security cards and so on.
I do keep a small number of reasonably valuable collectibles in our safe deposit box. They do not have enough value, in my opinion, to insure on their own. I mostly just want to have them in a separate and rather secure place besides our home.
Q6: How to stop package theft
I think that someone is stealing packages off of my front step but I don’t really know how to prevent it. About half the time in the last six months when UPS or FedEx or post office leaves a package for me, it has vanished. At first I thought it was a fluke but it’s pretty clear someone is either targeting my house or walking through the neighborhood grabbing packages. What’s a good solution for this that isn’t really expensive?
– Jerry
The best solution, though it’s kind of expensive, is to buy a parcel drop box. This allows packages to be deposited in a large opening at the top and then they drop down into a locked box below. You then unlock that box when you get home and there’s your package. I’ve seen these in a few front yards as of late.
You can also put up a small camera ($50 or so) and a sign indicating that the property is under surveillance. Then, if someone actually takes the package, you can watch the video and see what happened. This can help you and your neighbors get rid of the package thief entirely.
The best free (or low cost) solution is to talk to the delivery services and see if you can have your packages held at their location so you can just pick them up when they arrive.
Another approach would be to talk to the police in your area and report that packages are consistently being taken from your front step in a particular timeframe and likely from other homes in the area.
Q7: Clark Howard radio show
Any thoughts on the Clark Howard radio show? He seems to mostly say sensible stuff.
– Bill
90% of the time, Clark Howard does a very good job of making solid personal finance advice into an entertaining radio show. Of the people on the radio who talk about personal finance, he’s probably the one I like the best.
What about the other 10%? It seems like sometimes he starts talking positively about companies and how great they are and I just don’t see why. I’ve assumed that there is some paid product placement in places during his show, but I don’t know that – there’s just parts that feel very off when he’s recommending products or companies, like he’s talking about a company that really isn’t a great bargain or isn’t anywhere near the best in a particular market as though they’re a fantastic deal.
If you avoid his specific product recommendations (and tune out the ads), his show is pretty good.
Q8: Borrowing money to invest
What do you think of the idea of taking a cash withdrawal from a 0% interest credit card and investing that money now, then paying it back over time before the 0% interest rate deal ends? Seems like that would get money into a Roth faster at the start of the year instead of spread throughout it.
– Barry
While this can gain you a little money in your Roth if everything goes well, it comes with significant risk. You’re essentially banking on everything going well in your life, and if it doesn’t, this strategy could cost you a great deal. Plus, there’s the inherent stock market risk – there’s not a guarantee that this will make you money. You’re essentially taking out a favorable loan to make a short term stock market play, and the stock market isn’t a great short term investment.
I wouldn’t do this. You should take out 0% credit card offers in an effort to reduce financial risk in your life, not increase it. Use those things to pay off credit cards that actually have a balance or other fairly high interest debt. That’s a move that reduces your personal financial risk. Use such an advance to buy a necessary purchase instead of using a credit card with interest or using cash savings. That’s another move that reduces your personal financial risk.
This is a bad move.
Q9: Elderly parent in decline
My husband and I are in our mid 60s. We have not yet retired but were planning to do so around 70. My mother is 91 years old and on the verge of no longer being able to live independently. I am her only living child. She is still sharp of mind but her body is very frail. She currently receives a pension from the state plus Social Security so she’s better off financially than many people her age but her medical costs are really starting to ramp up.
The big issue is that we want to be able to move her in with us but our home is not accessible for her in any way. The cost of building on a room for her with a handicap accessible bathroom and easy access to kitchen and living room is expensive but doable for now but we are not sure we will be able to recoup the investment later if we sell the house.
Do you have any advice for our situation? Things we can look into or think about?
– Karen
The best advice I’ve found for this situation comes from AARP, as this is the kind of issue that they handle extremely well. I found this article on the decision to live with aging parents to be really valuable.
In short, the best thing you can do right now is to communicate a lot with your husband and then with your mother, and then when issues of concern come up, research those specific areas of concern.
As for the home addition, your best approach is to start gathering quotes sooner rather than later so that the room is ready when you need to make this move. If you and your husband are really committed to doing this, get started now so that everything goes as smoothly as possible. This means starting with some serious conversation as soon as possible.
We’ve had a bunch of heavy questions this week, so let’s finish up with three lighter ones.
Q10: Easiest pasta at home?
Want to try making pasta at home from scratch but don’t want to invest in a machine until I’m sure it’s worth it. Suggestions for first steps? Looked at some pasta cookbooks but they all jump in to the deep end.
– Alex
Make lasagna noodles by hand. Seriously. It’s not that hard at all and you don’t need a machine.
Use a simple homemade pasta recipe, like this one. It’s mostly just flour and eggs with a tiny bit of salt, olive oil, and possibly a bit of water depending on elevation and humidity. You basically mix flour and eggs until you make a thick dough, break it into small pieces, then roll it very thin, fold it over a couple of times, and roll it thin again. You basically just trim the edges a bit, cook it, and use it in lasagna.
When making lasagna, I actually think it’s worth the effort to make noodles like this instead of using boxed noodles. The homemade fresh noodles taste better and have a better texture in the mouth. I straight-up prefer them, though it’s not a life changing difference. They’re just easy to make.
For me, the real work of homemade pasta is cutting them into small noodles in any sort of efficient way (think spaghetti or fettuccine). This is easiest done by machine.
Q11: Computer games?
You said you spend a few hours a week playing computer games. What kind of games do you play?
– Adam
I basically play long simulation-style games. Over the last three years, aside from occasionally playing other types of games with my kids, I’ve really only played five computer games: Factorio, Stellaris, Northgard, Europa Universalis IV, and Civilization VI.
These are all relatively slow paced games where you spend time thinking about your next move and you can easily just save your game at pretty much any time and play later, though there is a strong “one more turn!” temptation with all of them. The only one that’s even “click-y” at all, and it’s very minimal, is Northgard.
I have several friends who play similar games and so I often talk to them about it, so it has a social component, but I play these games almost entirely solo. I enjoy them for the problem solving and the kind of slow and meditative pace.
My philosophy on computer games is that I’d rather play a game to utter death and earn most/all of the achievements rather than hopping from game to game.
Q12: Books with Impact suggestions
I have really enjoyed your Books with Impact reviews, especially when you write about personal finance adjacent books like personal development and productivity and leadership. Here are some books you might want to consider for this series.
Extreme Ownership by Jocko Willink and Leif Babin
Atomic Habits by James Clear
How to Be a Stoic by Massimo Pigliucci
A Guide to the Good Life by William Irvine
The Slight Edge by Jeff Olson
I look forward to reading your summaries and thoughts on these!
– Jared
Believe it or not, all five of these are on my list of personal development/personal finance books to read or, in the case of three of those books, to re-read. I tend to read a new book and re-read a different book in those areas about once every two or three weeks at this point.
The books I choose to actually review on here as a “Book with Impact” is one that I’ve read, then re-read, and also applied the content within in some successful fashion in my own life in a lasting way or it impacted my thinking in a meaningful and lasting way. I read a lot of good books, but they’re usually not ones I end up applying in any sort of meaningful and lasting way aside from perhaps a minor tactic or two.
I have about five or six books that are definitely going to be covered in this way in the future, and the books on my re-read list number about 20 and at least a few of those will probably pop up. My “to be read” list is much longer, but I usually prioritize ones that my readers ask me about, and that means that the ones above that I haven’t read are likely to be read or re-read soon.
If you have any suggestions for personal finance books, personal development books, productivity books, or books that just made you think a lot about the general direction of your life and perhaps the role that money plays in it, please send them to me at the link below (along with any other questions for the mailbag you might have).
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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A Life Well Lived
One of the best people I’ve ever known celebrated his 90th birthday very recently. His children put together a wonderful birthday party for him and invited tons of people – old friends, extended family members, all kinds of folks. There were people I knew well, people I knew vaguely, people I didn’t know at all, all drawn together to celebrate this occasion.
At events like this, the most wonderful part is how our shared relationships with this guy drew us all together. It was the common touchstone for all of us, and because of that, stories about him flowed. I wound up swapping stories about the guest of honor with all kinds of people and getting to know some of them along the way.
The thing that stuck out to me more than anything else was that people really don’t care what kind of house you have or what kind of car you drive or whether you have the latest gadgets. No one at that party cared in the least about any of that. They cared about the person – his humor, his kindness, his generosity, his good advice, his character, his reliability. So many of the stories involved the guest of honor opening his door to someone or showing up in a needed moment or coming through over and over again or doing something hilarious.
I didn’t hear stories about his house or the cars he drove or the fancy restaurants he dined at or how well he dressed or anything like that. That’s not what drew literally hundreds of people to his party. That’s not what filled all the bedrooms in several nearby houses and had people camping in tents and campers.
He spent much of the party holding court, with people sitting down to chat with him for a bit, then making room for other people. The sheer number of people and memories that shifted across his table in that afternoon was almost unbelievable, a true celebration of a lifetime of memories.
When I’m 90, what will I remember?
I won’t remember going out to expensive restaurants with my wife or with my friends. I will remember eating with them and laughing with them and enjoying their company.
I won’t remember the expensive watch I owned forty years ago. I will remember a random lazy afternoon with my kids when we rolled down hills and blew tufts of dandelions.
I won’t remember that I had the latest and greatest smartphone. I will remember being able to be there for a friend, and when they were there for me.
I won’t remember the books that filled my bookshelf. I will remember the things I learned from reading books, the lessons they taught me, and some of the great stories.
When I’m at my 90th birthday party, I don’t want to hear people talking about my board game collection. I’d rather hear them talking about the time we stayed up most of the night playing a game together, or how I showed up at their doorstep when they were down with a sack of food, some beverages, and a board game and spent the evening with them.
When I’m at my 90th birthday party, I won’t remember the exact details of some trip I went on with friends years and years ago, but I will remember us doing something new and laughing together.
When I’m at my 90th birthday party, I won’t remember the money I frivolously spent, but I will remember when I was able to help a friend and when they were able to help me.
Those are the things he remembers and laughs about when he talks about his life. Those are the sources of the pieces of wisdom he offers, the things that just come naturally from him. Those are the things that people talk about when they talk about him.
His old farmhouse isn’t full of expensive artifacts from forgotten trips. They’re full of meaningful memories, of things made by him and things made for him by loved ones, of photographs, of well-used and well-loved functional items.
The people who came to that party weren’t there hoping for a spot in a will. They were there to appreciate a wonderful person. They remember his character. They remember time spent with him. They remember the skills he had. They remembered what he gave of himself.
Those things aren’t bought. They’re earned over a lifetime of living.
When I look ahead at the life I have yet to live and I ask myself whether I’d rather have a house full of stuff or a life full of good memories and great relationships, I want the latter, and it’s not even a question.
That’s why my financial plans are largely in service of that. I want to have a life that gives me the ability to be there for friends, to be a part of people’s lives, to be more than just a career and a shiny car and a nice house.
I don’t want to end up in an empty house full of stuff with my kids counting down the days to clean it out and sell it off, without friends and people in my life.
With every year that has passed, he has taught me how to live that life. You don’t get there by spending money on forgettable things. You get there by spending time and care on the people in your life. You don’t get there by getting. You get there by giving.
Later that evening, as the festivities were winding down, I wound up sitting fairly close to the guest of honor, engaged in a conversation that he was merely listening to. I looked over at him and he looked absolutely tired, but he had this half-smile on his face that simply said he’d rather be there than anywhere else in the world.
After he went to bed, about forty people were still hanging out, playing cards and swapping stories and laughing. I can’t imagine a better sound to fall asleep to.
Thanks for the example, Herb.
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