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. Prioritizing college or retirement?
2. Types of auto insurance
3. Possibly illegal behaviors of boss
4. Kettle efficiency for tea
5. Buy low, sell high?
6. Generic allergy medications on Amazon
7. Learning how to program
8. Comparing Roth IRA options
9. Firestarters without newspaper
10. Impostor syndrome
11. Inexpensive electric car for commuting
12. Paper planner?
This past weekend was a wonderful Father’s Day weekend. I won’t bore you with the details of everything, but I deeply enjoyed the time I spent with my children doing things I really enjoy, which is about the best you can ask.
On with the questions!
Q1: Prioritizing college or retirement?
34 year old guy, wife’s 33. We have two kids ages 4 and 2. We have been contributing to our retirement plans since starting our current jobs, so I have 6 years of contributions and she has a little less than 5. We have 529 plans for our kids but don’t contribute automatically; instead we put “birthday gifts” and “Christmas gifts” in there and our parents have added more. It won’t add up to a major portion of their college costs though. We are wondering if we should be prioritizing college savings over retirement. Thoughts?
– Ben
Prioritize retirement. To me, it’s not even close. You want to make absolutely sure that your retirement is as stable and secure as you can right now. The best way to see why is to look at some worst case scenarios.
The worst case scenario if you save nothing for your children’s college is that they have to go to college, get student loans, and then pay them off themselves. It’s not fun, but it’s livable.
The worst case scenario if you save inadequately for retirement is that you have to work to a much older age than you want to, have a threadbare retirement, and potentially become a financial burden to your kids. This is a disastrous outcome.
College savings should only be happening if your retirement savings are generous enough to ensure a very stable retirement at a reasonably early date. If you’re not saving enough to get there, then you shouldn’t be saving for your child’s college education.
Q2: Types of auto insurance
Can you break down what the different kinds of auto insurance cover? Insurance guy talks a mile a minute and I don’t feel good asking questions. Googled it but it’s still clear as mud.
– Gary
There are a lot of different types of car insurance. The three most common are the following.
Liability insurance is insurance that covers you in the event of an accident where you’re at fault and you have to pay for damage done to another vehicle. Many states require you to carry this kind of insurance on your car at a minimum.
Collision insurance is insurance that covers damage to your car in the event of an accident with another vehicle, regardless of who’s at fault. It doesn’t matter if you were the one that caused the accident or someone else is, collision insurance will get your car fixed or replaced. Usually, the person at fault ends up covering the damage, provided they have insurance.
Comprehensive insurance is insurance that covers other damage to your vehicle that might occur other than accidents, such as storm damage. The exact things covered by a comprehensive policy can vary, so you’ll want to check into what exactly a comprehensive policy covers.
There are many other flavors of auto insurance that go beyond these to supplement for specific cases. For example, some drivers carry uninsured motorist insurance, which covers you in the event that you’re in an accident with some other driver who doesn’t have any insurance at all, or underinsured motorist insurance, which covers you when you’re in an accident with someone who has a very minimal insurance policy.
As an aside, if your “insurance guy” talks a mile a minute and makes you feel uncomfortable asking questions, you should probably search around for a new “insurance guy.” That’s not what you want out of your insurance contact.
Q3: Possibly illegal behaviors of boss
I have had a family vacation scheduled for early August for several months. My wife and kids and I were planning on going to Disneyworld and Harry Potter and I was taking two weeks off of work. On Friday, my boss called me into his office and told me that if I actually follow through on this trip I would come back to find that I had been fired for some cause that he would find. This seems illegal but I have no way to prove it and I think that if I were fired he would have some unrelated reason to fire me. What can I do?
– Jake
Regardless of how this specific situation turns out, you do not want to continue working for this boss. No matter what specifically happens in the next few months, you need to find a new position with your current employer with a different boss or a new position with a new organization. This is unacceptable treatment. You should start hunting for a new job immediately. Shine up that resume, talk to everyone you know who might help you get another job quickly, and get ahold of headhunters in your field who might be able to get you there.
Your boss is doing this because he believes you have to have this job and have no other options in life. If you go along with this treatment, then you are virtually guaranteeing yourself awful treatment as long as you stay there.
The unfortunate part of this is that you really have no legal recourse for this without some sort of clear proof of this treatment. Your boss knows this, which is why your boss pulled this stunt.
If I were you, I’d just tell my boss whatever he needs to hear to get off my back for the time being, then spend every moment you can getting another job lined up before your Disney World trip. I would not directly agree to skip your vacation at work; rather, I’d push off the issue for now and if pressure continues to be applied, talk to other members of management as the vacation approaches. I would not cancel the trip; rather, I’d do everything I could to have another job in hand before I leave, go on that vacation, and then come back and hand in your resignation letter with whatever notice is appropriate.
Q4: Kettle efficiency for tea
I drink tea a couple times a day. I have an ordinary stovetop tea kettle that I don’t like because the opening sticks. Looking to replace it and am considering an electric kettle. Trying to figure out what is more efficient over lifetime. Electric kettle is more expensive up front but does it make that cost back by being more efficient?
– Carly
A typical electric tea kettle is about 80% energy efficient, whereas heating water on a stove top seems to vary widely in efficiency based on model. This Treehugger article indicates that boiling a cup of water in a typical electric tea kettle consumes 0.04 kilowatt-hours (kWh) of electricity, whereas a convection stove top used 0.11 kWh to heat a cup of water. Each use of the electric kettle, then, saves you about 0.07 kWh.
So, let’s say you drink two cups of tea a day. That means you’re boiling a cup of water 730 times a year. Thus, over the course of a year, you’re saving about 51.1 kWh. The nationwide average cost of a kWh of electricity is about $0.13, so you’re saving about $6.64 per year with an electric kettle versus a stovetop if you’re boiling a cup of water twice a day.
Again, that’s an approximation; the type of stovetop you have, the exact model of electric kettle you have, the cost of electricity in your area, and many other smaller factors will vary these results. However, I’d feel pretty good saying that, given your usage, each year of using an electric kettle would save you between $5 and $10 on your energy bill.
So, is that worth it? I have this electric tea kettle on my desk (it was probably my favorite Christmas gift of the last year). It costs about $70 in most places, but can occasionally be found on sale for $50, but there are cheaper models that get down in the $30 range. There are a lot of traditional tea kettles to be found in the $15 range.
Given your usage level, if you buy a lower-end electric kettle, you’ll end up saving the cost difference in about two years. A fancier electric kettle could take as long as six or seven years to recoup the savings.
Of course, you may be able to find just what you want at a secondhand store for next to nothing, rendering this whole conversation moot. If you can get a $5 electric kettle at Goodwill, that’s your best solution, right there.
Q5: Buy low, sell high?
Don’t understand why you think it’s a bad idea to buy low and sell high. Your stock market advice makes no sense.
– Major
I don’t think it’s a bad idea to buy low and sell high at all. That’s how you make money on investing, after all.
It’s simply my belief that no one on this Earth has any idea what an actual “high” is and an actual “low” is in the stock market, at least to enough precision to be able to beat simply putting money into an index fund each month and forgetting about it until you actually need the money.
If you had the magical ability to predict every single stock market peak right when it peaks and also predict the bottom of every time the stock market drops more than 10% from its peak, then you’d be a brilliant investor. The problem is that literally no one can predict this. The game theory elements behind it – “if you do this, then I do this, but if you know I’m going to do that, then you’ll do this, so should I do that?” – and the real-world nature of what companies are doing makes it impossible for any machine or human to accurately predict the peak or the bottom of the stock market.
The problem is that if you miss those peaks and valleys by very much at all, you quickly erase most of the benefit of market timing, and if you miss them significantly, you’re actually doing worse than just contributing to an index fund like clockwork.
Thus, my advice for almost every investor who would ever read this site is to just contribute to an index fund with every paycheck and forget about it. That’s how people should save for retirement and for other long term goals in life.
It’s not that buy low, sell high is bad, it’s just that with the stock market, knowing what’s actually “low” and actually “high” is essentially impossible, and when you’re just buying kinda low and selling kinda high, you’re not getting enough edge for it to be worthwhile.
Q6: Generic allergy medications on Amazon
Is it safe to buy no name allergy medications on Amazon. They’re so cheap there but I don’t know if they’re safe.
– Ariel
I would have no problem buying generic over the counter allergy medications off of Amazon if I were willing to buy the same exact thing at my local pharmacy. For example, if I went down to my local pharmacy and was trying to decide between buying Zyrtec or generic cetirizine HCl (in other words, “no name Zyrtec”), I’d buy the generic without skipping a beat, and the same would be true buying that exact same item from Amazon.
For example, you can get a bottle of 365 cetirizine HCl tablets on Amazon for $15.99, whereas buying 100 tablets of Zyrtec – basically the same exact thing but with a name brand on it – costs $47.45. The active ingredient in both is the same, but you’re paying almost ten times as much per pill for the name brand.
What about generic Claritin? You can get a bottle of 365 loratadine tablets for $12.34, whereas buying 100 tablets of Claritin – the exact same thing – costs $37.88. Again, the name brand costs ten times as much.
If your pharmacist approves of the “no name” over the counter version of these types of allergy medications, and I sure they will, then ordering them off of Amazon is perfectly fine and a huge money saver for allergy sufferers.
Q7: Learning how to program
How does a person even start to learn how to computer program without taking classes on it? The devs at my company make 2-3x as much as me but I need a lot of skills to get where they are and I can’t even figure out where to start.
– Matt
I think the first thing I’d do in your shoes is figure out what language(s) the developers at your company use and start from scratch learning that language. Just start spending time with them and asking questions, just for your own curiosity. What languages do they use? What software do they use to write code? Then, dig into learning those things from scratch.
It’s hard for me to give any sort of specific advice without knowing what kind of development they’re doing, but your best step is to find a highly recommended beginner’s book for the languages they tell you about. Start with baby steps, even if they seem overly simple, because the difficulty will ratchet up and if you don’t start with the baby steps, you’ll never sprint.
The most important thing you can do is block off very regular and consistent blocks of time to learn. Don’t just decide, “Oh, I’ll learn it here and there.” It won’t work. Block off an hour or two each night to focus on learning how to program.
Once you’re able to write some basic things, come up with small projects for yourself that result in something useful. One of my first independent programming projects was a program for writing and encrypting and retrieving journal entries, for example. I wanted to be able to type out journal entries, save them with a password that encrypted them, and then be able to unlock and read journal entries with that same passcode. I eventually moved onto things like being able to search the entries even though they were encrypted, which taught me a lot about both programming and string algorithms, and that led right into my first career in data mining.
Probably the best free tool I’ve found for self-learning software development is Bento, but for me, I still learn better from a book.
Q8: Comparing Roth IRA options
I know you use Vanguard for your Roth, but how did you come to that conclusion? How do you compare investment houses and their Roth IRA offerings?
– Jana
First and foremost, a Roth IRA must be SIPC insured, which is basically the investment account equivalent of FDIC insurance for bank accounts. Don’t open any investment account that isn’t SIPC insured. For the most part, all brokers and dealers must be SIPC insured so this should be nearly a foregone conclusion. You can check their list of insured companies on their website.
After that, the most useful comparisons are the specific fees of their Roth IRA offerings (what does it cost to just have an account open and to buy/sell things within that account), their customer service ratings, as well as the expense ratios of the investments you’re interested in with each one (the expense ratio is how much the investment company slurps out of your investments each year, usually a fraction of a percent). Ideally, you want your Roth IRA to have no account fees and low expense ratios while having at least decent customer service.
These comparisons led me pretty quickly to Vanguard, but there are a lot of good companies that do well with those criteria – Fidelity usually scores well, as does Schwab.
Q9: Firestarters without newspaper
I used to always use newspaper to start fires but I subscribe online now and there just isn’t newspaper around like there used to be. What’s a good free substitute?
– Eric
There are a lot of things you can do. My favorite recently has been to stuff toilet paper rolls with dryer lint. I just save toilet paper rolls when the roll is empty and keep a small basket in the laundry room for dryer lint. I just stuff the roll with dryer lint and keep several in the garage. When I want to start a fire in our fire pit, I grab one of those and light it first, lighting the roll. The roll is enough to get the lint going and the lint is enough to get a few twigs going, and the twigs are enough to get some big twigs going, and the big twigs are enough to get a log going.
An alternative to the toilet paper lint rolls is to use a paper egg carton instead. Stuff each spot in the carton with lint, then melt an old candle remnant that’s not worth burning any more and pour the wax right on the lint until there’s enough to hold the lint in the egg carton. A carton full of these gives you twelve fire starters – just tear one off and light the paper egg carton part. These work really well but require a bit more prep work than the toilet paper lint rolls.
Another good strategy is to save bark off of any logs you get for firewood. Strip the bark off and save it somewhere and then use pieces of bark very early in the process. The lint in those lint rollers I described work well.
Q10: Impostor syndrome
Graduated college in 2009 and got a good entry level job that I stayed at for five years, then got another job that lasted for three. In 2017, got what I thought would be my dream job, but from day one I have felt utterly incompetent. Every day it is like I am not qualified enough to be here. People seem to like my work but I feel like everything I do whether it’s writing code or writing reports or contributing to meetings is just low quality. It has made it so that I don’t even like going to work. How can I fix this? I think others judge me as being good at my job but I think I am trash and am just hiding it.
– Allen
This is actually a pretty normal thing. It’s called “impostor syndrome,” which refers to the sense that you’re an “impostor” in some aspect of your life where others believe you to have competence that you do not believe that you possess.
I felt it pretty strongly when I started my first job after college. I was responsible for launching and largely writing by myself a software project that was orders of magnitude more complex than anything I had worked on to this point, and I felt really incompetent at the whole thing. It stuck with me for several months at least.
There are a lot of things you can do to overcome impostor syndrome, but the most effective one for me was to keep a running list of my achievements and look at them frequently. Could someone who didn’t know what he was doing actually do all of this stuff? After a while, it became hard to argue against it, so the feeling of being an “impostor” slowly went away.
Personally, my list began to include hitting large project objectives with flying colors. If I were incompetent, would I have been able to pull this off largely by myself? At first, I could think it was a fluke, but as our project kept hitting and exceeding our targets, I eventually realized that, yes, I was at the very least competent at my job.
Q11: Inexpensive electric car for commuting
Do you think an inexpensive electric car like a Chevy Volt or Nissan Leaf is good for a commuting car? Seems like it’s cheaper up front to buy a late model used high mileage gas car but do the electric cars end up saving in the long run?
– Jim
I’m assuming you’re comparing the cost of buying a late model Nissan Leaf or Chevy Volt with the cost of a late model used gas car like a Toyota Corolla. Sarah is thinking a bit about buying a Leaf or a Volt or similar car for her own commute, which is about 45 miles round trip each day.
It’s pretty easy to find a used late model Nissan Leaf around here for about $15,000 with about 40,000 miles on them. Toyota Corollas of the same year clock in about the same for the same price.
Here’s the issue with electric cars: the availability of charging them out and about is somewhat limited. You have to really look into what’s available along your commute for charging. You also have to get a home charging station that can charge your car overnight (most full electrics take a day at least to charge from an ordinary plugin, but a charging station can be installed at a relatively low cost that allows for much faster charging and many electric companies offer a rebate) and you have to get into a routine of charging your car. You can’t just go “Whoops, guess I’ll stop for gas.” It’s simply not quite as convenient as that.
However, the savings are impressive. By our math, we can get about 175 miles of range on a Nissan Leaf for $4 in energy charging at home. For comparison’s sake, even her Prius that she currently drives costs about $14 to charge over that same distance. On fuel alone, driving 15,000 miles a year, the Leaf would save us about $900 a year in fuel. That’s significant, especially if she drives it for several years.
We’re seriously considering toward replacing her Prius (which is over the 200K mark) with a Leaf or a Volt for commuting.
Q12: Paper planner?
I’m trying to understand how you do daily planning. So, you just write down tasks and events free form in your pocket notebook and in your journal and then transfer them into an online calendar and to-do list? And then don’t use a paper planner at all? Do I have that right?
– Jeremy
That’s exactly it.
I keep a pocket notebook and a pen with me pretty much all the time. When a task or an appointment or some other piece of info I need to deal with soon pops up in my life, I write it down immediately either in that notebook or into the Evernote app in my phone. I also do a daily journaling practice, and after I do one of those, I go through it looking for any tasks that I might have thought of while doing it.
A couple times a day, I go through my new notes in Evernote and my recent pages in my pocket notebook and move everything actionable into my to-do list manager (Omnifocus) or into Google Calendar. Those are the things I use for reference.
In short, my actual thinking about tasks takes place on paper, but I use digital tools for storing that thinking as discrete and sortable appointments and tasks.
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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