The Simple Dollar - “Questions about Old Stamps, Yoga, Hospital Bills, Chess, and More!”
The Simple Dollar - “Questions about Old Stamps, Yoga, Hospital Bills, Chess, and More!” |
| Questions about Old Stamps, Yoga, Hospital Bills, Chess, and More! Posted: 22 Sep 2014 07:00 AM PDT 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. Our family usually goes camping several times during the year, with these weekends spread across the spring, summer, and fall. When I was younger, I used to relish the summer camping trips because of the really long days. Now that I have children and am in my thirties, I actually prefer the spring and especially the fall camping trips. The days are shorter, which means that the children can enjoy some campfire time without completely wrecking their bedtime, and the weather is more palatable in that the daytimes aren’t scorching hot and the evenings and nighttimes have just a bit of chill in the air. I hope that we get a few more chances to camp before 2014 is over. Q1: Hospital bills and 529 plansMy wife and I are not big spenders. We cook at home, drive 10 year old cars, no cable TV, and budget a dollar amount for savings. My wife and I have a municipal funded pension and 401k. We have 7k in our savings and would like to start investing in a 529 plan for our newborn and personal investment of index funds for a better return than our savings account. One issue that’s holding me back from this is that our newborn baby required extensive open-heart surgery. With that, came a large hospital bill of 8k after insurance deductibles. I have already made calls to the hospital for a discounted rate of roughly 5-6k. The hospital gave us two options. Do a payment plan of the roughly 8k? Or pay a discounted rate of 5-6k in one lump sum? And after that is taken care of, what is a good amount of money to start the 529 and personal investment? Isn’t it best to invest most of the money than keep it in the savings account, knowing we will continue saving? If it’s only $5,000, I’d make the lump sum payment. That would leave you with a $2,000 emergency fund for the moment, which is low with a newborn baby with health issues, but not dangerously so. If the lump payment is $6,000, you start cutting that emergency fund very, very tight. I would be nervous to be in a situation with a sick child and only $1,000 in the emergency fund. If the emergency fund were a non-factor, of course, the lump sum would be far and away the better choice. Q2: Planning with constant challengesSo my husband and I have a debt repayment plan and we have a retirement plan too that we’re contributing to each month. As far as I can tell we are set to retire at age 62 or so. Sounds great, right? The problem is that I seem to have terrible luck. It seems like at least once a year some sort of disaster befalls me or our family. I’ve had two different types of cancer (both in remission). We have three children, two of which are autistic and the third one requires a number of medications to help with her breathing. I’ve lost six jobs in the last nine years all because the business folded up not because of my performance. My husband has had several long stretches of unemployment including one for an accident that broke a bunch of bones. I feel like making plans is useless because something else is going to happen any day now. If you’re planning for the future in a way that involves reducing debt and saving money, don’t worry about those kinds of “terrible luck.” Less debt and more savings will help you no matter what happens in your life. You will never, ever regret having more money in the bank. You will never, ever regret having less debt. What you will regret is spending money in a way that doesn’t bring some value into your life. Debt reduction and savings both reduce stress and reduce the impact of anything that happens, both of which have a lot of value. Q3: Using old baseball cardsThis is a tip for those of you with old baseball cards. What we’ve done with them is turn them into interesting decorations. We’ve taken team sets of baseball cards from 1986-1992 and turned them into framed art. So, for example, we took all of the cards out of his complete set of 1986 Topps and sorted them by team, then we took the pile of 30 or so cards for each team and arranged them in a multi-picture frame. We have sold a bunch of these for the nearby teams and a few from the other teams. I’ve even sold some of them on Etsy and Ebay. If you have old cards lying around that won’t sell on their own, try something like this. This is a simply brilliant idea. A friend of mine has an uncut sheet of 1987 Topps baseball cards framed in his living room. It’s actually a great little piece of art that is invariably a conversation starter. Simply taking cards from that era and turning them into a conversation starter wall hanging like this is simply genius. I already want a 1989 Topps one that features all of the Cubs from that year. Q4: Frugal yoga tipI greatly enjoy group yoga classes at a local studio, but individual classes range from $10-17 each (for one hour) and even with all possible discounts, $75 per month for an unlimited membership. I explained to the front desk ambassador at the yoga studio that a financial commitment like that is not in my budget, and she suggested that I participate in the “trade” or “karma yoga” program. I come into the studio 2.5 hours per week to tidy up the space and work the front desk and I get unlimited free classes! What’s really nice about this arrangement is that “trading” makes me accountable for showing up to multiple classes a week (to get my “money’s” worth) and it has helped me make great friends that are also trading! If any of your readers love yoga, have a bit of extra time, and want to save a lot of money, I suggest they inquire at their area studio about this great opportunity. Most yoga studios have a “trade” program! Some don’t require cleaning, some ask for cleaning, web site design, and other types of help for free classes! This is a great idea! In fact, this is a reasonable thing to check on with any community organization, not just a yoga studio. Many such businesses have staffing challenges which means that exchanges like this can sometimes bring value to such a business. Of course, businesses won’t necessarily agree to this type of arrangement. It really depends on what they need to keep the doors open and if they’re not interested, harassing them about it will do the opposite of helping. Still, it doesn’t hurt to ask. Q5: Baking bread at homeI tried your recipe for baking bread at home and it seems pretty labor intensive. My wrists couldn’t take doing that very often. I’ve tried some of the no-knead recipes too and they never turn out well. I would like to make bread at home because the ingredient cost blows away store bread and the bread is just way better (and better for you without all the junk in it). What is a low cost frugal way to make bread without tons of kneading and labor? A bread machine bought at Goodwill seems like a great idea here, but unfortunately, my experience has been that if you don’t like the no-knead breads, you’ll probably not like the bread that comes out of a bread machine. It often has a questionable texture. My best suggestion is to get a very sturdy stand mixer, like the ones made by Kitchen Aid. Avoid Kitchen Aid mixers made between 2006 and 2011, however, as they have a vinyl gear inside of them that breaks down – they switched back to metal in 2011. The nice thing with a stand mixer is that it can be used for tons of things from making bread to mashing potatoes. That’s really the best alternative for homemade bread that actually tastes good. The secret is in the kneading and the only mechanical solution I’ve found is a stand mixer. Q6: Frugality and “ripping off” businessesI think a lot of your frugality tips are great like taking advantage of sales and bulk buying and stuff. What turns me off are stories from people who do things like basically rip off businesses like asking for constant “extras” at sandwich and burrito places or taking tons of sauce packets at restaurants and putting them in their purse. What do you think about those tactics? This type of behavior leaves a bad taste in my mouth. Businesses offer these types of services under an obvious social contract. They leave out sauces and such things for people to use on the food they just bought, not to fill their pockets and bottles at home. They allow you options on your sandwich so you can have it the way you like it, not so you can jam on so many toppings that you never have to buy a meal for the rest of the week. I view people who do things like that to be leeches who take advantage of customer-friendly businesses. It’s not frugal in the least. Q7: Buy it for life: underwearI never buy underwear, but my current rotation is on its last legs. What’s the best, affordable, long lasting underwear? This is a question I never thought I’d answer in a reader mailbag, but here goes. Honestly, my experience has been that the best “bang for the buck” in men’s underwear – and it’s not even close – is the C9 brand sold at Target. It’s usually labeled “C9 by Champion.” The cost is a little high compared to the other items sold there, but these things just last and last and last. I’m really impressed with them. They’re comfortable and they’re incredibly cheap in terms of cost per use. Gary has a second question. Q8: Old stampsI have a few 46 cent stamps. Does it make sense to put two 46 cent stamps on my envelope and drop it in the mailbox at work instead of making a special trip 1.5 miles to and from the post office just for a 49 cent stamp? I hardly ever mail anything. I would compare this to driving out of your way for gas that’s 3 cents cheaper. If you live on a rural route, you can actually buy the stamps from your mail carrier. Just call the post office and see what they can do for you. My experience has been that it involves leaving an envelope in the mailbox for the carrier to pick up and the carrier leaves behind stamps. Even if you’re not rural, a quick call to the post office might help you to find a solution here that doesn’t involve you wasting those stamps. You can also buy stamps at USPS.com, but that may involve a shipping charge that eats up the benefit. Q9: Reliable car brandsWhat is a “reliable car brand”? Whenever you mention buying cars you talk about cars that are from reliable brands. What do you mean by that? The only brands I think of as “reliable” are super expensive (like BMW). I usually trust the reliability information in Consumer Reports. In their annual car issue, they usually have a ranking of different car manufacturers in terms of their long term reliability as reported to CR by their readers via their survey system. Over the last several years, Honda, Toyota, and Nissan have almost always been near the top of these lists. CR usually separates them by brand, so Lexus (for example) is near the top though they are made by Toyota. If you’re interested, I suggest hitting your local library and finding the most recent Consumer Reports car-buying issue. Q10: College savings and ill childWhen our daughter was born, we started a 529 plan almost immediately, putting $150 a month into the plan. A few months ago, our daughter (now age 4) was diagnosed with leukemia which she may not survive. We continued funding the 529 without really thinking about it since it was automatic. Given that her long-term prognosis is not good, should we continue to fund the account? What kind of penalties are involved? I am just trying to get our finances in order no matter what happens. I have become accepting that we may not get to see her grow up. If I were in your shoes, I would assume that your daughter will grow up just fine. No matter how bad the situation, keep acting as though she’ll skate right through it. Usually, you’ll be fine doing this. For example, with the 529 account, if the beneficiary were to pass away, this just becomes a normal investment account as there’s no penalty for taking the money out (assuming you stop contributions at that point). You have to pay taxes on the gains as normal, but that’s all. I’d just keep contributing like normal. If something does happen, you can get the money out as if it were a normal investment. If everything goes according to plan, then you’ll have plenty of money for her when she goes off to college. Q11: Wondering about a 401(k)I am employed full time at a small family owned business. They do offer a 401(k) program. However, instead of matching funds, the owners can decide to make a “discretionary contribution” to the 401(k) based on company profitability once a year. Below is the exact wording: “*****. may elect to make a discretionary matching contribution equal to a percentage of your elected salary deferral. In addition, ***** may make a discretionary qualified non-elective contribution allocated as a percentage of compensation; and/or a discretionary profit sharing contribution which will be allocated to eligible participants in proportion of their compensation to compensation of all eligible participants. Forfeitures will be used to reduce any employer contribution.” In the past 5 years, they have made contributions twice. As far as I can verbally research the contribution is always based on percentage of compensation. Out of 36 employees I rank about 29th in compensation level by my best estimate and I’m only investing minimally ($20/wk) as I pull out of debt and bankruptcy. Therefore my portion of the contribution has been minimal. ($1,600 last time). My question is should I stop contributing to the 401(k) but leave it open so that it will receive any company contributions and it will continue to “grow” based on investment returns and open an IRA and make my weekly contributions to it? Essentially – the major benefit (as I understand it) to a company 401(k) is the matching funds – since that is negligible, would I be better in an IRA? Part of the reason for the concern is that my husband owns his own sole proprietorship and has no employees and no retirement savings. The current 401(k) is all we have so I’m trying to maximize my dollar since I am 42 and he is 46. That’s probably what I would do in your situation. I’d leave it open for company contributions but if there is no matching, I’d invest elsewhere in a situation where you have more control over things. Your best route would be to open a Roth IRA, in my opinion. I have one through Vanguard and I’m extremely pleased with their offerings. Regardless of where you choose to open it up, it’s pretty simple to do and if you set up automatic contributions, you can practically forget about it while it builds up money for retirement. That would be my plan in your situation. Naturally, if your employer changes their policy and starts matching, I’d take advantage of that, but that doesn’t sound like that’s what’s happening. Q12: Time management insightI love your articles on time management and the different systems you’ve tried out and tools you’ve experimented with. One quick thought: I’ve found that most people either succeed or fail at time management regardless of the system. Some people are just better time managers than others. In other words, little tricks to help improve time management are probably more useful than starting from scratch. I know what you mean, but it’s a double-edged sword. I didn’t really discover the idea of time management until I was well out of college and into my career. I made it through college with almost no time management at all and certainly no formal system for it. At times, things were really chaotic for me and time management would have helped greatly. In other words, even people that are in successful jobs after earning a degree are still largely unaware of how time management can help them. I do agree with you that tips are more interesting at this point, but I can often extract tips from articles describing time management from scratch. I generally try to write a little bit of both because I find time management incredibly helpful in my day to day life. Q13: Flipping stuff on CraigslistMy husband had a really good “side business” going that he’s stopping because we’re going to travel a lot now. Here’s what he did. He would buy items off of Craigslist that were used or not working well that he knew how to fix. He would negotiate with them and buy the not-working items for cheap. Then he would bring them home and fix them. Then he would list them again on Craigslist. He could sometimes make $50/hour doing this but it was pretty irregular as he had to find items with problems that he knew he could fix. Anyway it did make him a lot of pocket money and some nice dinners and helped our savings out on the home stretch to retirement. Since he is out of the business I thought why not share it with The Simple Dollar? This is a great little side business idea for someone who’s a little bit handy. Many devices like lawnmowers and toasters can be fixed with a bit of work and some knowledge of how they operate. It’s usually just a piece or two that’s broken in them so if you can figure out what’s wrong and fix it, you can usually get the parts for a song and turn a non-working item into something really useful. The problem is finding stuff that’s in good shape except for one or two problems. I sometimes see stuff like that on Craigslist, but it’s usually all stuff that works. People seem to assume broken stuff won’t sell so they just send it to the dump. Still, if you’re willing to watch Craigslist, this is certainly a way to make a few bucks. Q14: Timing of new car purchaseMy husband and I both work full-time currently, though his job is PR for a ministry that runs until Christmas time, so he’ll be finding a new job before the end of the year (we’re not too horribly worried about that – he’s already got leads from this job). We currently live a little over 10 miles away from his work, but almost 30 miles from mine (almost a 45 minute commute). He drives a 1997 Grand Prix (250k+ miles) and I drive a 1999 Corolla (200k+ miles). His gets kind of sad gas mileage (at least compared with my little clunker), and the transmission is failing, among other smaller problems like rust. My Corolla seems to keep developing both small and large problems which would cost far more to repair than it’s worth, and if the Grand Prix’s transmission dies, the same will be true for it. We want to go down to a one-car family, but because he works a standard 8-5 job and I work second shift at a hospital, there is no feasible way to do this. We’re going to get a Prius, but we’re not sure if we should wait until we can go down to a one-car family and risk one or both of the cars dying (and thus having to buy a car anyways, on a time crunch, which I want to avoid), or trading in one of the cars now and figuring out a way to sell the second one later without having to offload a dying car on a probably semi-unaware (since stuff the seller and buyer didn’t know about always seems to crop up later) private buyer. Financial stuff: Currently we have the income stream to be able to pay off a new Prius (and yes, it will be brand new, because with the rates we can get, it actually would cost almost exactly the same to buy used, and we’d pay less interest in the end) in about half the loan term, though I have a worker’s comp-related health issue that may force me to find another job soon or finally start a business. We are legacy USAA members, so we have access to their amazing auto loan rates (we might be able to get 1.49% rate on 60 months, depending on when we buy), as well as their car buying service, which would save us somewhere around $4k off MSRP. Both our cars have been paid in full for a long time, and pretty much the only other debt we have right now is student loans (on income-based repayment plans), though we would like to get a fixer-upper (or something along those lines) house in a couple years, once we figure out where we’re settling down. We also tend to drive our cars until they die, as our parents all have (and my folks’ 2005 Prius is still going strong, and has only been in the shop ONCE in its lifetime – for a front-end alignment!), so this would be a relatively buy-it-for-life kind of thing… we just can’t figure out when to actually buy it. Please help! In your situation, I’m not really sure how a one-car system would work. Are your shifts opposing enough that you can both drive the single car to work? If that’s not the case, then it seems impossible unless you live in an area with a transit system. My guess is that you’re looking at changing jobs given the “worker’s comp” issue you discuss in the final paragraph, which would take away the need for a second car. It sounds to me like you’re on a “buy it new, drive it into the ground” cycle. I wholly agree with the “drive it into the ground” part of the cycle. The “buy it new” part can be questionable – late model used are typically better deals – but there are situations where new purchases can make sense. My suggestion to you is to bank it all on reliability. What does your life look like if one of those cars fails right now? Would there be job endangerment? If so, I’d sell quickly and get a stable car at home. If there’s not, I’d probably wait. Soon, you’ll need only one car (apparently), so if you can make it until then, the decision gets easier because there’s no pressure. Q15: Frugal way to practice chessI am 61 years old and retired for a few years after selling my business. I am the guardian of my grandson because both of his parents passed away in an accident several years ago. My grandson is twelve years old and is active in his school chess club and the community chess club. I used to be very good at chess but haven’t played in 20 years other than playing with him. His skill is growing rapidly and although I can still win most games, I realize that if I want to keep playing with him I need to practice during the day as he is constantly practicing. I have a reasonably modern Windows computer with an internet connection and access to a library. What can I do on the cheap (say $20 or less) to polish my chess skills? Short of a grandmaster level, everything you really need to learn how to play chess is available at chess.com. You can play against the computer, against other people, and try out chess problems. When I was really into chess a while back, I found a great deal of value in the “computer workout” section of chess.com. It does a great job of teaching you how to handle various situations and get the most out of your pieces. I think it’s just about perfect for what you’re wanting to do. Got any questions? The best way to ask is to email me – trent at thesimpledollar dot com. 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 Old Stamps, Yoga, Hospital Bills, Chess, and More! appeared first on The Simple Dollar. |
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