Questions About Car Loans, Toasters, Skin Care, Mortgages, 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. Possible dodgy car loan
2. Maximum income before taxes
3. Buy it for life toaster?
4. Financial success dependent on others?
5. Frugal skin care solutions
6. Books on modern frugality?
7. Mortgage loan while on disability
8. Music subscription services
9. Driving twice a year
10. Having more kids
11. A plethora of unread books
12. Holes in undergarments

So many tasks in life are made up of a long series of comically simple steps. Take painting a wall, for example. You just put some masking tape around the edges, dip a brush and/or a roller in some paint, cover the wall in paint, and then remove the tape.

It’s so easy to not even really think about those simple steps and do a haphazard job. You miss little spots on the wall. You don’t tape properly and the edges look bad.

Focusing on those details makes all the difference. Being mindful of the task you’re working on instead of letting your mind wander across the infinite things you want to accomplish is the real difference maker.

On with the questions.

Q1: Possible dodgy car loan

I decided to finance my 3 year, 45,000 miles lease because I had driven 40,000 miles. It has a residual value of $15,600. I got a loan with an APR of 6.74% for the full value of the car pre-lease. I believe that I have at least 14-30 days to refinance for a better rate without further damaging my credit score. My credit score is 718. Can I get a better APR? and any recommendations for refinancing with another lending institution?
– Billy

You should be able to get a car loan down in the 4% to 4.5% range right now, provided you have good credit (which you seem to) and there are no other factors (you haven’t mentioned any).

I would definitely shop around and see whether or not you can come up with a loan with a lower APR than 6.74%. That sounds like a car loan that a dealership is putting on a car in the hopes that you won’t shop around and they’ll collect some nice profit because you didn’t.

I don’t have a particular recommendation for a lending institution. I would just suggest shopping around and getting several quotes from different lenders. Investing several hours right now could easily save you $2,000 or $3,000.

Q2: Maximum income before taxes

I am 71. My spouse is 70. How much can we make before we have to pay taxes?
– Barry

Given that you are both over the age of 65, the minimum amount of income that you need to earn before filing federal income tax returns is $26,600 (that’s the 2018 number, and it increases slightly each year). If you earn less than that, you don’t need to file a return at all. You may still want to file one if you paid some income taxes (via deductions from a paycheck during the year, for example) so you can get them refunded to you.

If you earn over that amount, you do have to file, but you will owe very little in taxes if you’re close to that number.

With Social Security, you have to do a bit of calculation. Social Security is concerned with your combined income, which is your adjusted gross income from other sources, any nontaxable interest (you likely don’t have any), half of your Social Security benefits. If that total is below $32,000 and you’re filing jointly, your Social Security income isn’t taxed.

Q3: Buy it for life toaster?

I’m hoping you’ll evaluate two of my recent purchases using your ‘buy it for life’ philosophy. This detailed evaluation is overkill for a single, cheap purchase, but it would be valuable to have a good strategy for similar future purchases. I needed a new 4-slice toaster oven and decided to buy one at Walmart during a weekly shopping trip. Given the low price, I couldn’t justify spending the time or gas on a trip to another store. I also didn’t think I’d find many quality online reviews of sub-$30 toaster ovens. The options that satisfied the size and features criteria were a $20 Mainstays brand model or a $25 Black & Decker brand model. I was skeptical that the Black & Decker model would last 25% longer, or be 25% more effective. Second, a toaster oven is relatively simple – I doubted there was any game changing technology that B&D incorporated into this model that the cheaper version lacked. My cynical mind also suspected the B&D model was only branded as such after being manufactured in a random factory. I bought the cheaper model. What would you have done differently?
– Jim

This is exactly how I would have done it, excepting that I would have checked a secondhand store for small kitchen appliances first like a toaster or toaster oven.

The only time I’m willing to pay a higher price for something like a small kitchen appliance is if I have seen great reviews for that particular model in Consumer Reports. That’s my trusted source when buying things like appliances.

If I’m in the exact situation you describe, I’d go for the store brand, too. It’s likely that the two models you were looking at were extremely similar on the inside and there’s no reason to pay extra for a label.

Q4: Financial success dependent on others?

I am struggling with the fact that my financial success is dependent on the failure of others. If Americans suddenly started being sensible with their money, instead of like 80% of us living paycheck to paycheck, a lot of us would be jobless pretty quickly as a lot of retailers and online businesses would die in rapid order. I’ve got lots of money in stocks and those stocks would crater. I’d probably lose my job and my portfolio would die if other people weren’t careless with their money. I feel like I am getting rich off the back of other people’s financial ignorance.
– Carly

The thing to keep in mind is that your job exists because others choose to spend their money in that way. Anyone in a retail or service job is largely doing that job because other people choose to spend their money in a certain way, and that’s okay. It means we have freedom of choice.

Yes, your investments would probably collapse if Americans had a mass behavioral change. However, in that scenario, the thing that would probably at least hold value, if not skyrocket, is real estate.

Q5: Frugal skin care solutions

Do you (or your wife or female contributors) have a recommendation for an anti-aging skin care regime that is budget friendly? I’m newly in my forties, accumulating wrinkles like nobody’s business, and even drugstore brand night creams are so expensive! I’d love to find a more affordable solution. Any recommendations?
– Jenny

I asked a few people who I really trust about this and I got a wide variety of answers. Two consistent things stood out.

One, they all mentioned using a mix of ordinary glycerin soap and ordinary olive oil. Just get a bottle of liquid glycerin soap and add about a tablespoon of olive oil to it for every four ounces of soap and mix it thoroughly. If your skin is naturally dry, use a bit more olive oil. If your skin is naturally oily, use a bit less oil. Two different people I asked said they used some version of this mix in the morning to wash their face and kept it in a bottle in their fridge.

The other thing mentioned by multiple people is that they would take a tablespoon of dry oatmeal, puree it with a coffee grinder into a fine powder, mix it with a tablespoon of plain yogurt, and then put that mix on their face for ten minutes in the evening, then wash it off thoroughly.

Those strategies seem super cheap to me. Sarah doesn’t really use any sort of special routine for her skin other than keeping it clean.

Q6: Books on modern frugality?

Are there any books that are like a modern version of the Tightwad Gazette? Or any new great books on frugality? Maybe you could write something like that.
– Daniel

I think that frugality is a topic that’s mostly addressed on websites and blogs these days. Books that focus on frugality are fairly rare and when they do appear they focus on the basics.

In fact, I view frugality and lean personal finance blogs as being the direct successor to The Tightwad Gazette. They just appear online and in email newsletters rather than in print form.

I think this appeals more to the frugal mindset than buying a print newsletter.

Having said that, I would probably subscribe to a new version of The Tightwad Gazette or something similar.

Q7: Mortgage loan while on disability

My family plans on moving hopefully this summer. I have a large down payment (140,000) but plan on applying for a conventional loan to pay the remainder. I receive SSDI income Auxillary Child benefits. I assumed all of my gross income would be added and grossed up by 25% because I assumed it’s all non-taxable. But when I looked at my jointly filed income tax return line 20b said $17,000. I completely freaked out and called my lender and he said he would still gross up my SSDI income because I’m the only one applying for the loan. My median credit is 745. Do I have anything to worry about?
– Adam

A bank with conservative lending practices will probably balk, but I think most banks will still give you a reasonably sized loan, one that they’re confident you’ll be able to repay.

In your specific case, I’d probably trust the lender I was working with. If he says that you’re still fine getting the loan, I’d believe him.

I would definitely seek out pre-approval, though. Before you even consider hunting for a house, get pre-approval from your lender.

Q8: Music subscription services

What do you think of music subscription services like Spotify/Pandora/Tidal/Amazon Music/Apple Music? Do you recommend one?
– Andrew

Honestly, about three years ago, they were all kind of distinct and did their own thing, but they all seem to be borrowing ideas from each other and seem more similar.

For example, Pandora used to really excel at musical discovery, but now it’s pretty easy to find new stuff using curated playlists on those services. Also, their overall music content is pretty similar at this point, too; they all have a few exclusives, but there’s pretty much a bottomless well of music that you’ll like at any of the services.

If you enjoy listening to music throughout your day, I think a subscription to any of those services is worthwhile. Most of them offer free versions with ad interruption; for me, it’s worth the less than $10 a month to get rid of it. I personally listen to Spotify, mostly because I share playlists with a few friends on there, but I’m not heavily tied to the service.

Q9: Driving twice a year

I suddenly realized that I really only need to drive twice a year. I visit my family for several days during the holidays (when I drive there) and I usually go on a summer road trip of some kind. Aside from that everything I do could be done on mass transit or a bike. Is it cheaper to do it this way and just rent a car when I need one?
– Tommy

If you’re dead sure that you only need a car twice a year for those reasons, then it’s probably cheaper to do things that way.

The catch, of course, is that you may actually have more car needs than you think. Are you easily able to handle getting groceries and household supplies without a car? I found that during my years without a car I relied on a friend who would take me along when he went to a warehouse club and then drive me home with all of my goods.

I would strongly suggest that you have at least a few close friends with cars who might be able to help you out if you realize that being without a car causes more trouble than you think. If you’ve got that, then try giving it a shot for a month or two – just don’t do anything at all with your car and see how it goes. If it’s fine, then sell it and drop your insurance costs.

Q10: Having more kids

You have said before that the leap from no kids to one kid was pretty expensive and challenging, the leap from one to two was less so, and the leap from two to three is even less so. Why? Do you think the pattern would hold with even more kids?
– Adrian

The leap to more kids is less expensive because you can reuse a lot of the stuff you had to acquire for the first kid, like bottles and car seats and so on. It’s also relatively easy because you’re well-practiced at the things that need to be done for child care, you begin to have helpers for many of the tasks. While the addition of another child does take time, it’s not as much time as the first one.

I think that the pattern would continue to hold for more children. I know a few families with more children than ours and they handle things in very systematic ways, with clear chores for everyone and lots of group activities. They do ensure regular one-on-one time between each parent-child pairing, but it’s basically just a refinement of what we do with three kids.

That being said, the first child is a major life change (unless you have enough money to buy help to shield yourself from the changes). Multiple kids just accentuate that core change.

Q11: A plethora of unread books

I used to have a very bad habit of buying books. I’d go to bookstores and drop $50 without thinking about it. I’d go to library book sales and spend $50 there and fill up a box. I have thousands of books on several bookshelves in my home and almost all are unread and I finally realized I’m never going to read most of them. So I started sorting and I have all of the ones I’m actually excited to read on one shelf, ones I’ve read and want to keep on another, and all of the others are full of books I will never read and I don’t know what to do with them. Ideas?
– Abbie

If I were you, I’d probably just have a big book sale during the garage sale and yard sale season in the spring. Put out a posting that you’re having a sale focused exclusively on books and then put them all out on tables or even on shelves for the sale. On the first morning, charge $1 a book. In the afternoon, charge $0.50 a book. Second morning, charge $0.25 a book. Second afternoon, charge $0.10 a book. Last morning, fill up a box for $1. They’ll probably all be gone by the end of the second day.

Just promote the sale where you can. Put up a bunch of flyers around town before the sale. Get in on every garage sale and yard sale listing you can. Highlight that it’s a book sale and note your pricing scheme.

I suspect you’ll make a few hundred dollars from this and clear out a lot of shelves in the process. Good luck.

Q12: Holes in undergarments

Should you throw out underwear if there are small holes in them? Don’t see why as they still do the job.
– Brent

For some reason, this question made me laugh and I kept coming back to it, so why not?

I’d simply ask myself two questions. One, do the holes bother you? Two, do they bother anyone who might see them?

My rule is literally a rule of thumb. If I can get my thumb through a hole, then they go in the trash. That’s my rule for any garment, though holes in outerwear are usually relegated to home use until the holes get to thumb size. I have a few favorite t-shirts that I still wear around the house or as an inner layer even though there are a couple of small holes in them. A small hole will not cause me to throw away a particularly comfortable t-shirt, particularly when it’s a shirt I’m wearing under a hoodie or a shirt I’m wearing while doing dishes or painting or something.

If holes are smaller than my thumb, the truth is I probably won’t even notice them. If I’m noticing a hole, it’s probably large enough for my thumb to go through, so it’s time to toss that pair. If I do find a hole in something and my thumb doesn’t fit, I usually assess the garment and if it’s not one I’m particularly attached to, it goes to the rag bag or the trash can.

My wife is far more picky about sock holes than anything else. She really does not like socks with holes in the toes.

I can’t believe I answered this question.

Got any questions? The best way to ask is to 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.