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.
1. Getting a back-up car
2. Why you should keep stuff?
3. Frozen slow cooker meal tips
4. Prioritizing credit card debts?
5. Maximizing schedule with long weekends
6. Why worry about retirement?
7. Strategies for cheaper gym membership?
8. Saving old pocket notebooks
9. Thoughts on credit card churning
10. Creative financial milestones
11. Annuity question
12. Good “useful” Christmas gifts
In our family, the passing of Halloween and the start of November means that we’re beginning to think about Christmas.
That may be a pained response for some of you, but we have a number of things that we need to start on now if we hope to get them done before the holiday arrives.
We send Christmas cards to a fairly long list of people, for one, and each one involves something handwritten on them.
Some of our Christmas gifts are homemade and if we don’t get started making them, they won’t get made.
A shopping list made now gives us more weeks to watch for sales related to those items. (In truth, quite a few items are already purchased, but now we’re entering the home stretch.)
Travel plans need to be made sooner rather than later in order to hit the best bargains.
All of that stuff starts now, not later. It’s hard to believe that another year is wrapping up already.
I am considering getting a ’93 Cadillac just to have as a back-up car just in case my wife or I ever needed to put our current vehicles in the shop for repairs (which we just had to do). My truck also has about 155,000 miles on it, and my wife’s car has about 120,000 on it. I would pay nothing to get the cadillac (other than clerk fees to transfer title and to get new plates) because the car was owned by my grandparents who are now deceased. I feel the car would only help us because it only has about 85,000 miles on it, thus we can drive it more and preserve our current vehicles in the process. The cost to insure it would also be low since it’s an old car. Also, the car is in good running condition. My wife states we probably should not get it because “The car is old,” and she’s worried about having to pay more money for maintenance on it. Can you please offer your thoughts on this matter, thanks.
I can see both of your points of view, so if I were you guys, I’d take the car to an expert first.
If you have a trusted mechanic, I would have that mechanic look over the car thoroughly. Most mechanics will check for the most glaring potential problems in a car fairly inexpensively and quickly.
If the car passes muster with a mechanic, then I would keep the car and use it as a backup. I wouldn’t let any of your cars sit around for too long, though, as I’d drive all of them regularly to make sure no problems pop up.
If the car is going to require a lot of repairs that exceed the value of the car, it’s probably not worth your money or time to hang onto the car.
Remember, just because it runs great now doesn’t mean there aren’t problems right around the corner, and if you’re buying it to add some reliable redundancy to your life, make sure that the care can actually provide the kind of redundancy you want before jumping on board.
I thought this was a pretty good counterargument to “minimalism” and getting rid of your stuff:
Curious to hear your thoughts on it.
That article provides a great argument for being a lifetime learner and learning about things that you might not otherwise consider learning about. However, I’m pretty sure that this article is mostly referring to acquiring knowledge rather than physical possessions.
The article appears in the Chronicle for Higher Education and repeatedly refers to academics and classrooms throughout it, which makes it clear that the article is talking about tackling topics in the classroom.
While I suppose you could certainly apply the ideas from this article to your personal possessions and your philosophy toward owning things, I think the big point of the article is that the process of learning new things has value for a person beyond the simple knowledge acquired.
We have been making frozen slow cooker meals for many years. A few tips:
– If you use freezer Ziplocs double or triple bag the meals. Thawing seems to often poke little holes in the bags which can cause a mess. We have moved to using thicker walled containers.
– Put the whole bag or container in a bowl in the fridge at least 24 hours before you’re going to start slow cooking it.
– Never ever ever cook a frozen slow cooker meal on high. Always do it on low. Just put it in before you leave for the day and eat it when you get home. They always turn out burnt or mushy if you do it for a few hours on high to “make up for lost time.” Wait until the next day if you forgot to start it early in the day.
– You really don’t need to add water to most of these meals. There’s almost always more moisture than you think there is.
These are really good tips.
We learned about the double-bagging thing the hard way when a lot of single-bagged meals had little holes in them. Our solution was to just have them thaw in a bowl in our refrigerator. That way, any juice that leaked out would just go into the bowl and could be dumped into the slow cooker at the start of cooking.
I agree strongly with the tip about cooking on low. I do that with almost every slow cooker meal. I firmly believe that slow cookers are designed for cooking on “low” and things often turn out badly if you do them on “high.” The food on the outside almost always gets really crunchy or sometimes tastes/feels burnt if you cook on high, and the food in the middle is sometimes undercooked, too. It’s not a good mix.
The water thing depends a lot on the meals, though. If you intentionally add appropriate amounts of water before freezing, that’s true, but we often label our slow cooker frozen meals with a note saying to add two cups of water or something like that, depending on the recipe.
Freezing meals in advance for the slow cooker has been an incredibly useful strategy for us.
Right now, I have two student loans, a car loan, and a credit card. All of the advice I have read on your site and others says that I should be prioritizing paying off the credit card. Why?
The reason is simple – interest rates. Almost every single time, if you look at a car loan, a student loan, and a credit card, the credit card will have the highest interest rate. It’s true so often that people often simply suggest paying off credit cards first without studying the full situation.
In general, my experience has been that payday loans have the highest rates, followed by credit cards, then by student loans, then by mortgages, then by car loans (though some car loans are higher if people have poor credit). That’s a really rough sketch, though, and it depends a lot on the individual person doing the borrowing, what that person’s credit looks like, and who they borrowed from.
The best practice for paying off your debts as quickly as possible is always to tackle the one with the highest interest rate. For many, many people, that’s their credit card, or the credit card with the highest interest rate. If you’re going to make extra payments, you’re going to get more value from those extra payments by making extra payments on that highest interest credit card first.
Right now, I work a schedule with 3 12 hour shifts, then three days off, then three days on… you get the idea. This leaves me with a three day weekend every three days, but those days aren’t consistent. How can I use those days to make more money or maximize my value? Going to school seems impossible because of the constantly shifting weekends so I am looking for other ideas.
With that kind of schedule, it’s going to be fairly difficult to hold down another job or to take an offline class, because those require you to be at a certain place at a certain time.
Instead, I would look at filling that time either by trying to start your own little side business or by taking an online class, preferably through an accredited school if you’re hoping to build toward a degree.
There are lots of potential side businesses that work with this schedule. Things like lawn care businesses would work well, as would things where you produce content online (Youtube channels, websites, and so on).
Another strategy is to talk to your supervisor about what skills you could be adding to make yourself more valuable at work (and potentially in similar workplaces). Then, find ways to build those skills on your days off. Since I don’t know exactly what kind of work you do, I can’t offer specific examples, but almost every job utilizes some skills that can be built elsewhere, and a stronger skill set means more job options within that field.
I appreciate all of your retirement and early retirement advice but what if you just have no interest in retiring? I literally want to work until I cannot, at which point I won’t have much time left on this earth, so why save?
You save because your employment options might not be as strong when you’re seventy as they are right now. If your current job goes away, others may not want to hire you in your field when you’re older. Sure, it’s ageism. Sure, it’s wrong. But it happens.
You also save because the things you want and value right now might not necessarily be the things you want and value in twenty or thirty or forty years. By choosing not to save right now, all you’re doing is restricting those options.
Another factor is that the money you save right now is literally the least important 10% of your income. It’s the money that you’re going to use for the things that matter least in your life.
Retirement savings aren’t there so you can golf in Florida when you’re 70. Retirement savings are there so you can do whatever you want when you’re 70, regardless of what other people might be doing.
I am considering signing up for a gym in the next month. Do you have any strategies for saving on a gym membership? I looked through your older posts to find some advice but couldn’t find any.
One big strategy you should consider is simply waiting until the start of the year. Many gyms offer big “New Year’s Resolution” discounts at the start of the year to entice people who make a resolution for change in their life and you can easily take advantage of them.
If there are several gyms in your area, you can simply visit lots of gyms, actively compare their offers, and then ask the gyms you like the best to price match the other gyms. They might not necessarily do it, but some gyms will consider it.
You should also consider what exactly it is that you’re wanting out of a gym membership. Is it access to specific equipment? If that’s it, run the math on just buying that stuff yourself versus a gym membership. If it’s access to coaching, you’re talking about personal trainers, which are likely a different thing than ordinary gym memberships.
What do you do with your pocket notebooks when you finish them? Do you save them somewhere? Or do you just pitch them? I have filled up several pocket notebooks and have been saving them but I haven’t looked at them since filling them up. I looked at them in the first day or two but after that I put them in a box and never saw them again.
I save some of them simply because I think my children and grandchildren may enjoy leafing through them, but most of the notebooks I use just end up getting tossed. It’s silly, I know, but I do enjoy looking at some of my grandparents’ old notebooks sometimes. I’m kind of selective about the ones I save for posterity, as I try to think of the lists and items that the kids will enjoy the most.
I have the exact same experience as you do, by the way. I find that when I get a notebook full, I keep it around for a few days and still refer back to it to make sure that all of the stuff I needed from that notebook is taken care of or moved elsewhere, then I end up tossing that old notebook in the trash or storing it somewhere.
For me, a pocket notebook is just a short-term tool. It’s something that I use to write down a piece of information that I’m going to need to use again very shortly, like a to-do or a grocery list or an article idea or something like that. It’s not really meant for posterity, so why keep it?
Do you have any thoughts or strategies for credit card churning? I searched through your archives and couldn’t find anything on it.
For those unaware, credit card churning refers to the practice of opening credit cards and using them just enough to acquire any and all signup bonuses, leaving the card open long enough to fulfill the terms of the agreement, then closing the card. Often, churning involves doing this with many cards a year. Most people just move their normal spending to the card they’re “churning” until they’ve fulfilled the offer, paying off the balance in full each month.
Doing this can be a little rough on your credit score and it can take some significant time, as you have to keep track of the dates for each offer and how much you need to spend by that time.
I don’t have any particular problem with churning per se, but I don’t think that it earns enough return for it to be worthwhile. Almost all of the “rewards” you earn are locked up in things like “points” or mileage programs that aren’t really that valuable as they represent spending on stuff you don’t need, and if you end up selling those rewards you’re reducing your return anyway.
I tried it for a while in 2007 and 2008 using all of the advice I could find on the subject and I just couldn’t get it to add up to being worthwhile for me. I absolutely did make some positive returns, but the time invested in finding decent offers, applying for those offers, keeping track of which cards I had to put charges on and how much I had to charge, canceling cards, and making sure I didn’t miss any bills wasn’t worth it.
On top of that, the more you churn, the more open you become to identity theft. Corporate databases get hacked all the time and the more corporate databases you’re in, the more likely you are to eventually face an identity theft situation.
It just doesn’t add up enough for me.
I’ve been trying to figure out a way to come up with good financial milestones for each step in my financial journey. My end goal is to retire a little early (around age 55) and I am currently 37. I would like to come up with a system that encourages me to work toward some kind of goal every three months. The obvious and easy one is to use net worth measurements but do you have other ideas?
I’m in the same boat to a certain extent. I tend to work best when there are milestones along the way. Medium-term goals – three to six months – really get me going and keep me motivated, while long term goals don’t really do it for me at all in terms of day-to-day motivation.
So, how do I turn our big financial goal – which is essentially financial independence / early retirement – into medium-term financial milestones? There are a few things I do.
First, as you allude to, I break our net worth project down into chunks. Each one is 1% of our overall goal. So, let’s say our overall goal is $1 million. I would then have “a $10,000 increase in our net worth” as a goal. I count it as having achieved that goal the first time I see our total net worth reaching that point, even if stock market changes might cause me to drop back from that peak.
Second, I often come up with little projects to work on. For example, my goal over the next three months might be to write a novel and get it listed on the Kindle Store, providing another (small) income stream. Or, my goal over that timeframe might be to get rid of the extra foods in our pantry by actually using them, so I’ll sort my pantry and make a shelf or two of “extras” and my goal is to empty those shelves by planning meals around them.
Finally, I have made increasing my own contribution percentage a goal over several months. At this point, our spending is pretty well budgeted, so pledging to increase our savings by, say, 1% is actually an interesting task. Can I do this without impacting my standard of living in a real negative way? That’s a good goal to work for.
These goals give me plenty of things to work toward and I always feel like I have a shorter-term goal or a milestone to work toward along the path to the big goal of early retirement.
My wife and I decided when we were younger that we would start buying annuities and then keep buying them until the income from the annuities was more than our living expenses and then retire. We started buying annuities at age 40 and have bought them ever since. We are now 55 and 52 and our income from our annuities is about $5K per month which is enough for us to retire on.
The problem is that now we are thinking it wasn’t the best way to invest our money. The annuities offer lump sum values that will allow us to “cash out” and do something else with the money. On the other hand we will almost assuredly lose some real value by doing this. Thoughts?
First of all, you should absolutely see a fee-based financial advisor with this question. I do not have nearly enough specific information about your situation to give you a really good answer, nor do I have the analytical tools available to me that a good financial advisor would have. Be sure to get a fee-based advisor when you do this, as a commission-based advisor has financial incentive to just steer you toward a specific product, which isn’t what you want.
There are a lot of factors that come into play here. Taxes definitely come into play. The relative surrender value of your various annuities matters, too. Your personal life choices, such as your feelings on working again in any fashion, also play a factor, as does your risk tolerance.
Ask around your social network for a recommendation regarding a financial advisor, for starters. Remember that you really want a fee-based one. When you visit that advisor for the first time, be sure to ask plenty of questions and recognize that a good advisor will have plenty of questions for you.
I almost always start my Christmas shopping in November so I have plenty of time to watch sales. This year I am trying to buy everyone gifts that are actually useful for them as I don’t want anyone to have junk in their closet that they’ll never use. Do you have any ideas for good functional gifts that many people would like but aren’t way expensive?
I find that consumable gifts are the best kind of gifts to give to people that you don’t know very well. Items that are going to be permanently in someone’s home, especially if they’re of any significant size, should be very carefully considered.
Gifts I love to give include food, beverages, pocket notebooks, and digital media. Those items either don’t take up any space at all or else they’re consumed and then no longer take up space.
Sarah and I often make homemade food and beverage items to give as gifts. We’ll make a batch of a particularly unusual jam or jelly, or we’ll make a batch of homebrewed beer, package them with a bit of thought and care, and then ship them out.
Sure, maybe those gifts won’t be perfect, but at least in that case they can easily be shared in a party setting. With permanent items, that’s much harder to do.
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.