Reader Mailbag #63

Each Monday, opens up the reader mailbags and answers ten to twenty simple questions offered up by the readers on personal finance topics and many other things. Got a question? Ask it in the comments. You might also enjoy the archive of earlier reader mailbags.

As usual, we’ll start things off with a few links to older articles that directly answer questions I’ve heard recently. Three readers have written me for advice on expensive hobbies (particularly golf). Here are some thoughts on saving money on hobbies.
Ten Ways That I Save Money Golfing
The Tug of War Between Frugality, Hobbies, and an Emergency Fund
Making Expensive Hobbies More Financially Manageable
Evaluating Your Expenses – Entertainment & Hobbies

And now, some great reader questions!

I was reading your series on buying a house, and I have a question about that. Did you read a particular book or books that you would recommend for someone considering buying a first home? (Or maybe building, I’m picky)
– Chapeau

During our home-buying process, I hit the library pretty hard and looked at a ton of books. Mostly, I’d just make lists of questions that I didn’t know the answer to, then I’d hit the library and seek answers to all of them at once, then repeat a few weeks later.

The most useful all-around book that we found was, surprisingly, . It consistently had readable answers to most of the questions we came up with. Eventually, my wife purchased a copy of the book and it became quite dog-eared by the time we finally made our move.

My suggestion? Make a big list of questions. Go to the library and look at lots of different home buying books to find answers to your questions. When you find one that really seems to answer things well for you, buy a copy and then don’t be afraid to add notes all over the book. It worked really well for us.

I want to start a Roth for my wife and I through Vanguard but the minimum fund amount is $3000 each so it would be quite a substantial amount of money to buy even two funds for each of us. Do you have any suggestions how to start one through vanguard without so much start up money?
– Bob

Since you’re in a Roth IRA, there’s no tax penalty for switching from fund to fund. Thus, my suggestion would be that each of you start with the fund. It’s a well-diversified standalone fund that has only a $1,000 minimum.

Once you’re in that fund, have all of your contributions go there until you’ve built up enough to buy the minimum of whatever funds you want, then sell all of the Vanguard STAR shares and use the proceeds to buy the other funds. Then, change your contributions so that you’re allocating how you like.

This is exactly what I did with my Roth IRA – worked like a charm.

Have you considered reviewing children’s storybooks that deal with money management themes? We already own two (-The Peanut Butter and Jelly Game- and -Stock Market Pie: Grandma Helps Emily Make a Million-), and I’m familiar with a few other titles, like -Alexander, Who Used to be Rich Last Sunday-.

I know Dave Ramsey has a handful of books aimed at kids, but I haven’t read them yet, and I’d be interested to hear someone else’s opinion of them.
– Jenzer

I’ve seen several books along these lines and they look compelling. I think most of them teach really good lessons in a way that young children can grasp.

So why haven’t I reviewed any? To be frank, I’m waiting until my son and daughter are a bit older – probably a year or so. When they reach that age, I’ll start reading such books to them and see how much the ideas stick in their heads. That, to me, will be the real test of whether or not these books are worthwhile.

I will probably start with some of the Dave Ramsey books, actually.

This won’t work for everyone but I am a 20-something that lives close to home. I just use my mom’s Sam’s card whenever i need to go there. Therefore I don’t pay for it. Not to mention, it is free to her because it is a necessary business expense.
– Ryan

I actually did the same thing when I was in college, more or less. My college was fairly close to a Sam’s Club, so my parents bought a membership and would often fill up their vehicle with Sam’s Club purchases when they came to visit. I kept the other card that came with the membership and went there quite often.

If you have a family member who would also benefit from a membership at a warehouse club, talk to that family member and discuss splitting the cost of the membership. You might find that, though $40 is too much to spend, $20 is a price point you’re willing to pay.

Personally, if you have adequate storage room in your living space, I think most people will get their membership’s worth out of a warehouse club.

If you have a little spare time, do you bother entering competitions, answering surveys, becoming a mystery shopper and the likes to make a little extra money, or is it just a waste of time?
– V

Most of the time, I don’t bother. The time investment is too much for the return – or the chance of a return, in the case of contests and other such things.

That being said, such things can be a simple distraction in the evenings – a way to fill commercial breaks with something largely mindless that can bring in a dollar or two. I usually use that sort of time to bargain hunt, for example.

However, if you’re devoting blocks of time that you could be using elsewhere, things like surveys aren’t worth it, in my opinion.

Whenever you mention watching TV shows or listening to music or watching movies, you always talk about buying them or renting them. Why not just BitTorrent them or use LimeWire?
– Kelly

Because I’m opposed to piracy. Whenever an album or a television show or a movie appears, a lot of people – most of them earning just a typical living wage – are involved in producing that item. They work hard to provide a good piece of entertainment.

Whenever you download a movie or a piece of music or a TV show, you’re telling all of the people that worked on the item that their contributions are worthless to you. That is inherently a lie, since you’re going through the effort of downloading it – if it has no value, you wouldn’t be putting forth the effort.

Yes, I know all about how the RIAA and the MPAA are evil. I also know that most people who use that as an excuse are looking to build a big grey area on the issue so that they can feel justified in their theft.

Having said that, I will say that there are much better solutions to this whole problem than the MPAA/RIAA or the pirates are advocating at this point. If this topic really interests you, I strongly encourage you to read by Lawrence Lessig, which is an extremely levelheaded and intelligent book on copyright in the age of the Internet. His conclusions are really interesting, and I think that adopting some of those conclusions would make all of this a moot point.

How do you catch up on television shows you missed?
– Adam

This somewhat follows from Kelly’s question. I know a lot of people catch up on television shows via BitTorrent and other such services.

Fortunately, though, most of the shows I follow (like Lost, for example) have their episodes up on the web for free viewing. If I want to start a series from scratch, I’ll usually trade for the DVDs of the series, but, quite honestly, there aren’t many series that I would want to devote that much time to.

If a series is actually good enough that I could see myself watching the whole thing all the way through multiple times (a la Lost, probably), I would have no objection to buying or trading for the DVDs. The people that create such compelling work deserve the dollars.

Have you ever played the lottery?
– Chloe

When I was in college, I used to play the lottery fairly often, particularly scratch-offs. I really have no idea why I did this – it was more of a laugh than anything else.

At some point, I realized how much of a waste of money it was. This revelation came well before my ultimate financial meltdown, so it wasn’t a part of my financial turnaround. I just didn’t see the point any more.

If I’m going to “gamble” away my money, I’ll do it in a way where I at least have some control over things, like poker or blackjack. Otherwise, I might as well just agree to hand the casino or lottery commission a dollar and let them hand me back 93 cents over and over and over again.

Why are you always so self-righteous? Why do you look down upon everyone else?
– Tom

Comments on my writing alternate between claims that I’m self-righteous and claims that I’m overly humble. Frankly, I don’t see either one.

I think that any time you comment on someone else’s life, you run an enormous risk of coming off as self-righteous. After all, you’re suggesting to others how they should live their lives, and it often comes from your personal experiences and reflections and learning. In giving that advice, you inherently create an impression that you’re “right” and the person asking the question is “wrong.”

Very rarely is that true. My own life has taught me that you should never, ever judge anything by its cover. Quite often, the questions I receive are from people who are successful in most aspects of their life, likely more successful than I am. They’re asking for thoughts and advice on a certain area – money, careers, and so on – where they don’t feel as confident.

Because I respect the people that write in, I feel obligated to give them my honest answer. I consider it dishonest to sugar-coat things for anyone. So, I get right to the point – I tell them what I know and how I would do things. Quite simply, if I did anything else, it would be pretty insulting to the person who wrote to me asking for that advice.

Most of the posts I write for come directly from questions posed by readers. You deserve my honest take on things without sugar coating. To give anything else would be a failure on my part – and it would let you down, too.

If that means I sound self-righteous sometimes, well, that’s something I’m quite willing to take.

My wife was sick with appendicitis in approximately 1998 or 1999, absolutely no later than the year 2000. She was making payments of $10/month on the debt and eventually got it down to around $450. Then the hospital stopped sending monthly statements. So she called and they told her that the debt was forgiven and she no longer was required to make any payments. Again, this was no later than the year 2000.

Today we got a message on the machine from Allied collection services saying that they wanted to speak to my DW. She called and they told her they want to collect the $450 from the debt. This is a debt that is between 9 and 11 years old, and one that we were told was forgiven by the hospital! I told DW that I believe the debt is to old to be collected on and to not pay it and not make any agreements to pay or make payments. It is my belief that the debt is in fact to old to be collected and that we are not required to pay because we were told that the debt was forgiven.

I realize it is only $450, but the fact that we were told it was forgiven about 10 years ago makes me think that this is just a collection agency who bought up old debt and they are fishing to see who they can collect on today. We don’t even live in the same state anymore. I also wonder how they got our new telephone number and address. Also, if we refuse to pay this, can they legally put it on our credit report?

What do you think?
– Paul

The call came from a collection service. Likely, that collection service just bought your still-existing debt from the hospital (likely for pennies) and is now just fishing to get some return on their investment. I would ignore this collection agency, particularly if you have some sort of written evidence of loan forgiveness. If you do not, you can try ing the hospital, but likely they no longer have the debt on their books at all.

In any case, it is always useful to get things like this in writing. If an organization forgives your loan, you should ask for some sort of documentation to that effect.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

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