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. Culture and frugality
2. Learning conversational Spanish
3. Winter, dressing warm, and heating
4. Dirt cheap recipes
5. Where to keep emergency fund?
6. Value of faster internet
7. When should I jump ship?
8. Alternative auto insurance options
9. Voting and personal finance
10. Great low cost board games
11. Buying a diesel vehicle
12. Popcorn advice
13. Washing clothes inside out?
14. Lifetime warranty troubles
15. Baseball cards
I’m writing this at a frightfully early time in the morning (about 4:15 AM). Why so early? I got up this early because we have guests visiting us and I’d rather spend as much of the day with them as I possibly can.
So, that means getting up far too early to write, then probably staying up far too late talking. A very long day, in other words.
Q1: Culture and frugality
I recently found out that my library hosts a weekly group on money saving tactics, so I went to the first meeting and I was really surprised. Although I live in a community that’s about 75% Caucasian, this group was a mixed bag of ethnic groups – about 20% Caucasian, 20% from the Indian peninsula, another 20% or so from other parts of Asia, and the rest from other parts of the world. (There were about 25 people at the meeting.)
At the meeting, there was actually a mention of this cultural diversity. One person suggested that many of the members of the group came from cultures where frugality is more valued culturally than it is in the United States.
Do you think that is true? Is frugality more valued elsewhere than in the US?
It’s absolutely true. Many other cultures value frugality more than American culture does. That’s not to say America is dead last, either, but there are many cultures where frugality and saving is very highly valued.
I don’t know of a single statistic that encompasses “frugality,” but individual savings rates come awfully close. This chart compares the United States to a bunch of European nations in terms of individual savings rates. This list includes a different set of nations, too. The US isn’t last, but it’s far from first.
In terms of personal experience, I worked with a large number of graduate students and postdoctoral research associates from China, Korea, India, and Pakistan during my previous career. Almost all of them were very careful with their money. I can only recall one of them spending like crazy and that was because he came from a very wealthy family.
Q2: Learning conversational Spanish
I want to learn to speak Spanish. I am a retired educator and need a cheap way to become bilingual. I have taken classes but they only teach you to read and write the language and I want to become a proficient speaker. Any ideas?
The best tool for you to use is LiveMocha.
The site is built around the idea of people volunteering to assist other people with language learning. For example, you might volunteer to help someone who knows Spanish and is seeking to learn English. In exchange for that, you’ll get help from someone who knows Spanish and can help you learn it.
Another tool that’s pretty good is Duolingo. While you’re not paired with a native speaker, many of the free lessons involve speaking sentences and phrases out loud.
Both are free, so give them both a shot! You’ll need a microphone for your computer, of course, but if you’re using a laptop, you likely already have one built in.
Q3: Winter, dressing warm, and heating
When I was growing up, my parents kept the temperature in the house at about 50 F. We always wore long sleeved shirts (usually with a t-shirt underneath) and layered pants (usually denim over sweatpants) in the house all winter long. We’d turn it up if there were guests.
Anyway, during my “rebellious” years, I decided that everything my parents did was “cheap” and tried to do the opposite. This meant that I kept my home toasty warm in the winter.
Well, now I’ve realized that my parents perhaps weren’t as dumb as I thought. Last year’s heating bills were atrocious.
So now I’m trying to find a good balance. I want low heating bills but I also don’t want to freeze all winter. Suggestions?
Experiment. That’s my suggestion.
First of all, try just wearing long sleeved shirts and pants around the house. Don’t shed your warm clothes when you walk in the door. Then, try out a bunch of different temperatures. Find one that’s on the low end of tolerable for you. That’s where you should keep your temperature.
You don’t have to keep it at 50 degrees. That’s just the temperature your parents found that worked well for them. You can keep it as warm or as cool as you like. Just remember that in the winter, the cooler you keep it, the lower your energy bills will be.
Q4: Dirt cheap recipes
Do you have any suggestions for really cheap recipes? I need some ideas for getting my family through at the end of paychecks. I am paid only once a month and by the 20th or so things start getting really tight.
There are a ton of things you can do. It’s not hard at all to find foods that are cheap, filling, and tasty. You can just go to the store and stock up on the cheap staples, like rice and beans and peanut butter and eggs and whatever vegetables are on sale and so on. Then just find creative ways to mix them into meals.
For example, one thing I used to do when I was in college is to make a can of a very hearty soup – think beef stew or something – and then add a bit of extra water to it. Then, I’d add about half a cup of instant rice to it, heat it while stirring for another minute or two until it was boiling, then let it sit for a few minutes. That usually cost me about $1.50 in food and was good for two or three meals. There are lots of things like this you can do.
The key is to stick with cheap staples. Make those your diet. Things like dry beans, dry rice, eggs, vegetables and fruit on sale, soup mixes, and so on – they’re almost always really cheap and can be remixed together endlessly to make cheap meals.
Q5: Where to keep emergency fund?
Is a money market the only good place to keep an emergency fund? I have $15,000 saved for a family of three. First, do you think that is sufficient for three months, and second, is there something I could be doing with this money to earn more than what it is accumulating with the money market?
A money market is a great place to keep an emergency fund. It’s FDIC insured and essentially puts your money at the lowest possible risk, which is what you want for an emergency fund.
Three months is sufficient, but whether or not $15,000 covers three months depends on your situation. Do you have a mortgage? How big is it? What about other debts and other bills? Will $5,000 a month be enough to make all of those payments for three months while keeping food on the table? For most Americans it is, but not for all.
Remember, an emergency fund is what you want to tap when things fall apart. You want that money to be as safe and secure as possible. Virtually any investment that earns a better return than money markets requires you to add risk to the equation, and risk is something you don’t want when it comes to your emergency fund.
Q6: Value of faster internet
Our town has a telephone cooperative that offers internet service. They offer a ton of different speeds and bundling packages.
My town is discontinuing dial up servie – they’ve had it for the last several years for $10/month – and so I have decided to sign up for one of the other speeds.
Is there any real value in signing up for anything faster than the slowest speed? I usually just go to a web page I want to read and it loads up pretty fast. I have images turned off so just the text comes up.
If you’re essentially just using text-only browsing to surf the web and aren’t using any other aspect of the internet, the lowest speed will be perfectly fine.
The advantage of higher speeds comes when you have several people using it at once or when you’re doing things like watching streaming video (like Netflix). If you’re the only user and never watch streaming videos, then there’s no benefit to the higher speeds.
However, your question might be whether or not there’s enough value in those things to pay for higher internet speeds. I can’t really answer that for you. I watch more online video than television these days, so I find it to be worthwhile.
Q7: When should I jump ship?
I am of the philosophy that my current job is a fundraiser for my dream job. I spend a few hours a day (probably 5 on average) working on building a side business of instructional Youtube videos. These videos are currently earning me $1,500 a month with an increase of about 5% per month. It has taken me years to get here and I’m very proud of things.
Anyway, my question is at what point I should consider jumping ship and doing this full time. Is there some sort of threshold I should consider?
I agree with you in terms of that philosophy. It’s a good one to have. If people had that philosophy and really applied it to their work, people wouldn’t find themselves in dangerous debt positions. Instead, they’d have a lot of money in the bank and the freedom and ability to follow their own path.
What you’re really wondering about here is what the threshold is for cutting off your biggest income stream so that you can focus on nurturing other ones. For me, it would depend on my dependents. How many people do you have relying on you? If it were just me, I’d feel okay jumping ship with a small emergency fund as soon as my other businesses were bringing in enough to cover my monthly expenses.
With a spouse and/or children, the equation changes a little. You’d want a very healthy emergency fund and also some breathing room in your reduced income before you jump if you have children that you are responsible for.
Q8: Alternative auto insurance options
My wife and I have always lived a fairly frugal life and through research usually seem to make the correct financial decisions (‘Usually’).
I am a car guy, so we have a couple antiques and three dependable daily drivers, all of which we carry insurance on which adds up to quite a bit of money.
The antiques are of less concern than the daily drivers because their insurance is very reasonable (full coverage for ‘$80 / six months’ each) which I buy only for the 6 month span between the summer and fall.
My biggest issue about my current insurance is that we have three daily drivers and we can only drive two at any given time. That means that the third is just sitting in the driveway and costing me money.
Are you familiar with any alternatives to the normal 6 month policy auto insurance? I did a quick search and found that there are quite a few companies offering ‘Pay as you go’ or ‘Pay as you drive’ but its hard for me to trust any of these without some feedback from other people that have actually used these types of insurance.
Some sort of ‘On Demand’ type of insurance is what I’m looking for. It seems like if I could find the right company there could be great potential savings by going this route.
If I were you, I would blatantly shop around at some of the larger insurance houses. The big ones, like Geico and Progressive, offer a ton of different policies and varieties.
If you’re looking for a nice list to start with, I’d try out this list from Forbes. It lists auto insurance companies in the order of most satisfied customers according to J.D. Power.
Explain your situation to each one and see if they offer a package that works well for you. I’d avoid the fly-by-night companies entirely. They’re not worth it.
Q9: Voting and personal finance
Like you, I live in Iowa. And probably like you, I am utterly sick of the flood of ads and telephone calls and door-to-door people due to this Senate race.
Here’s my problem. If I vote for the candidate that I think will be best for my financial state, I’ll be voting for a person I don’t trust and honestly don’t like. On the other hand, if I vote for the candidate I consider more trustworthy and more likable, I’m probably voting against my own economic interests.
Which one is more important?
My experience has been that the candidate who is better for my economic self-interest in the short term (say, five or ten years) is worse for my economic self-interest in the long term (more than ten years down the road). Over and over again, that seems to be the case. Given just those two options, I’ll always choose the one that protects my long-term economic interests. The person who just promises to drop my tax rate next year and doesn’t really have any long term ideas won’t get my vote – instead, I’ll just feel like they’re trying to buy my vote.
I generally vote based on social issues more than economic ones and I tend to vote for candidates that maximize individual freedoms, even if I don’t necessarily agree with those freedoms. I might not like the choices other people make, but if they’re not directly harmful to me or my family, they should be free to make those choices. I’m more likely to vote for a candidate that’s supportive of maximum individual freedom.
I will also never vote for a candidate that I genuinely don’t trust. The easiest way to make me not trust a candidate is when I see a negative ad bashing their opponent. The more negative ads I see bashing a candidate, the less I want to vote for their opponent. It makes me feel like they’re not proud of their own record or ideas and have to resort to telling me how horrible the opponent is. It’s even worse when the negative ads are criticizing very pointless or misleading things (which they often are).
I understand that there are a lot of different economic and social ideas and philosophies out there. I’m more likely to vote for a candidate that tells me what they truly believe and how they will vote even if I don’t agree with that candidate than a candidate who just airs negative ads about their opponent and fluffy positive ads about themselves that don’t say anything. I’m unlikely to vote for a candidate that doesn’t spend time in debates describing their own positions.
In other words, I vote for candidates from both major parties and sometimes from third parties, too. I hope that helps.
Q10: Great low cost board games
Do you have any suggestions for some great low cost board games? I am looking for games that cost less than $25 but are something fun for my family that goes beyond what’s on sale at Walmart.
What will click as a “fun” board game depends a lot on your family. I can only mention a few that have really clicked with us that are under $20.
Hanabi is a card game for two to five players that’s fully cooperative, meaning that you win or lose as a team. The big swerve here is that you hold your hand of cards outward, meaning that your fellow players can see them, but you cannot. You’re charged with giving each other very specific clues (mandated by the rules) about the cards in each other’s hand so that you play them to the table in the right order. The goal is for all players to play sets of five cards to the table in the right order (1 first, then 2, then 3, then 4, then 5) for each of the five colors in the game.
Forbidden Desert is a board game for two to four players where players are working together to find four pieces of their ship that are hidden on the board. However, the board is made up of tiles that all look the same and so you have to flip over tiles to get clues as to where the ship pieces are. To make things trickier, the tiles slide around during the game and other obstacles pop up. You have to really work together to find all of the pieces of the ship.
Coup is a simple card game for three to six players where everyone starts the game with two cards in their hand and take turns bluffing about what those cards are. Each card has a special power and on your turn you can claim you have any card you want in your hand (regardless of whether you have it or not). If no one challenges you, you get to use that power; if you do get challenged, you have to either remove one of your cards from the game (reducing your hand size) or reveal that card (in which case the challenger removes one of their cards from the game). It’s all about bluffing and plays very quickly.
All of these work well with a variety of player counts, each one is relatively short in terms of play length and not overly complex, and each are available for under $20.
Q11: Buying a diesel vehicle
Could you research whether buying a diesel vehicle and converting it to biodiesel or some other form of converted used oil makes financial sense over the long haul?
If you’re looking strictly at dollars and cents, biofuels don’t really add up unless you live in a state where reduced taxes on biofuels enables the price to be artificially low compared to traditional gasoline. In general, without tax incentives, biofuels tend to be higher than traditional fuels, but that may be different in your state.
Even given that, I wouldn’t trust it over the long term. Different politicians find their way into offices all the time. I would not make long-term decisions based on current taxes on a product with any controversy.
The big advantage of biodiesel and other such fuels is that they can be made locally, is less polluting, and comes from a renewable source. While that’s amazing, it doesn’t translate directly into savings for individual consumers at this point.
If you’re looking strictly at dollars and cents down the road, the best option will probably be a plug-in hybrid car or a fully electric car. It is far cheaper to charge up an electric car off of the electric grid.
Q12: Popcorn advice
Is there any need to get a popcorn popper? I always just use microwave popcorn bags or else I take some popcorn, toss it with a bit of oil, and then microwave it in a paper bag. My fiance swears that this is terrible and dry and that she always used a popcorn popper growing up. It seems like a waste to me…
Actually, it seems like a Christmas present to me. Give her a nice popcorn popper and some good popcorn and oil for Christmas.
I do think that microwaved popcorn turns out drier than popcorn from a traditional popper, but that may just be my own tastes. I do know that putting some oiled kernels into a paper bag works just fine, though.
This is one of those things that just works well as a gift. It’s completely inessential, but it is something that will be used and is desired.
Q13: Washing clothes inside out?
My mother used to swear that if you washed clothes inside out if they didn’t look dirty on the outside you could greatly extend their life. Is there any truth to that at all?
The biggest advantage to washing clothes inside out is that it helps dark colors to not fade as fast as they would otherwise. Most items are colored on the outside and, due to the rigors of washing, it’s the outside that gets bumped around the most and starts to fade first. Washing inside out slows that down.
However, this isn’t some kind of magic trick that will quadruple the life of your clothes. It might help a little, especially with darker items, but it won’t extend the life of your wardrobe by a hundred wearings either.
I will generally turn darker items inside out if I’m thinking about it (usually when I take them off when changing clothes), but I don’t make a big deal out of it.
Q14: Lifetime warranty troubles
I have always had a preference for buying things due to them having a lifetime warranty. Almost always, this pays off with a really well made item. My problem is this: most of these companies will accept returns of items many years later after they’ve been used a lot. Is this wrong to do? Let’s say I have a sweater with a lifetime warranty that I’ve worn literally hundreds of times and now it’s looking worn. Should I feel bad about tapping a lifetime warranty here?
When an item is purchased with a “lifetime guarantee” attached, I view it as though the cost of that guarantee is baked into the item. In other words, part of the price you paid exists to cover the cost of that guarantee.
That being said, if I use an item heavily over a lot of years and it wears out naturally, I just wouldn’t turn it in for a lifetime guarantee. That guarantee exists so that if a flaw pops up in the product at some point, they’ll replace it. Natural wear and tear is always going to cause an item to show wear over time. That’s normal use to me.
Many companies that offer such guarantees have pleasant customer service departments that will handle your return no matter what, but that doesn’t mean it’s good to return an item that’s worn down due to reasonable normal wear. By using the warranty in that way, you’re begging the manufacturer to consider changing their policy.
If you have a good sweater that has lasted for many many years and you have worn it many many times, that’s a good thing. You should reward that company with future purchases, not try to abuse it by stretching the “lifetime guarantee” as far as possible.
Q15: Baseball cards
As a family tradition, my parents give me a few packs of baseball cards each year. I have fun opening them and appreciating the design, but after that, I never know what to do with them. Suggestions? Preferably something that is better than just chucking them?
I often use things like that for decorative purposes.
Here’s a great example. One of my friends has a giant wall hanging in his office that shows a single Topps baseball card from the regular Topps set each year. He has a card in there for each year dating back to 1951. In his family, there’s a tradition of getting him a single pack of cards each year, so he chooses his favorite card from that pack and puts it in the frame.
Why not do something similar to honor that gift? Go back and track down a single card from each year and put them in a giant frame somewhere in your office. It can make for a great decoration and a great way to keep track of that tradition.
As for the rest of the cards? If they don’t have secondary value, you can chuck ’em without guilt, I think. Most of the joy of opening a pack of cards comes during the actual opening of the pack.
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.