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Creditwrench has just posted in the Credit repair discussions forum of CreditWrench under the title of The Simple Dollar.
This thread is located at http://www.creditwrench.com/consumers/showthread.php?t=3295
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Each Monday, The Simple Dollar 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 (http://www.thesimpledollar.com/category/reader-mailbag/).
As usual, we'll start things off with a few links to older articles that directly answer questions I've heard recently.
My thoughts on Dutchmen buying tulips in the year 1637 (http://www.thesimpledollar.com/2007/02/22/what-a-dutchman-buying-tulips-in-1637-has-to-do-with-your-finances-today/)
What's compound interest? (http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-1-getting-started-and-defining-compound-interest/)
What does compounded monthly mean? What's an APR and an APY? (http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-2-monthly-compound-interest-aprs-and-apys/)
And now for some great reader questions!
*We just bought a used chest freezer for $50 to help us stock up on refrigerated/frozen deals, meat and otherwise. Many of our friends have opted to buy a "freezer pack" of beef (for a family of our size, 1/4 of a cow, or about 100 lbs) from a local farmer. This guarantees getting local, organic, grass-fed beef, and a variety of cuts that will last us a year or more.
The catch: this 100 lbs of beef works out to about $4/lb- which is very expensive for the (albeit high-quality) ground beef in the pack, but a great deal on the steaks and other cuts. Under normal circumstances, we'd only buy ground beef, limit our meat consumption, and stretch what we do buy.
So, is it worth the price for high-quality, low-carbon-footprint meat? Or should we stick to filling the chest freezer with only meat on sale, regardless of the origin? *
- Joanna
If you're up to date on current food prices, the $4 a pound rate for top-grade ground beef isn't really that bad, either. You can get it for lower, but will you be able to get top grade ground beef for $4 six months down the road? I'm not sure.
The real question is whether or not this purchase raises your overall food budget and food quality, and that's one that I can't tell from this question. If you typically did not consume higher-end cuts of beef (steaks, et. al.), it's quite possible that this did raise your overall food budget. However, if a prime steak is substantially healthier than what you were eating before (like preservative-laden box meals, for example), especially since it's grass-fed beef.
One concern, though, is the rate of consumption. If it will take you a year to get through it, some of the meat near the end may be getting old from the time in the freezer - the taste may be a bit off. Eat the prime cuts earlier and save the roasts and other lower-quality cuts for later.
*How does your audience look like - States vs the rest of the world?*
- Nefertete
Approximately 80% of the site's visitors come from the United States, with roughly another 7% coming from Canada. The other 13% is distributed all over the place.
It's worth nothing, though, that those percentages represent fairly large numbers. For example, my non-US audience adds up to about 120,000 visitors per month, so there are a lot of non-US readers out there.
*My company is expecting to merge with another company in the next few months and as a part of the merger, we employees will be issued stock equity in the new company upon closing of the merger. The newly issued stock can be held or immediately sold. Since I'm relatively young and have never really held any equity, especially under these circumstances, I wonder what you suggest. My industry is a relatively volatile one and the company's stock price can fluctuate fairly wildly within even just a few months, so it's hard to project where it will be at any time in the future. Also, my industry is facing potential bankruptcies of several of our competitors within 1-2 years unless the market dramatically changes.
So, long story short, what would you recommend I do with my soon-to-be acquired equity in my company? Sell it immediately and pay off debt? Keep it as a "nest egg"? Something in-between, more likely?*
- Derek
It comes down to one thing: do you believe in the merger? Is this just a merger of two flailing companies who will flail together, or is one or both of the companies bringing something compelling to the table?
As someone working inside the doors, you should have something of a grasp on this. If you don't, start asking a lot of questions around the office and see what sort of feel you can get for the merger.
If you don't believe in the merger, sell. Dump most if not all of the stock. If you do believe in the merger, don't sell - hold onto the stock until you have genuine need for the money. No matter what, though, your stock investments should be diversified. If you look at all of the investments you hold and more than 20% of those investments are in the merged company, trade away from it until it's down to
*I really enjoy hearing about your marriage. As a single woman in my 30's, I'd like to find a partner that is able to think about things and who is able to communicate as well as you do. It's hard to know from what I've read if you and your wife have always had this kind of relationship, or if it's something you've developed and cultivated. I'd love to hear your ideas about singles meeting and dating and talking about life goals - without being overly creepy.*
- Mary
I really believe the best way to find potential singles is to get involved with social opportunities connected to things that deeply and personally interest you. If you're passionate about something, get involved with it and see what happens. You'll become exposed to people who are also passionate about that very thing.
If I were you, I'd sit down and think about your true interests. What things fill you with the most personal joy? That's your starting point, right there. Follow that interest and you will find some like-minded people.
For me, at least, most of the "singles"-type places were a waste of time. Everyone was there trying to find their "match" and in their rush were overlooking interesting people.
*You mentioned that you did computer repair as a way to generate some additional income. Do you have any resources that you could recommend on doing computer repair as a side business? I have two sons who are on the Autism Spectrum, and a large part of our income goes towards their needs. On top of that, we have medical bills and such that we need to pay down. Fortunately, we have no credit card debt, but we just recently had to take out a car loan (though we were able to make a large down payment). I would really like to do something to make some extra money, but am at a loss on how to get started.*
- Kris
All I did was hang up some flyers around town (the post office, city hall) with some number tags, stating that I'd help people with computer repairs, tune-ups, and figuring out what computer was right for them. I also tapped my social network, sending out some emails to local people I knew.
That's really all it took. I spent a lot of time on customer service, talking to people and answering some simple questions on the phone for free. Before long, I had a pretty wide network of people who'd call me up to have me look at their computer or help them pick out a new one. It was pretty steady, except I usually got a business burst close to Christmas and often the two or three days after Christmas.
Most of the questions I dealt with were extremely easy - things like plugging in monitors or making sure power was going to the computer or simply de-installing crummy software.
*My question is where can I find a reliable emergency radio that does not depend on electricity?*
- Glenda
I've seen several models, but the one I was most impressed with was the American Red Cross FR150 (http://www.amazon.com/gp/product/B0014SWPO6?tag=onejourney-20). It's an AM/FM/weather radio with a flashlight and a cell phone charger that operates on solar power and a hand crank. It's got a small footprint (it's about the size of a dollar bill and about an inch and a half thick) and it doesn't take much winding time to get the radio or light working (about a minute of good cranking gets you about thirty minutes of radio).
Just put it on a sunny windowsill somewhere in your house and it'll be good to go whenever you need it.
*How can I bring myself to let go of saved money??
I have about $5,000 in CC debt (nothing extravagant, accumulated living expenses while I searched for a job) and about $3500 saved up…but I can't bring myself to take large chunks of saved money to pay off my debt! I'm worried that the second I send like $1500 to the CC company, I will have some emergency and need the money.
I'm super cheap already, so parting with money is always difficult, but I'd really like advice on how to pay off the debt and feel comfortable about it.*
- Dee
If you feel comfortable with your emergency fund now, but the thought of getting rid of some of it for a non-emergency purpose makes you nervous, don't spend it. Seriously. The point of an emergency fund is not only to help you take care of emergencies, but also to make you sleep better at night, not having to worry about how you'll handle some unforeseen emergency.
Alternately, you could be expressing a general problem you have with saving money, in that you are psychologically fixated on saving more and more. If this is the case, you should start thinking about your real goals in life - what are you saving this money for? What kind of life do you wish to lead? One of my closest friends saves the majority of his income, but he's doing so so that he can basically walk out the door at age 40 and do whatever he pleases.
*You often mention that everyone should strive for continued self-improvement, something I think as well. However, can't this lead to people thinking they're never good enough? At what point to you say "I'm happy with the way I am?"*
- John
I think it's psychologically healthy and normal to be happy with they way you are right now - if you're not, you've either got a very specific problem that you should bear down on right now or you should seek professional assistance to help you through your situation.
Being happy with the way you are, however, doesn't mean there's no room for improvement. I'm happy with the way I am, but I'd like to lose weight and become more well-read in some certain areas. To do this, I set some personal goals for myself. I don't feel bad about where I am now, but I know that there are always things I can be doing to improve my situation.
*I don't want to ever retire. Retirement sounds really boring - I want to be doing stuff until I die. What should my investment plan look like?*
- Joe
Just because you're not going to retire doesn't mean you shouldn't take advantage of the tax sheltering made available by retirement plans, particularly a Roth IRA. A Roth IRA allows you to make tax free withdrawals at any time up to your total contribution, and when you turn 59 1/2, you can withdraw the investment earnings tax-free as well. I'd definitely use a Roth IRA for part of it simply for the tax benefits.
Since you never plan to actually retire, you should spend some time figuring out what your long term goals really are. Do you want to be self-employed? Do you want to start your own business? Or are you just pretty happy where you are right now and you just want to save so you can do interesting traveling when you're older or follow up on other interests?
The real question is how far down the road are these goals, and what sort of dollar amount will you need? The further down the road they are, the more risky your investments can be - you should be putting most of your money into a stock index fund if the goals are more than ten years down the road. If things are closer, keep money in bonds, treasury notes, or even just in cash in a savings account - this is so you don't lose any money (but you won't have the potential for big gains, either).
*My brother is working for a political campaign for a state senator running for the House of Representatives. The candidate is likely going to lose the race, but my brother absolutely BELIEVES victory is going to happen and that he's going to get a nice job working for that guy. How do I clue him into reality?*
- Will
I don't think you need to "clue" your brother "into reality." Most likely, if he's a paid staffer for a House campaign, he's probably strongly committed to a life in politics and is building up a network of connections as we speak. No matter what happens from this campaign, he'll likely be able to move on to some sort of position, perhaps with a PAC or maybe with a lobbying firm, or maybe even in the office of another politician if his candidate is putting in some good words for him.
Your brother, especially if he's young, is doing the right thing for his career right now. He's building the lifelong contacts he'll need for a long career in politics. If he's skilled enough to be a paid staffer for a Congressional campaign, I'm pretty sure he'll find some worthwhile work even if his candidate loses.
*Got any questions?* Ask them in the comments and I'll use them in future mailbags.
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