The Simple Dollar
While thrift stores and secondhand stores are my first line of defense when it comes to new clothes, I don’t always find what I need there. I’m very tall with a long upper torso, which means that a lot of shirts just don’t fit me well. They’re either cut for someone who weighs a lot more than I do or they simply aren’t long enough to the point that they reveal my lower back when I’m just standing normally. Neither of these things are really acceptable, so I have to be fairly careful when buying clothes.
There are similar sizing issues for our children. They each have my relatively long torso, which means that children’s sizes sometimes fit them well and sometimes do not. As is the case with me, we have to be a little selective in the clothes we buy them lest they look comically baggy or too short.
If we’ve had a dry run with Goodwill and other highly discounted secondhand shops, we’ll often move up to the next level, which is a little more expensive but adds a lot of options: consignment shops and outlet stores. We use consignment shops and outlet stores primarily as a follow up to stores like Goodwill. In general, prices are higher at consignment and outlet stores than at Goodwill, but it’s easier to find items that match what you’re looking for.
Let’s clarify what exactly we’re talking about here first. Outlet stores typically are an outlet for a particular clothing factory or clothing brand. Usually (and I’ll discuss this more below), they sell slightly flawed versions of normal items – something isn’t stitched right, something has a minor flaw, something has a hole, or something else like that. Because of that flaw, they can’t sell it at normal price, but the flaw isn’t bad enough to make it unusable, and that’s what an outlet store is for. They’ll sell items with minor flaws that are otherwise normal for a discount price.
Consignment shops are typically where high-quality used items are sold on a per-item basis. Usually, someone has a nice wardrobe, takes it to a consignment shop, and the consignment shop picks which items they think will sell. The sale price of the item is split between the shop and the person who contributed the item.
Here are a few tips.
For starters, some outlet stores have the same prices as normal stores – they just put the word “outlet” on the sign to get customers in the door. Sarah and I experienced this firsthand very recently when we visited an outlet center only to discover that most of the stores in the outlet center were barely discounting their prices and seemed to be selling the usual things that would be sold in one of that brand’s normal stores.
Don’t simply trust that a store has bargains just because it says “outlet” on the window. Come equipped with a sense of what the items should actually cost (and don’t be afraid to use any mobile devices you might have to check). If the prices aren’t a bargain, don’t buy.
Consignment shops are generally a good place to look for nicer, dressier clothes. My general experience has been that consignment stores generally don’t bother with items that aren’t pretty nice, though the policies tend to vary from consignment shop to consignment shop. I’ll utilize these as part of my search if I’m looking for nicer clothes for special occasions, but for ordinary wear, I rarely find good items in consignment shops.
In other words, if you’re trying to find a good price on a great dress or a suit, a consignment shop that sells clothing would be a good place to look for a bargain, though, as I mentioned above, consignment policies do vary.
As always, be selective. Just because something is on sale or has a really low price does not mean you have to buy it. Never shop for clothes unless you have a genuine need for clothes or see that need coming in the near future.
For us, consignment shops and true outlet stores are a great place to look for clothes if other resources (clothes swaps, Goodwill, and so on) don’t pan out. The prices are still usually very good for what you find and you’ll often come home with some quality items.
This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere.
One of my best resources for finding new clothes comes from going to the nicest neighborhoods in a metro area (in my case, usually Des Moines) and finding the nearest Goodwill or other secondhand clothing shop. That’s where I begin almost all of my clothes shopping.
Why do it this way? Simply put, people in nice neighborhoods seem to be far more likely to get rid of items for very minor reasons than people in other areas, and like most of us, they’ll simply find the closest place to drop those items. Thrift shops and secondhand shops in upscale neighborhoods are the beneficiaries of this, and they’re often loaded with wonderful items.
Here are some tactics for getting the most out of these stores.
First, do some scouting. If you go to the Goodwill closest to the nicest neighborhood in your area and it doesn’t suit you, it does not mean this entire idea doesn’t work. Thrift stores and secondhand stores often operate on widely varying policies.
Start with that store in the relatively ideal location, but cast your net a bit wider. Look at all of the thrift shops near (or within) most of the nicer neighborhoods in your area.
What are you looking for? You’re looking for good quality and low prices. Finding a thrift shop or a secondhand store with a great balance of the two is well worth your time and effort, because it will be something you can draw on for a long time.
Second, widen your vision a little. Don’t completely disregard a secondhand shop because they don’t have the perfect item on the shelves at that moment. The wares at a good secondhand shop or thrift store rotate surprisingly quickly.
Instead, look for items that are close to what you’re looking for. Are there items in your size that you might not necessarily pick? Are there items in sizes close to yours that you might otherwise buy? Are there other items of interest in the store? Are these items priced reasonably considering they’re from a secondhand store or a thrift store?
These are indicators of the potential of the store to have items that you’d like to buy in the future, which I consider to be more important than items I want to buy right now. I’m more likely to go back to a store that has 50 items that are close to what I want than a store with two perfect items and nothing else.
A final tip: do this with a friend. Usually, social shopping is a bad thing, as people tend to talk each other into purchases. However, I’ve found the opposite effect is true when going thrift shopping.
For starters, if I have a friend that’s excited enough about thrift shopping to spend hours jumping into various thrift stores and secondhand stores with me, they’re not going to be the type that spends money recklessly. That person is going to be at least as conservative with their dollars as I am, which is just who I want to shop with.
Given that, the shopping companion would also make a strong second pair of eyes, helping you to see stuff that you might not otherwise notice. This is incredibly valuable when scouting stores, as every set of eyes helps.
Not only that, doing this with a friend makes it a social occasion (and a rather fun one) instead of just a shopping trip. A friend that is willing to pack some sandwiches and spend the day hitting thrift shops with you is going to be a pretty good person to hang out with.
There are fantastic deals all around. All you have to do is find them.
This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere.
For the last twenty months or so, I’ve been switching back and forth between a vegan and vegetarian diet for health reasons (also occasionally eating fish). Sarah has more or less adopted the same diet, although we do often make vegetarian and non-vegetarian variations of the same meal.
The result of all this is produce – lots of produce. Before switching diets, we already ate a lot of fresh vegetables and fruits, but the dietary change has taken things to a whole new level. Fresh fruits and vegetables are now the largest part of our diet, and with that we’ve had to really focus on techniques for minimizing cost and maximizing value when it comes to produce.
As I sat down to write this article, I started off with a long list of specific tips before eventually realizing that many of them boiled down to variations on the exact same tactic. In the end, I found six useful and flexible tactics that we use constantly to trim our produce budget.
It’s worth noting that many of these tactics work well with other food items. Although our focus is on fresh fruits and vegetables, quite a few of the ideas carry over to meats, canned goods, frozen goods, and other items you’ll find in your local grocery store.
1. During much of the year, we let the produce sales lead our purchases and our meal plans (often resulting in food experimentation).
More than ever, we let the fruits and vegetables completely lead our meal planning. If there’s a big sale on Brussels sprouts at the store, then we’re going to be experimenting with Brussels sprouts. If we’re able to find a great bargain on green bell peppers, then we’re going to be eating meals involving green bell peppers in the near future.
In order to pull this off, a couple of things have to be in place. First of all, we need to have a general sense of what kinds of things one can do with a particular vegetable. What can you do with a Brussels sprout besides merely steam it? It turns out that there are quite a few things one can do with it, and the more things you know (or can easily find), the more sense it makes to really stock up on that produce sale.
Much of that knowledge comes from experimenting and from reading, both in cookbooks and on the internet. In the kitchen, I really prefer to have a cookbook around because it’s usually very convenient for the food research process as well as for cooking, as you can bookmark it and leave it open while cooking and you don’t have to panic if you splatter a bit of sauce on a page.
Thus, we often snag cookbooks at garage sales and other discounted places, and I often receive them as gifts, too.
So, we’ve looked at the grocery flyer and we know what produce is on sale this week. We have some ideas about how most of the sale items can be used. The next step is to put together a meal plan.
This is usually pretty straightforward. We look ahead at our calendar for the coming week and identify which weeknights will allow us to cook something that might take a while, which nights need a quick meal, and which nights are going to rely on a crock pot. Then, we just start penciling in meal ideas into those boxes. We might have something like eggplant parmesan one night when we can cook slowly, a pasta meal when we need something faster, and perhaps a rice-and-beans-and-okra meal in the slow cooker on one of the other nights.
It all relies on what’s on sale. That’s what pushes the meals we select.
From this meal plan, we develop a grocery list. We just identify the items we need (beyond the on-sale produce item and the other items we already have on hand) to make the meals we’ve selected. This usually involves a bit of pantry digging, but a solid grocery list can come together within half an hour of sitting down with a store flyer.
2. If we see an amazing deal, we freeze or can the excess.
Every once in a while, we’ll stumble across a deal that’s just simply amazing. A friend will give us twenty pounds of sweet corn. We’ll find some roadside stand selling tomatoes at ten cents a pound just to get rid of his excess before they rot. Some grocery store will offer up an amazing loss leader just to get customers into the store.
If we find a deal like this, we’ll go far beyond what we could consume before the vegetables or fruits go bad. We’ll find ways to store it, which often means freezing or canning the items.
For example, if I have twenty pounds of sweet corn, I’m likely to save a few dozen ears for eating immediately, then I’ll take the rest, shuck them, cut the kernels straight from the cob, and put them in freezer containers measuring about two cups apiece. These containers will make for wonderful additions to soups and stews in the fall and winter as well as potential side dishes and ingredients in other things.
There’s usually at least one very good technique for preserving each type of fruit or vegetable. Tomatoes, for example, can easily be frozen whole (soak them in water for a while, then freeze them on a cookie sheet and you’ll wind up with very firm frozen tomatoes which thaw wonderfully) or canned in a variety of ways. Some beans are usually best left to dry and stored in your pantry, while others can be canned or frozen. The National Center for Home Food Preservation has a ton of tips, from techniques to specific ideas for specific produce types.
3. Fresh produce isn’t just bought at the store.
As I hinted at above, the local grocery store is just one source for fresh produce. There are many ways to get fresh vegetables and fruits into your kitchen.
Roadside stands These tend to populate the roads all over around here when it gets late in the summer or into the early fall. Prices will vary, mostly depending on how urgently the person needs to sell the items. Sometimes, you’ll find a really great deal; often, it’s just a bit lower than the prices at the store. If you find something great, take the items home, then plan the meals for the next week around them.
Farmers markets These tend to vary greatly, too, in terms of prices and what’s available. I tend to have a lot of luck going near the end of the farmers market, where someone needs to offload most of their remaining stock and is dropping the price rapidly.
Friends We have quite a few friends and family members who are avid gardeners. We informally swap fresh items with them, often in a “gift” method. If they have an abundance of tomatoes, for example, we might find a bunch of tomatoes on our front step.
Co-ops If you’re really willing to be flexible, a farmer’s co-op can be a great deal. In our area, most co-ops revolve around getting a box of whatever the farm is producing that week. Over the course of a year, the sheer weight of this ends up being a pretty strong deal per pound, but it’s unpredictable, both in terms of the exact poundage you’ll wind up with and the exact items you’ll get. Our neighbors are members of a co-op and they often wind up with more than they can eat and sometimes with items they’re unsure about.
And then there’s the big one…
4. We plan our garden to offer a lengthy harvest.
Yes, we have our own garden.
We plant lots of different things in our garden, but we usually stick to beans, tomatoes, and cucumbers because they’re fairly hardy while growing and there are a lot of things you can do with them in the kitchen. We’ve also planted onions, broccoli, sweet corn, peppers, strawberries, and many different herbs over the years (and many other things that I’ve mostly forgotten about).
One key with our garden is that we try to stagger the plantings based on the expected harvest time. For example, let’s say we have access to two different kinds of tomato starts, one that will produce tomatoes in 70 days and one that will produce in 90 days. We might plant two or three of each of them, then wait ten days and plant two or three of each kind again. That means we’d have production from a few plants in 70 days, a few in 80 days (the 70 day plants plus ten more days), a few in 90 days, and a few in 100 days. That spreads out our tomato production, meaning we’re not dealing with a flood of them at once.
It takes a bit of planning, and it’s definitely not an exact science. With some luck, though, we’ll find ourselves spreading our harvest out over three or so months (late July to late October, usually) without having too much of a food flood all at once.
We do still wind up with extras, which we freeze or can, but we’re not stuck with a garage full of vegetables that have to be dealt with. A small batch can easily be handled in an hour or two. Fifty pounds of vegetables is a major project and often results in mass giveaways.
If you’re thinking of starting your own garden, here are some tips for starting a garden inexpensively.
5. What do we do with items that are getting late in their life cycle? We make vegetable soup!
Even with this type of planning, we still often wind up with vegetables and fruits that are unused. We’ll buy three peppers and use two in a recipe, or we’ll have a few too many tomatoes from the garden – you get the idea. They stay in the crisper or on the table until they’re just starting to get old.
What we often do at that point is chop them up a bit, toss them into a large freezer container, and then wait until that freezer container is mostly full, then we just make a big pot of vegetable soup. We boil some water (or stock – see the next item), dump in all of those frozen vegetables, add a bit of salt and some spices, and let it cook slowly.
Because of the variety of vegetables, each batch winds up a bit different than the others. There will be one or two vegetables that contribute a strong flavor, while others fade into the background. Almost always, though, it’s delicious.
Another option if you don’t like the soup route is to simply make ratatouille with it. I love making ratatouille, as it’s just loaded with flavor. Ratatouille is quite easy, except that if you’re freezing various leftover vegetables, you do need to keep them all separate until you make it. What you’re going to do (roughly) is add your vegetables in order of toughness to a warm skillet with some heated olive oil until everything is tender. Here’s a good guideline for many common summer vegetables; a quick Googling will find other vegetables.
6. What do we do with scraps and other items still left unused? We make stock, and then make compost!
Even after this, you’ll often still find yourself with a few leftovers. You’ll chop up a vegetable and find yourself with some edible-but-not-quite-perfect pieces left over along with some pieces that you wouldn’t want to eat. You’ll find some vegetables in the back of your freezer that have a bit of “freezer burn” to them.
Even those things don’t have to go to waste.
If the items are at least edible, we usually just turn them into a batch of vegetable stock. In our freezer, we have a container for leftover vegetable pieces – discarded bits of a tomato, a few extra spinach leaves, an unused portion of kale, and so on. These are things that could be eaten, but are fairly marginal.
When our container is full, we just put all of the vegetable scraps into a slow cooker, fill it most of the way up with water, and turn it on low for the day (often with just a dash of salt and ground black pepper).
At the end of the day, the water has transformed into delicious vegetable stock, a liquid that will make almost any dish better and will make soups absolutely amazing. We just strain out the remaining vegetable pieces and save the liquid in small portions (one or two cups).
What about the pieces we’ve strained? What about the inedible pieces? Those end up helping our garden next year via the composter.
Behind our house, we have a barrel composter. Into that composter goes the really bad vegetable scraps, some yard waste, and a few other odds and ends (coffee grounds, for example). We keep it damp and rotate the barrel once a week or so.
In the spring (and sometimes in the fall), we empty out that composter and spread the dark organic material all over our garden. It’s an amazing natural fertilizer and it keeps the soil rich in our garden. This helps the plants to grow like wildfire the following growing season.
As a convenience, we do keep a small lidded pot on our kitchen counter, where we keep scraps over the short term. We usually fill this container, then take it out to the composter once every few days or so. That way, we’re not running to the compost bin multiple times a day.
And so the cycle continues. All along the way, we’re using tactics to reduce the cost of our food budget, from the seeds in our garden to the vegetables on our plate on to the scraps we’re about to throw out and back around again. These tactics keep our food budget under control and ensure that we always have fresh and delicious things to eat.
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. Renting or selling land
2. My religion
3. College cash and investing
4. Transportation dilemma
5. Drawbacks of ebooks
6. Retirement and student loans
7. Walking away?
8. Garden vegetable choices
9. Roth 401(k) and Roth IRA?
10. Alternate oil choices in playdough
The main floor of our home has a large number of trays spread about, each full of seedlings.
Little green tips are just starting to peek through the surface here and there. Before too long, they’ll be ready to transplant outside.
These are the first steps toward a bountiful harvest later this summer.
Q1: Renting or selling land
My parents recently inherited 137 acres (total) of farmland from their parents, who died this past year. 100 of that 137 is tied up in a trust with other siblings, so I’m going to focus on the 37 here. My mother wants to sell her 37 acres so she can pay off her debt and finally be debt-free. I definitely support her desire to be debt-free. However, I feel that it is going to be financially more beneficial for her to keep ownership of the land and rent it out via cash rent.
In Iowa right now, land is renting for between $300-400/acre per month and selling at a minimum of $6,000/acre. I’m not exactly sure how the income tax works on rented vs. sold land, but here is the way I’m calculating the profits:
Renting 37 acres every year: 37 x 300 (monthly rent) = 11,100 x 12 (per year) = $133, 200 per year of income on the owned land, before income and property taxes
Selling 37 acres of land: 37 x 6000 (assuming the lowest value) = $222,000 total before income taxes
Now, after doing the math, the right path seems obvious to me. In two years, my mother would earn in cash rent what she had made if she sold the land. Is there anything I’m missing? I want to be able to show her this so she understands that it is much more beneficial to her in the long run to keep renting the land. But I want to make sure I’m understanding this correctly before I go to her with any of this information. Would you consult a lawyer and accountant in this case as well to determine what is the most financially beneficial route? My gut instinct is to never sell the land as the income will not only benefit my mother for the rest of her life, but then benefit me and my children for years to come.
Since I live in Iowa and am friends with and related to quite a few farmers, I will say that the value of farmland is mostly pegged to the value of a bushel of corn and/or a bushel of soybeans – or at least the expected value of a bushel over the next year or two. Land values are also being buoyed by very low interest rates, meaning farmers can borrow money to pay for the land with very little interest attached.
I will certainly say that if a bushel of corn drops by 50%, you’ll not be able to find a farmer willing to rent land at $300 per acre, and the price for selling that acre will drop significantly, too. The same is true if interest rates start to rise.
The real question here is what will grain prices do and what will interest rates do? If grain prices stay high and interest rates stay low, the best thing to do is to rent, as you’ll make more money that way. If grain prices drop and/or interest rates rise, then you would have been better off selling and locking in those high values, as farmers will be unable to pay very much per month per acre to rent.
My personal gut feeling is that your mother should sell the land and eliminate her debts. A lot of factors are working against her if she holds onto the land – the interest rate on her debts, the future of corn and soybean prices, and the future of bank interest rates.
If you need some further guidance, I’d suggest talking to a lawyer in Iowa that specializes in farmland and farm inheritance, as that person should be able to guide you.
Religion is something I enjoy studying and find deeply fascinating. My personal spirituality is something I struggle with greatly. I am constantly asking questions and trying to dig down and find answers, and often that just ends up being a cycle.
I call myself a Christian. I participate in a Lutheran (ELCA) church that’s pretty friendly and open. My wife often jokes that our church is mostly a big collection of Americans of Scandinavian descent who like to have potlucks (the NPR show A Prairie Home Companion can be eerily accurate at times). My children go to the Sunday school there, which is mostly a telling of a Bible story, followed by an art project and cookies. I’d pull my kids out of there immediately if I felt like they were being indoctrinated or forced into anything. My children ask a lot of questions and I answer them as best I can, but if they don’t end up being Christians, I don’t feel as though I failed them as long as they’ve followed their own spiritual journey and thought about the issues at hand.
While I have some things I hold to be true for myself, I don’t feel the need to evangelize to others because I feel that people are best served coming to their own answers about issues of faith, even if those answers end up being different than mine. If someone asks me privately about specific issues, I’ll answer, but I don’t think there’s anything wrong at all about having a different perspective than I have.
One of my greatest wishes for the world would be that everyone in it would wake up tomorrow and think, “It’s fine that other people think differently about God and about faith than I do. Let’s sit down over dinner and have a nice non-confrontational chat about it. At the very least, I’ll learn something new.”
Q3: College cash and investing
I am senior in college and in need of some suggestions. I am not sure what I should do with additional cash that I have from working at during my studies at college. Should I open up a high yield savings account or CD’s, or traditional or Roth IRA? I will not need the money for a few years.
If you’re going to use that money before retirement and want to have access to the money you’ve earned while it was saved or invested, then I wouldn’t consider a Roth IRA or a traditional IRA. Those both work best when you’re saving specifically for retirement.
Right now, a CD won’t earn you significantly more than you’d earn in a savings account due to the depressed interest rates. Of course, a savings account won’t earn you much, either. The advantage both have is that they’re insured by the FDIC, which means you’re not going to lose money on them. If you were to choose to invest your money in stocks or something via a brokerage account, you’re going to take on risk and a decent chance of loss, especially over a short period like a few years.
What this really comes down to is goals. What do you hope to do with that money? Are you going to graduate in May? Do you have a job? If you’re about to graduate and don’t have a job, I’d keep the money in a savings account because you may really need it soon. If you have a job locked up and are looking further down the road at things like a house or a car, I would consider putting some of it in a shorter term CD, but I wouldn’t lock up all of it (you still need an emergency fund, after all). If it’s truly for retirement, I’d probably put it in a Roth IRA. If it’s for starting your own business in fifteen years, I’d look at a brokerage account of some kind and invest it in stocks outside of an IRA.
It’s all about your goals, because your goals tell you how much risk you can tolerate and how liquid you need that money to be.
Q4: Transportation dilemma
I’m 27, have no cc debt, own a car that is fully paid off, and have about 50k in student loans (10k of which is at 6.55%, the rest is around 3%). I have about 10k in savings and 30k split between a Roth IRA and 401k. I currently live in southern CA, but my boyfriend and I are moving to DC (where I grew up) to be with family and friends. My parents have generously offered to let me live rent-free with them in order to expedite paying off my student loans, which is my biggest priority right now. My bf is going to rent an apartment nearby.
My boyfriend and I plan to drive his car across county to DC. The question is what to do with my car. I own a 2006 Mitsubishi eclipse. It has about 70,000 miles on it and needs a new timing belt, but other than that is in great condition. Its blue book value is around 9k (assuming I put in a new timing belt). I do not anticipate finding a job that will pay my relocation expenses and have estimated that it will cost $1,500 to have my car transported back home. I don’t think I could make the drive back in my car to DC on my own, so that is not an option.
I find myself torn on what to do! In scenario 1) I keep my car, pay $1,500 to transport it and run the car into the ground, as it is fully paid off. I hesitate about this decision as I feel like I’m outgrowing this car and am looking to have a car that has more space and could possible carry children in the not too distant future. Plus does it make sense to pay that much money to transport a car with a low value to it already?
In scenario 2) I sell the car and then buy another used car in DC. I’d want something reliable as the weather and traffic in DC isn’t easy to navigate and am thinking of using some of my savings to purchase something used around 12k or so. But then I also feel like this is delaying me from reaching my main object – paying off my student loans!
In scenario 3) I sell the car and then use public transportation. DC has a pretty good public transportation system so I was leaning toward option #3. My parents home (where I will be living) is about a mile from the metro and is fairly near bus stops. I was considering selling my car and attempting to see if I could just take the metro to work. When I mentioned this to my parents, they seemed to think I was absolutely nuts. They have never not had a car and my mom gets lost easily on the metro – so I think that could be part of their bias. But with that said, if I do sell my car and attempt to use the metro, I could very easily see them offering to drive me places rather than let me use the metro. They can be very giving and I don’t want to burden them, just because I am being frugal.
So any thoughts on my current predicament?
If you have a strong sense of the availability of public transportation, I would lean toward option #3 as well. DC does have great public transportation (I’ve used it myself during an earlier stage in my career) and if there’s an easy way to get from your place of residence to the public transportation system, that’s pretty close to a dealmaker.
If you’re making the case to your parents, suggest that by selling the car you could immediately pay off the higher interest loan (or close to it), plus you’d no longer be paying insurance or fuel for upkeep so you’d have more to channel toward your debts.
If your mother is stressed about using the metro, I would show her exactly how you get to and from work when you have employment secured. Turn it from navigating a bunch of routes to a simple matter of “go to the bus stop, wait for bus X, ride bus X to the train station, get on train Y, get off at this stop, and you’re right by my work!”
Q5: Drawbacks of ebooks
What are the bad aspects of having a Kindle? I know you and Sarah each have one and I’ve read so many positives. What are the negatives?
There are simply some physical features of a book that a Kindle (or other e-reader) makes very difficult.
For example, if I’m using a book for reference, I often litter it with bookmarks. While bookmarking does exist on a Kindle, it’s not nearly as intuitive as it is for a paper book.
Another issue is when a book is trying to teach a technique. The layout of a printed page has a lot of flexibility when it comes to picture arrangement, for example, and an e-reader just doesn’t have that.
Of course, you could get many of these features on a tablet, but the actual experience of reading on a tablet is pretty hard on the eyes after a while. My eyes get blurry pretty quickly if I read a significant amount on a backlit screen.
My solution is to use a Kindle for a lot of my reading, but stick with real books for things like cookbooks and other reference books.
Q6: Retirement and student loans
My wife and I will be starting our medical residencies starting in July. We will be earning about $100,000 combined for the next three years. This will be both of our first jobs, and we have no credit card or vehicle debt, but about $300,000 in student loans combined (most at 6.8%, a much smaller amount at 3.6% and 8.0%). We would like to contribute about $5000 per year each to our retirement funds. Our hospitals offer 403(b) accounts without any matching. We are wondering whether we should (1) put our retirement savings in the 403(b) and use the savings from the deferred taxes towards our school loans or (2) put the retirement savings in a Roth IRA for the tax advantage when we are retired.
If I were in your shoes, I would make absolutely sure that I was hitting my retirement targets before worrying about extra payments on those student loans.
Sit down with a good retirement calculator, like this one, and put in some numbers. Talk with your wife as you’re doing this and make sure you’re on the same page when it comes to your retirement goals. Eventually, you should be able to come up with an idea of what you ought to be saving each year.
So, what should you use? The usual recommended method is to invest in a 401(k)/403(b) up to the employer match limit (which for you is $0), then max out a Roth IRA, then put the rest into the 401(k)/403(b). This accomplishes a lot of good things – diversification for tax purposes and maximization of “free” matching money chief among them. You’ll need to keep an eye on income limitations on the Roth if you do this, because the income limitations are lower if you’re using your plan at work.
Once you’re saving properly for retirement, see what you have left over for paying off those student loans.
By saving for retirement now, you’re significantly reducing the amount you’ll have to save for retirement each month throughout your career. If you wait ten years, the amount you’ll need to save each month to reach your goals will skyrocket.
The only time you should cut back on the retirement savings is if it begins to look like you’re not going to be able to make minimum payments on your student loans or collateralized debts. Given your income, this shouldn’t be a problem.
Q7: Walking away?
Got myself into a little bit of a pickle during the housing boom/crash. Bought a newly built house for $145,000 in 2004. Then over the course of the next 2.5 years, I refinanced 3 times, taking advantage of some “pocket cash” opportunities. My employer filed for bankruptcy in June 2010 and cut my pay by 22%, none of which has yet been restored. I’m using maxxed out credit cards to help make ends meet for now. So I’m stuck in a home I for which I owe $192,000 and which has a value (according to zillow.com) of $71,400. I have a first and second mortgage, with payments adding up to $1,557 monthly. So, basically, I’m a prisoner in this home. It’s close to my work, and it’s big enough for my needs. I have a 15-yr-old and a 13-yr-old living at home with me as a 48-yr-old single dad. I live in AZ, meaning I can “strategically default” and only be held accountable for the total of the second mortgage, which is around $16K. I’d walk away in a heartbeat if not for the damage to my credit score. My question is this: would I be smarter to just stop paying the 1st and apply the whole $1557/month toward the second, and plan to do a short sale later in the process when I’ve paid a big chunk on the second? I know my credit score would dip into the 400s, but can I realistically expect to come out ahead on this mortgage by riding out the insanely huge underwater amount? I’m torn and conflicted. Any advice would be appreciated.
The first thing I’d do is understand fully how the Arizona “strategic default” rules work. The right step here is to contact an Arizona property lawyer, since it seems as though the specifics of the laws regarding this have been changing steadily over the last few years due to court decisions.
What I’d suggest you think about in the interim is how important your credit rating is to you over the next several years. Are you going to need to make a major purchase that involves debt? If your plan to rent your home over the next several years and don’t anticipate needing a car loan, I wouldn’t worry too much about my credit and I’d focus on making moves that preserve the most money in your pocket.
Again, I think the best step for you is to talk this over with an Arizona property lawyer who specializes in such things.
Q8: Garden vegetable choices
What vegetables do you and Sarah plant in your garden? I have a patch of land where I could start a garden and am thinking about what to grow. I’m mostly interested in things that are easy to grow but produce veggies I can easily eat!
We plant mostly beans, tomatoes, and cucumbers each year. We eat these three vegetables by the pound in August and September and often end up freezing some for later in the fall and winter. The rest of our garden is perennial herbs and asparagus that are really low maintenance.
Honestly, part of the reason we grow these three vegetables is that they’re pretty hard to mess up. While I like to garden, I don’t exactly have the greenest thumb in the world, and the same is true with Sarah. Through all of our efforts to kill the plants in our garden due to our mistakes, we have the most luck not killing beans, tomatoes, and cucumbers.
I’d suggest visiting your local garden center and asking them for some very hardy and disease-resistant and pest-resistant examples of tomatoes, beans, and cucumbers, and plant those.
Q9: Roth 401(k) and Roth IRA?
I have a 401k with my company and if I contribute 9% they will match up to 8%. They also offer a Roth 401k version and the 8% is matched whether one is contributing to traditional or Roth 401k. I contribute 10% to traditional and 4% to Roth. The company 401k is setup through T Rowe Price. I also have a Roth IRA setup through Vanguard and I contribute $300 a month to it.
My question, does it make sense to contribute money to a Roth 401k and Roth IRA instead of just contributing to one, specifically my regular Roth IRA? If both Roths were equal in maintenance fees would the only benefit of the Roth 401k be that the money is taken out before I receive a paycheck? I am trying to maximize my take home pay now while still contributing the same level of money to retirement whether its through payroll deductions or after the fact. Thanks for your time and great work on the blog, I read it everyday.
The money that you put into a Roth IRA or a Roth 401(k) is post-tax money. In terms of contributions, they’re pretty similar.
If you’re contributing less than $5,000 per year and your income is significantly below $100,000 per year, the only difference between the two with respect to contributions is whether it comes home to you or not. The difference is, as you mention, maintenance fees and investment options.
This of course hints at some of the differences between the two. The Roth IRA has an income cap – if you earn much above $100,000 per year, you’re going to find yourself unable to contribute the full amount to a Roth IRA. There’s also an annual contribution limit for a Roth IRA, which is $5,000 a year if you’re under the age of 50. There are other differences, too, such as the investment offerings.
The basic recipe for homemade playdough is 2 cups flour, 2 cups warm water, 1 cup salt, 2 tablespoons vegetable oil, and 1 tablespoon cream of tartar.
You can use almost any kind of vegetable oil for the oil, so soy is not a requirement. I generally use whatever we have on hand.
The real key to making playdough is storing it in a sealed container so that it doesn’t dry out after the first use. If you let it dry out, you might as well just toss it.
Got any questions? Email them to me or leave them in the comments and 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 hundreds of questions per week, so I may not necessarily be able to answer yours.
Several years ago, I owned this wonderful sweater that I liked to wear during the winter. It fit me almost perfectly, the color of it matched my complexion, it wasn’t itchy at all, and I loved the pattern.
As much as I liked it, though, I ended up wearing it only once or twice a winter, and I eventually ended up giving the thing away.
Why? It required individual washing. Every time I would wash the item, I couldn’t help but run the numbers on the extra time and money this sweater was costing me, and when I compared that side-by-side with a nice article of clothing that didn’t require such extra care, I always leaned toward the item that was easier to care.
At the time, Sarah and I lived in an apartment that had a coin-operated mini-laundromat in an adjacent building. To do your laundry, you would carry a basket of clothes over there, pop four quarters in the washer, come back in half an hour, pop four quarters in the dryer, and come back in about an hour.
Two bucks, you say. Big deal. Let’s think this through, though.
Let’s say I would wear this sweater five times a winter for five years. Each time I washed it, I need to use some cleaning agent, costing (say) twenty cents. Also, I’m going to have to devote, say, five minutes each time to the process of washing it.
Just to wear this item regularly as described above, I’m spending an hour and forty minutes just cleaning that shirt and spending $55 in the process. Even if I had my own washing machine and air-dried the shirt, I would still be spending about $18 over the life of the garment just for washing that one item (over 25 washings).
That realization led me to try other methods of cleaning it. Hand-cleaning worked wonderfully and saved considerably on the money side of things (I just needed the cleaning agent), but significantly increased the time investment. Having a cleaning service do it would have been even more expensive.
Eventually, I found myself wearing it perhaps once per winter, cleaning it afterward, then talking myself out of wearing it for the rest of the winter. I eventually donated it to charity.
The immediate response people might have to this experience is that I was being lazy or cheap. Regardless of whether or not that’s true,
That’s why, given a choice between adding a garment I can wash normally to my wardrobe or adding one that requires individual washing, I’ll always lean heavily towards the one I can wash normally. It devours significantly less time and less money over the long haul.
I do still own multiple garments that require special cleaning, but I rarely wear them. All of the “special care” items were gifts. When the opportunity comes around to wear them, I often can’t justify the time and expense when there are many other wonderful items I can wear that don’t require specific cleaning methods. Why not just wear that nice shirt I can launder with everything else?
This response winds up informing my shopping practices. If I see an item with special cleaning instructions, I’m simply very likely to skip it.
Special cleaning instructions have a cost, both in time and in money. Keep that in mind when purchasing clothes, and don’t be afraid to look for similar items that don’t require special practices.
This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere.
This tip is directed at everyone who has a job where a 401(k)/403(b)/other individual retirement savings plan is available, but you’ve not yet signed up for it out of laziness, forgetfulness, or some other non-retirement-based reason. This tip is doubly directed at everyone whose employer offers matching money for that retirement plan and they’re not signed up for it.
Open that account now.
Let’s be realistic here. If you’re under the age of about 50 or so, you’re playing a fairly dangerous game in assuming that Social Security in anything close to its current form will be there for you when you hit retirement age. Most likely, the money will be a pittance and not nearly enough to survive on. There’s some chance that there will be nothing at all.
Don’t rely on that pension, either. Companies go under – even governments go under. Many look for ways to get out from under the financial burden of paying out that pension they’ve promised to their employees, and many get away with it.
The only retirement tool I believe in is one’s own savings for retirement, and that’s where a 401(k) (or similar plan) comes in.
For most people, a 401(k) plan is the absolute easiest way to get started saving for retirement. In many workplaces, you just fill out a form, they take a little money out of each of your paychecks, and you’re saving for retirement. Not only that, the money taken out of your checks isn’t very painful at all. If they take out $20, it likely only drops your take-home pay by $16 or so because the money is taken out before taxes are calculated.
Even more importantly, some employers offer free money into your 401(k) if you put money in yourself. Let’s say your employer offers a one-for-one match. If you sign up to put in $20 per paycheck, your paycheck only goes down $16, you put $20 into your account and your employer puts $20 into your account. That’s free money, and if you’re not signed up for it, you’re saying no to that free cash.
Some people stress out about the investment choices. Don’t. Even if you make a really poor choice among the investment plans offered, you’re still far better off putting money in there than you are not putting anything in at all. Saving money in a terrible investment is much better than saving nothing. You’re better off just picking a plan at random than you are putting it off another paycheck.
That’s not to say you shouldn’t look at the investments and try to figure out the best one. The thing is, you can do that later. You can change investments later on without much difficulty at all if you decide you’d rather be in something else. The only difference is that if you start saving for retirement now, you’ll actually have money in there to move.
Of all of the financial mistakes I made in my early life, the one I didn’t make was putting money away for retirement. I saw the challenges my parents were having as they neared retirement and I didn’t want to have that kind of difficulty. I put in quite a lot, and I’ve never really stopped.
Looking back on it, I realize that I would have had bigger paychecks had I not put that money away, but I know full well that if I had bigger paychecks back then, I would have just spent the money on things I didn’t need.
You won’t miss the small amount that’s gone from every paycheck, but a few decades down the road, you certainly will miss not having hundreds of thousands of dollars in retirement saved if you don’t make this move today. Just do it.
A few days ago, Sarah and I were buying shoes for our daughter. She’s graduating to shoes with laces, as she’s developed the finger strength and dexterity to tie them for herself, plus her feet are just getting too big for her old ones.
After checking prices in several different stores, we found the perfect pair in an outlet store. The little girl fell in love with the purple design and the sparkles, I respected the sturdy craftsmanship, and the price was pretty solid, too – around $12.
Content with our purchase, we looked around for other items in the same area. We walked down to another outlet store about a block away and found ourselves browsing a mix of children’s clothing and shoes.
While there, Sarah spied a family of six – two adults and four small girls – trying on shoes. One of the pairs that one of the girls was trying on was virtually identical to the pair we had just bought for our daughter (it might have actually been the same model, but I wasn’t quite close enough to tell – suffice it to say that they were very similar). They then talked about the price of the shoes, and I saw Sarah almost choke when she heard that the family was about to pay $50 for that pair of shoes.
She couldn’t hold it in. She spoke up by tapping the mother on the shoulder and saying that we had found almost the exact same pair of shoes for 80% less at a store down the block. The mother’s eyes lit up, she thanked Sarah several times, and that family practically ran out of that store.
Since then, I’ve been flipping this situation over and over again in my mind.
First of all, is it intrusive to suggest lower prices to other customers? If I know that a person can get a lower price on a particular item elsewhere, do I feel appropriate telling them so? On the flip side, if a person in the store knows I can get an item at a lower price elsewhere, is it appropriate that they tell me?
For some people, the answer to both of these might be “yes;” for others, it’s always a “no.” For me, it’s a “sometimes,” mostly depending on context and often depending on how outgoing I’m feeling in that moment.
On the other hand, does it really make a difference whether I’m standing in a store or not? I’m very much willing to share a deal while sitting at my computer. I often visit blogs that share deals, particularly when I’m trying to find a discount on a particular item. Friends often email me deals on things they know I’m looking for, and I do the same for them.
In both cases, context really matters. I simply wouldn’t do such a thing at my preferred local game store, for example, because I value the continued existence of that business and I know that the multitude of services they provide are subsidized by selling things at MSRP. On the other hand, at a large chain store, I’d find myself much more likely to do it, particularly if the savings is quite large.
In the end, I don’t think there’s really anything wrong with sharing bargains with other customers in a store. Much of it has to do with your own social skills and the approachability of the other person.
This brings me to another interesting situation I found myself in recently. When I was shopping at a local store, I was picking up a container of my youngest son’s favorite fruit juice when I noticed that someone had actually stuffed a coupon for the item down inside the label so that part of the coupon was hanging out of the package. Naturally, I used the coupon.
It left me thinking about the person that did this, though. Most likely, a person clipped the coupon, decided it was still too much even with the discount, and decided to leave the coupon for some other buyer (in this case, me). That seems reasonable.
I often clip a lot of coupons that I don’t use. Should I just attach them all in a similar fashion as this mystery juice shopper did for me? Perhaps I could create a culture of coupon paying-it-forward at my local grocery store.
A week later when I was at the store again, I found myself leaving behind six coupons. I just stuck them inside of labels or left them on top of packages. I’d like to think that six lucky customers found the coupons, saved some money, and then maybe one or two of them decided to help someone else save a buck as well.
I think the notion of paying it forward is really what it all comes down to. If you have a chance to share savings with someone else and feel comfortable doing so, share it. It costs you nothing, but it certainly helps the other customer. Perhaps that person will share a savings tip with another person or two and someday the savings will come back around to you.
Soda and fast food are both convenient pick-me-ups that many people utilize for a sweetness fix or for getting rid of a case of the munchies.
From a personal finance perspective, though, there are much better choices for each of those options.
Let’s look at soda for starters. You have the sticker cost of the soda, of course, which can vary greatly but often seems to settle at somewhere around $0.05 per ounce. Of course, on top of that, there are health costs. Studies have shown a direct correlation between soda consumption and health care costs later on in life. Quantifying it down to an exact cost per ounce is impossible due to the variables (not all sodas are the same, not all people are the same, not all diets are the same, etc.), but there is a real connection and a real cost there.
Simply put, if you’re looking to quench your thirst at a bargain price, look at water. A glass of tap water is incredibly inexpensive, and even filtered water gets down to a tiny fraction of a cent per ounce. If you need that sweet fix, do what I often do: squirt a little bit of lemon juice into a big cup of water and add a pinch of sugar or two, then stir. That’s still far less expensive per ounce than your average soda. Want it convenient? Fill some water bottles and keep them in the fridge as a replacement for soda.
You can tell a similar story with fast food. Much like soda, it’s convenient and it can often become part of a normal routine. Much like soda, the cost each time doesn’t seem like too much. Much like soda, it’s usually tasty. Much like soda, there are long term health costs associated with repeated use.
If you want to replace the convenience and tastiness of fast food, make it yourself in advance of your crunch time. Make a big batch of homemade breakfast burritos and nuke them on your way out the door. Keep a container of nuts in your car to munch on instead of swinging into the Mickey D’s drive-thru. Prepare meals in advance so that all you have to do is pop them in the oven when you get home. There are tons of inexpensive recipes where the cost per serving just blows away fast food in terms of immediate savings.
I’m speaking from experience when I say that the hardest part of switching away from routines of drinking soda or eating fast food is not giving up the item, it’s breaking the routine. Human beings are creatures of habit and shaking our routines is something we’re not particularly good at. Over the years, I’ve found a few specific tactics that really work for me when it comes to breaking an unwanted routine or establishing a new one.
One, try to change just one routine at a time. If you have a routine of getting a soda and a burrito after work each day, just focus on breaking that routine. Ignore other changes you want to make in your life right now. Focus just on going home instead of stopping for that snack, and keep that money in your pocket. If you want to, eat something else instead when you get home – something that’s likely far less expensive.
Two, minimize the resistance to the new routine. It’s a lot easier not to pick up a soda if you’ve got an easy alternative to grab when you’re thirsty, such as a water bottle you filled yourself earlier and stuck in the fridge. It’s a lot easier to ride right by a fast food restaurant if you have a few nuts in your vehicle to munch on instead. It’s a lot easier not to eat out if you have an easy meal at home all ready to toss in the oven (or is sitting there ready for you in the crock pot).
Three, find alternatives you really enjoy. I used to really enjoy drinking a particular type of soda. I liked it so much I didn’t really believe I would get enough enjoyment out of anything else to make it worth the savings. What I did is I spent some time just experimenting with different alternatives until I came across a great mix of water, a bit of lemon juice, and a pinch of sugar that I really, really liked. Having a cheaper alternative that I genuinely liked made the switch much easier.
Finally, recognize what you’re gaining from the change. If you eliminate three sodas a day (on average) that cost $0.50 each (on average), you’re saving $500 a year in immediate soda costs, plus a significant amount more in long term health care costs. If you move from eating one $3 fast food snack a day to eating a homemade snack that costs $1 to make and a few nuts that cost $0.50, you’re saving $500 a year in immediate food costs, plus a significant amount more in long term health care costs. Keeping those dollars and cents in mind was a real motivator.
The thing to always keep in mind is that there are a lot of savings to be had from changing your dietary routines. Nothing is sacred as long as you’re meeting your basic nutritional needs.
This past weekend, Sarah and I went on a long walk in the woods at a state park, checked out the restored birthplace of President Herbert Hoover, ate a picnic meal in a beautiful grove, found a bunch of Devonian-era fossils, and played with our children on a playground.
Our total cost for all of this – minus the food we brought ourselves – was nothing. All of it was made free to us by our community and other communities in Iowa.
In the past month, my family has gone ice skating in a public rink, played disc golf, played tennis, played basketball, watched an outdoor concert, and enjoyed a pile of food samples. Cost (beyond stuff we already own)? Nothing.
In the next month and a half or so, my children are participating in a youth soccer league, my oldest may be participating in a youth baseball league, we’re going camping for a weekend (probably), going to a couple of concerts, watching at least two parades, eating a ton of food samples and at least one meal, watching multiple live sporting demonstrations and tournaments, playing and eating picnics and exploring and hiking in several public parks, going on a family scenic bicycle ride, and observing the religious practices of several world religions. Cost (beyond stuff we already own)? Nothing.
The amazing thing is that we’re barely scratching the surface of what’s available to us. The vast majority of the free options we have on hand are discarded without discussion, and quite a few more are tossed aside after discussion. There are still more things to do and enjoy in our community and surrounding communities that are free than we can ever take advantage of.
How do you find all of this stuff? Here are several tactics to use.
Read any and all free local newspapers. They are almost always full of notices of free community events, festivals, parades, concerts, and other things of that nature.
Find your community’s parks and rec department’s website (and those of towns nearby). Search for your town’s name plus the phrase “parks and recreation” in Google. Look at the offerings they have, from bike and hiking trails to parks and organized sporting activities.
Find your community’s calendar of upcoming events (and those of towns nearby). Search for your town’s name plus the phrase “community calendar” or “upcoming events” in Google and you should find something (provided your town has at least a little size to it). Do the same for surrounding communities. You’ll find tons of different activities, from community festivals and parades.
Keep your eyes open. I’ve discovered many community events by simply examining the bulletin board in local stores or outside the local post office or near city hall. I’ve found posters for interesting events all over the place, from being taped to light poles to being stuck in our front door.
We’ve found that, as a family, if we have a long list of free things to do, we eventually find a few that we all have at least some interest in doing, and if it’s a free activity that’s enjoyable for all of us, that’s a big win. We aren’t spending money, but we’re all having fun.
If you can find fifty free things to do, you only need to have one of them be appealing to you to have something free and fun for you to do.
Each week, my children receive a small allowance. It’s not tied to any chores; instead, it’s mostly a tool to teach them about money management.
We pay them in quarters, with each child receiving twice the number of quarters as their age. So, a five year old would receive ten quarters, a three year old would receive six quarters, and so on.
When each child has turned four, we’ve started having them segment their allowance into four different groupings. At a minimum, they’re required to put one quarter in each of the four segments (after age eight, two quarters is the minimum).
The four segments are spending, saving, investing, and giving.
The spending segment is just like it sounds: they can spend it on whatever they like, within reason. This money goes for short term wants like trading cards or other such things.
The saving segment involves them picking a specific savings goal, then putting aside their money in that segment until they have enough to buy it (usually along with money in the “spending” segment). This usually ends up being savings for a larger toy, like a Nintendo DS.a
The investing portion is a long-term savings that won’t be touched until they’re at least sixteen, but with it they get to see the power of long-term saving and compound interest. So far, we’re just letting this segment build and talking about how much is in there, but eventually we’ll put it in a bank and perhaps invest it in other things.
The giving portion is just that: it’s given to a charity of their choosing once a year or so. We like to focus on charities where they can, in some direct way, see the good their money is doing, but they have the final decision about what charity to aid. We usually present several options to them, talk about each one, and they choose one.
We’ve been using the Money Savvy Pig for this separation (it made for a wonderful fourth birthday gift for our oldest and our middle child), but you can certainly replicate this scheme with four jars. You can also make up your own divisions and assign your own rules to it – whatever works for you.
The reason behind giving an allowance and segmenting is because, in the end, this is a budget. Segmenting an allowance means budgeting. They’re learning that when their income comes in, there are good reasons to split it up and to save some of it for the future. You should spend less than you earn in any given week, because if you do that, you’ll have money for other things later on.
This technique lets children see personal finance at work in a very tangible way in their own lives, which is the best way to make it real for them. There’s no abstraction at all. They feel the physical quarters, they see them in the jars, they get to make the choices as to how to spend them, they see the benefits of those choices.
Not only that, it gives you (as a family) an opportunity every week to talk a little bit about good personal finance practices, and that little chat can often be just as much of a motivator toward good behavior for the parents as it is for the children.