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The Simple Dollar

Life insurance: Best to keep universal life policy – or drop it?

Life insurance packaged in a universal life policy is rarely the best investment. Term life insurance is cheaper; other investments, better. See question No. 4 in this Reader Mailbag.

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Q6: Graduation gifts
Do you have any good ideas for (relatively inexpensive) high school graduation gifts?
- Sherry

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It really depends on the graduate. I find that a well-thought-out gift that connects with that particular student can often be far less expensive and more meaningful than a generic gift.

For example, I know one particular graduate this year quite well. I’m planning on getting him a gift that’s very in tune with who he is, but it’s not an expensive gift. On the other hand, we’re almost spending as much on another graduate that we don’t know nearly as well.

If you don’t know a graduate well, do some research into that graduate. Find out what you can about them. Use their “likes” on their Facebook profile as a guide. Talk to the graduate’s parents a little bit. You’ll eventually find yourself going in a sensible direction.

If all else fails, get them a copy of Your Money or Your Life.

Q7: Cooking a whole chicken
A few days ago,I purchased a whole chicken (instead of my usual frozen chicken breasts). I recently bought a slow cooker so I slow-cooked it today and intend to make stock on Saturday (I re-read your post from a couple years ago about cooking a whole chicken).

I have 2 questions and I need answers so I can make the stock on Saturday. I do appreciate a quick response.

1) what was I supposed to do with the giblets? I took them out and put them into a bag before I cooked the bird, now it occurs to me that maybe I should cook them before I throw them into the stock pot with all the other stuff that’s already been cooked. Should I have cooked them with the bird and then pulled them out? Should I boil them before making the stock? Or is it safe to throw them in the pot raw because they will get cooked there?

2) what about the liquid left in the slow cooker? I tried to screen out all the solids (bone, pieces of meat, and onion) from the drippings and ended up just putting all of it into a container. Should I/can I use the liquid in the stock? Wouldn’t adding this to the stock increase the fat content? (I’m using fat and skin in the stock so maybe that’s a moot question).
- Kelly

With the giblets, you can certainly cook them either before or in with the stock you’re preparing. I would have no objection cooking the giblets right in the stock if the water was nearly simmering (around 200 F).

The leftover liquid, on the other hand, is gold. Don’t throw that out. That’s the truly flavorful part of the stock.

If you don’t want “lumps” in your stock, you can always strain it through a cheesecloth or through a very fine strainer. A cheesecloth will leave you with a pure liquid. A fine strainer will leave you with a liquid with some small particles in it. Personally, I don’t worry about tiny bits of vegetables when I make vegetable stock (or tiny chicken bits with chicken stock). I just fish out the big pieces and call it good.

Q8: Blogs and giveaways
I’ve been contemplating for some time trying to monetize my blog, and try to get into doing reviews and giveaways. You probably don’t follow “mom blogs” but reviews and giveaways are All over the place there, for a variety of products – “green” things, cloth diaper related items, big ticket items like car seats and other bigger ticket items, and things in categories I don’t even know about. I admit that I am especially interested in getting new “free” things.

My readership isn’t very big, but I have slowly found new readers by participating on other blogs, and a little bit through twitter (most of that all related to participating in giveaways). A significant number of my readers view the posts/comment only on my personal facebook profile, and I don’t know how that would translate over.

Part of my struggle in going for it is that I don’t want to push away family and friends from reading my blog because of too much advertising/reviews/giveaways. I don’t want to clutter their twitter feed with all of that either. However, I don’t know that starting a new blog just for the purpose of reviews or giveaways is quite what I want to do, since I like the idea of having more than just review after review. I’ve already created an “alter-ego” on twitter, but it’s separate from my personal blog.
- Ellen

Many blogs get into a habit of giveaways because giveaways provide a “spike” to your traffic numbers. If you do a giveaway that lots of people know about, you’ll get a very short term jump in traffic. This translates not only to immediate ad revenue, but also makes it easier to sell your site for future ad revenue.

The problem, as you’ve seen, is that loading your blogs with too many giveaways will drive away the actual readers, so if you start having a lot of giveaways, you have to keep them up to maintain the traffic numbers you need. Instead, your “readers” will be people who just hop to your blog for the giveaways, never to return.

If I were you, I’d separate the two. Start a Twitter account and a Facebook fan page related just to your site, then tell your family and friends about it. If they’re interested in such things, they’ll follow the new Twitter account and the Facebook fan page. If they become disinterested, they can always un-follow the Twitter account or un-like the Facebook fan page without deleting their connection to you.

Q9: Reversing charge-offs
After several years of job insecurity and random financial mess, I am finally in a place where I am paying down my debt in a significant way. Although many of my debts were consolidated through a CCCS-approved plan, there are a few that were “left behind,” because they declined to participate.

These debts are now charged-off, I believe, and have been sold to outside collections agencies. Since I am in a better and more stable situation, would it be possible to get in touch with the original creditor to try to salvage the relationship and pay them back directly, or do I have to deal with the folks who purchased my debts?

I want to make repairs to the damage I’ve done to my once perfect credit report / score as soon as possible, and move on with my life without having the specter of poor credit follow me for another seven years, but it seems like it’s going to be impossible.
- Kevin

You can certainly try, but most of the time, the original company will simply just refer you to the collection agency. Their hands have been washed of the situation and they no longer own the debt, so they don’t have much reason to get involved. They may be willing to clean your report a bit if you get things fixed, but that’s never a guarantee.

Your best bet is to negotiate with whoever holds your debt now. You want a settlement that will clean your credit report as much as possible. Be up front about this and keep on them if they don’t quickly fix your report after you’ve paid up.

It’s likely that you’ll never be able to clean up everything, but you should be able to clean up some of it.

Q10: Mortgage now or later?
I am days away from being 28 years-old and am currently in the market for a multi-unit home. This will be my first home purchase and I have around 50K prepared for any up front costs (down payment, settlement costs). These savings are in addition to an emergency fund, as well as other misc. investment and retirement savings. The homes I am considering are in the 175-225K price range, and I am just starting to evaluate my financing options (30 vs 15 vs ARM). Specifically, I question whether or not any specific option is better for someone who only plans on residing in the home for 5-7 years, and then renting out both units, or possibly selling the home. It would seem best for me to seek low to medium up front costs even if that brings a somewhat higher APR. Any thoughts or insight would be warmly welcomed!
- Amy

I would choose a 15 year mortgage over a 30 year mortgage, given a choice between the two. A 15 year mortgage is almost always coupled with a lower interest rate, and between the lower rate and the longer term, you’ll find yourself spending far less in interest than with a 30 year mortgage.

As for the ARM, I would avoid it. ARMs are prevalent because people who sign up for them are under the belief, just like you are, that their future is smoothly charted and they’ll be selling the house in five years just like they planned.

Real life doesn’t always work that way, though. Your financial situation in five years might not make selling that house a good move, in which case the adjustment will be incredibly painful. You’re far better off locking down that interest rate via a 15 year fixed rate.

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.

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