Questions About Travel Rewards, Water Bottles, Credit Card Balances, and More!

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. Earning more interest?
2. Carrying a credit card balance
3. Disabled and taking next steps
4. Travel rewards
5. US citizen investing outside US
6. Water bottle when flying
7. Purchase-generating media
8. Trusting international foods
9. Assets included in net worth
10. Pokemon Go as frugal hobby?
11. Selling an old record collection
12. Epicureanism?

My wife and I are part of what is called the “sandwich generation,” meaning that we’re at a perfect age to watch our children grow from infancy into adulthood while, at the same time, watch our parents retire and suffer some of the challenges and indignities of becoming older.

Over the past few weeks, I had the opportunity to travel with my parents and my children at the same time, with my parents taking what will likely be one of their last long trips that they take as they’re simply not getting around as well as they used to.

To experience both at the same time while traveling was both wonderful and exhausting. It was wonderful because I know the time period in my life when I get to still enjoy the company of my parents as well as the joy of my children is a fairly narrow time period. It was exhausting because the desires and interests of everyone were so divergent, with my children wanting to do one thing, my parents wanting to do another thing, and Sarah and I often trying to find balances.

Exhilirating. Exhausting. Thought-provoking. Memorable. The last few weeks of my life were all of those things, for sure.

Q1: Earning more interest?

I am earning 1% interest on my cash at my online bank. The money at my Fidelity IRA is in a money market fund earning near 0%. How can I earn 1% interest on my cash at fidelity. Is there an ETF I can buy that is like cash but takes advantage of the 1% rate of return available at many MMAs? My credit union also offers 1.25% on IRA money. Can I open an account at my credit union and then tranfer the money between the IRAs? Any help is appreciated and I know anything you tell me is not investment advice.
– Tina

I’m going to assume you’re retired, because if you’re not retired, you should not have retirement money in an money market account. (To tell the truth, I likely won’t keep my own IRA money in a money market account when I am retired.) If you’re not retired, you really need to have that money in something else that offers a better long term return than a money market fund.

It does look like Fidelity’s money market fund isn’t a high performer. If you just want to transfer the money market portion of your IRA to an IRA with a better money market fund, that does make sense, and if your local credit union offers that, moving that portion over can be a good move. It will require some paperwork and so on, but if you’re talking about a significant balance, it’ll be worth it.

Just make sure that a money market account itself makes sense for you right now, regardless of a 0.15% interest rate versus a 1.25% interest rate. Is this money that should be earning a higher average annual return, even with a bit of risk?

Q2: Carrying a credit card balance

I came across TSD while researching for my first credit card. I am currently an undergrad student starting off in the credit world. My question for you is in regards to Mistake #3: Making only minimum payments in your article (http://www.thesimpledollar.com/best-student-credit-cards/). I’m not quite sure I am understanding this section correctly.

What does it mean to carry a credit balance into the next month? Does it mean that I was not able to pay back what I spent that month on the bill?
– Lane

Exactly. If you carry a balance to the next month, that means you were unable or unwilling to pay off the full balance.

Most credit card bills have two different amounts on them. One is the total balance on your card, while the other is the minimum monthly payment. You’re only required to pay the minimum monthly payment.

However, whatever you do not pay is carried over to the next month. The amount carried over earns interest that’s usually compounded continuously, so that when you receive your next bill, it’s larger due to the interest that’s accumulated.

Because of that, it’s usually a good idea to pay as much as you can on your credit card bill each month. That way, the amount that carries over is smaller and thus there’s less money to build up interest.

Q3: Disabled and taking next steps

I have so many opportunities that I’m not sure where to begin. Please allow me an opportunity to let you know my needs and then you might be able to tailor a program to suit.

First, I have no cash. None. I have a small Disability check monthly, but it doesn’t allow for much. I was approved again for a $5,800 Pell Grant as well as a $9,500 loan. I’ve not used it yet in the 4 years since I’ve been applying. Business and family always came first. I am divorced now after 25+ years of misguided priorities and have recently remarried. I currently have two postal locations which are in Georgia as well as the Philippines. I want to get the easiest degree possible and even much, much, more importantly, the least expensive. I need to budget much of the left over monies to help with my household expenses as well as pay the books, tuition, etc.

Since there is a 12 hour difference in time between here and NY time, it’s difficult to speak to anyone on the phone (when it works). I can however email easily.

So, basically, I need to work online doing anything legally and ethically that generates money. The reason it needs to be online only work is that we travel plenty and I can still get work accomplished while we are in range if a cell phone and data towerwherever there is internet and possibly phone service. Please help me figure it out..

My background is I was a plumber since age 16. that gave me the money to go through 5 years of correspondence school (there was no online schools) at that time which gave me a BA in Education with a Minor in Finance. That turned out to be useless as the school lost its accreditation. (so basically toilet paper).

I worked as a teacher of science and special education at an inner-city high school for 6 years. I moved to Georgia and opened a mortgage and finance company for 8 years until the economy took a downturn. I was offered as a favor, the chance to work for Wells Fargo to which I took. it didn’t last too long as I got progressively worse with my diabetes. This led to complete kidney shut down requiring hemo-dialysis 3 times per 2 week leaving me exhausted. in 2012, I went through a routine checkup to get on the kidney transplant lists that I needed emergency bypass heart surgery. in 2013, due to the diabetes, I lost my leg. in 2014, I lost my best friend, mom at age 88. which devastated me. Finally in summer of 2015, my wife of 25 years decided to leave me.

I have a fresh outlook on life and a new bride. I want to fight for both of them but especially myself.

That’s the story. After you process this info, please refer a good recommendation to help. Don’t forget that I need the money to budget with my disability to make my budget.
– Tom

First of all, I would look at this list of low cost online bachelors programs for out of state students run by state universities. These schools are almost all smaller state universities, which usually means that they’re supported by the state they’re in, accredited, and offer a reasonably good education.

From there, I’d start examining career options. What kinds of things do you want to do? I’m not clear whether you just want an online education or you want to be in a situation to telecommute. My suggestion would be that, given your background, you either pursue something in education or something in business. So, I’d check out each of these schools, look at their online degree programs, and find one that matches the area you’re looking for.

I think that your grant, your loans, and your disability check can cover most of the cost of these degrees, given the pretty low cost per credit that these schools offer.

Q4: Travel rewards

I am looking to start earning travel rewards and I am trying not to mess up my credit score (which hovers just above 700). I currently have a Citibank Thank You Points card and a Discover It cash back rewards card. I have been happy (more or less) with these cards and I am not eager to change these cards because I am trying to build up a stronger credit history, but I want to get something with a different reward system (travel miles to be exact).

What card would be good for me? I do not want a card that charges an annual fee, but I want a card whose reward miles can actually be used at multiple airlines so I can start taking trips. I plan to pay all my monthly bills with the card to build rewards quickly and then to pay it off at the end of each cycle so if I could have one that earns miles with purchases and with payments that would be great!

Also, I’ve seen in your website that you recommend Discover It Miles card. If I transfer my account with discover from the Discover It Cash Back Rewards Card to the Discover It Miles Card, does that count as continuation of the same account (thus not affecting my credit score) or does it count as closing one account and opening another (thus lowering my credit score)?
– Thomas

The Simple Dollar has several different writers that focus on different areas. Personally, I rarely write about specific credit cards, as my credit card philosophy is that you should use one or two cards with programs that provide bonuses through the retailers you use the most, so I don’t have much reason to review lots of cards.

If I were to point at one single travel card, it would probably be the BankAmericard Travel Rewards card. I think it hits almost everything you’re looking for – flexible travel points, no annual fee, a good rate for earning points, and so on. Kiplinger Personal Finance magazine named it one of the best travel rewards cards of 2015 and it stood out because of the lack of an annual fee (something that many other travel cards have).

It’s a very solid card that would work well for what you’re looking for.

Q5: US citizen investing outside US

I would like to open an investment account, and although I am a US citizen with a US mailing address and a SS#, I do not reside in the US. I keep hitting a dead end because most of the companies I contacted will not take me. Do you know of any reputable companies that accept non-residents?
– Carl

You’re going to have a hard time finding such a company.

The reason is that, due to the Foreign Account Tax Compliance Act (FATCA), brokerages have a ton of additional tax compliance rules put on them if they operate outside of the United States. The reason for this is to keep American citizens from hiding money in offshore accounts, but the offshoot of that is that citizens living abroad have restricted access to financial services from American companies.

Although it will make taxes more challenging for you, your best approach is probably to use an investment house native to the country that you are in and simply deal with the tax challenges that will present. I’d look around for an investment house in your country and see if they will work with an American citizen.

Q6: Water bottle when flying

This is a comment to the story about expenses that can derail your travel budget. One of those expenses is buying beverages at an airport since you can’t bring any through security. When I fly, I bring an empty (reusable) water bottle with me and fill it up at the water fountain once I get past security. This saves a little money on each leg of my trip every time I fly.
– Tracy

This is a great tip that I should have included in the article because it’s something I do myself when flying; I just found myself mostly thinking about road trips when writing the article.

If you want to flavor the water, buy some of those little flavoring packets at the store that you can just dump into a container. They have lots of flavors and sugar levels and brands that you can try, and a single little bottle of flavor additive lasts for a long time and is small enough to go right through airport security (I’ve done it myself).

I prefer wide-mouthed Nalgene water bottles like these for airport and airplane use.

Q7: Purchase-generating media

I’m really struggling with spending too much on board games and I thought you could help. Like you board games are my favorite hobby so I play them three nights a week at board game nights and often read about them online in my spare time. What I have found is that even if I am not looking for new games I will see mentions of other games that I am unfamiliar with and in order to figure out what the person meant I find out about a new game that gets me really excited and fills my thoughts until I buy it and then I play it a few times and the cycle repeats itself. I’m just spending too much on games but I love this hobby so much and I don’t want to just quit it.
– Darren

The problem isn’t the board game hobby in general. The problem is the media related to the board game hobby. Sites like BoardGameGeek and Twitter and other discussion forums are really great for connecting with others who share your hobby, but that inherently means that conversations are going to swing toward games that you don’t have or aren’t familiar with. It just naturally comes with the territory.

My solution to that problem? Spend less time on the messageboards and spend more time with the games you have. If you’re at home, get off the computer. Read rulebooks. Bag and organize your components within the games. Set up games and play them solo. Find friends who will come over and play if you can’t leave the house.

If you’re at work and twiddling your thumbs, find something else to do. If you really want to engage in your hobby, plan out a game night and invite people. Maybe download a PDF of the rules for a game you want to play.

You’ll find that the hobby is just as wonderful as ever, but the endless desire for new games tends to trail off pretty fast.

Q8: Assets in net worth

What assets do you include in your net worth calculations? Do you include: (1) your house, (2) your car, (3) your collectibles?
– Avery

First of all, I don’t include any assets worth less than $1,000 unless it’s an account balance. It’s just not worth it to include lots of small and fairly random things when calculating net worth.

However, I do include any assets that I own that are worth more than $1,000, which would include our home and our car and some of our collectibles (among other things). These are all things that we could sell and continue our life.

The only asset that I might consider not including is our primary residence, because we do live there and we would need a roof over our head if we sold it. However, if we were in a situation to sell our home, we could simply move into an apartment and live there for many years on the generated cash, so we feel safe including it.

Q9: Pruning and life

I love your blog! As an avid gardener, the things you talk about on The Simple Dollar remind me of the practice of pruning. You’re basically treating your life as a plant, and when you practice frugality in the sense of cutting spending drastically on the areas that don’t matter, it’s much like pruning a plant. You’re removing the parts of the plant that are competing for nutrients so that the parts that matter get all of the nutrients you need. What happens after you prune? The parts you leave behind usually thrive! All of the lessons we need for life come from living things.
– Marilyn

That’s a great analogy! Frugality really is a lot like pruning. It’s not about tearing out everything, nor is it about leaving everything so that it all becomes overgrown and fails. Instead, it’s about carefully removing the stuff that doesn’t matter so that the stuff that does matter can really take off.

I pruned things out of my life like golf and expensive clothes and shiny cars because they just didn’t really matter to me in the big scheme of things. By doing that, I had plenty of resources left for the things that did matter – my family, my personal freedom, and a few hobbies that are deeply important to me.

Pruning isn’t about the things that you prune away. It’s about the things that you leave behind and how they’re going to thrive!

Q10: Pokemon Go as frugal hobby?

So for the last two weeks my husband and I have spent several hours on walks together playing Pokemon Go and just talking about life. It’s been wonderful. The app is free, gets us exercising! Highly recommended!
– Sara

Pokemon Go is a great little game to encourage people to get outside and walk around more. For those unfamiliar, it’s a game that can be played on smartphones that is location-dependent, meaning you have to actually move around in the real world and go to certain locations to play. Thus, it encourages you to go on walks.

It does have the drawback of having in-app purchases, but you can most certainly play the game to a high level without even considering those purchases provided you have an area to walk around in that’s active with Pokemon Go locations.

It also does require some kind of mobile data plan, but my son played many, many hours of Pokemon Go and used significantly less than a gigabyte of data, so you don’t need extensive data plans to play.

Seems like a good bargain to me!

Q11: Selling an old record collection

I inherited a large collection of records from the 1960s and 1970s. It’s mostly pop and hard rock stuff like The Beatles and Rolling Stones and Led Zeppelin. It has been in boxes for years and I would like to sell it but I don’t know where to start. How do I sell this and not get scammed?
– Gary

You probably have at least some value in your collection. The artists you mention all have people who avidly collect their records and memorabilia.

First of all, you’re going to want to evaluate what you have. Records usually fall into four categories – 78s, 45s, LPs, and 12″ singles. The easiest way to do this is to just sort them by size – 7″ records (45s), 10″ records (78s), and 12″ records (LPs and 12″ singles), and then by artist.

You’ll also want to note the condition. Condition is extremely important when it comes to records. If you see much wear at all, the value is drastically reduced – and I mean drastically. A scratched record is unplayable. A damaged cover isn’t as interesting for artistic purposes. Condition is critical.

Make a list of everything that looks like it is in very good shape. Note the artist, the title, and any identifying markers on it (like the number of the record if you can find it). I’d focus on musicians you’ve heard of as those are ones with lots of collectors.

At that point, I’d visit an online record collector’s forum and explain your situation. Include a list of what you have. Ignore any private messages sent directly to you as those people are probably scamming you. Look for public responses and figure that the average value is somewhat accurate. People will probably want high resolution images of the more valuable stuff.

From there, you can move on to individually selling the records or selling them in bulk. Good luck!

Q12: Epicureanism?

Loved your posts on stoicism. Really in line with the other stuff you talk about? Have you ever talked about epicureanism? I think you would find some great stuff there, too.
– Lisa

From Wikipedia: “Epicureanism is a system of philosophy based upon the teachings of the ancient Greek philosopher Epicurus. […] Epicurus believed that what he called “pleasure” was the greatest good, but that the way to attain such pleasure was to live modestly, to gain knowledge of the workings of the world and to limit one’s desires. This would lead one to attain a state of tranquility (ataraxia) and freedom from fear as well as an absence of bodily pain (aponia). The combination of these two states constitutes happiness in its highest form.”

That sounds pretty appealing to me, actually. The goal is a life of pleasure, but that pleasure is achieved by living modestly and understanding the world.

I tend to think that epicureanism is something of an external philosophy, in that it’s about attaining external pleasures for maximizing freedom from fear and absence of pain through modest living and knowledge, while stoicism is something of an internal philosophy given that it is about separating one’s mind from emotions and trying to look at the world rationally. Some differences are obvious, like the relative disdain that stoicism shows for external pleasures (they view pleasure as an external emotion), but they do have some important overlaps, too.

I think a modern stoic and a modern epicurean could end up living very similar lives, but they would have big disagreements when they talked about the reasons behind it. I think, internally, stoicism makes more sense to me, but I understand and appreciate epicureanism.

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. 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.

The post Questions About Travel Rewards, Water Bottles, Credit Card Balances, and More! appeared first on The Simple Dollar.

Questions About Grocery Delivery, Travel Journals, Insurance Agents, and More!

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. Grocery delivery with small fee
2. Everyday carry?
3. Handling pushy insurance agent
4. Old bank account emergency fund?
5. Emergency fund
6. Constant arguments over money
7. Preparing for interest rate rebound
8. Survivalism and frugality
9. Is laundry service worth it?
10. Financial independence from wealthy parents
11. Best notebook for travel journal
12. Low cost of living retirement

As I write this, I’m sitting in a quiet hotel room with my family. They’re all still asleep, as it’s very early in the morning. We’re in the midst of our family vacation, currently in Toronto.

I’ve learned that on a typical average night, my youngest son and I seem to need the least amount of sleep in our family. I can already tell from his stirrings that he will be the next one to wake up.

It’s just a quiet, peaceful moment. I wouldn’t trade it for anything in the world.

Let’s dig into a few mailbag questions before he wakes up and wants to play.

Q1: Grocery delivery with small fee

In my area the local grocery store is rolling out a delivery service. They charge you 5% of your total ticket (min. $20 purchase) and they deliver it to your door within a certain radius of the store. I’m figuring that doing this will be worth it for me so that I can avoid impulse buys. I just send them my grocery list and they deliver. Impulse buys are more expensive than the fees I think. What do you think?
– Adam

I don’t think this is a particularly bad bargain for a service, myself. In fact, I wouldn’t be surprised if they raise the rate in the future.

Let’s say, for example, that I have 40 items on my grocery list. If I got into my car, went to the store, bought all of those items, checked out, drove home, and unloaded the car, it would easily take me an hour and a half.

Let’s assume that I could add all of those items to my online cart and pay for it by credit card in 30 minutes. An hour later, they deliver the groceries to my front step.

I’m basically swapping that 5% fee for an hour that I could spend doing something else. If my grocery bill is, say, $150, that’s $7.50.

Is $7.50 worth it for an hour of free time? If it’s genuinely valuable free time, yes. If it’s an hour channel surfing or reading pointless websites, no.

I’m generally willing to spend $7.50 for an hour of true quality free time on occasion, particularly when my life is in a situation where quality free time is hard to come by. It has a lot to do with a person’s life situation, I think, as I don’t believe (for example) my parents would make the same trade.

Q2: Everyday carry?

What does your EDC look like these days?
– Harry

Well, as I mentioned at the top, I’m sitting here in a hotel room with my “portable office” backpack beside me and all of my usual stuff on me, so let’s have a look.

In my pockets, I carry my keys, a money clip, a few cards held together with a rubber band (the band provides great friction to keep the cards in place), my cell phone, a pocket notebook, a Uniball 207 Ultra Micro), and a Spyderco pocket knife. I’m not sure which model of Spyderco it is (I think it’s a Tenacious) – I bought it at a pretty good discount at a sporting goods store because the color of the handle wasn’t selling (it’s purple) and I really don’t care about color.

In my backpack, I usually carry my laptop and laptop charger (which I’m using right now). Still in my backpack, you’ll find a backup Thunderwire charger, a backup micro USB charger, my Kindle (which honestly moves between my bedside stand and my backpack quite often), some extra pocket notebooks and pens of the same type as what’s in my pocket, two granola bars (the number varies a lot), a small bottle of hand sanitizer, a toothbrush and some toothpaste, an empty water bottle, and a drawing that my daughter gave me several days ago.

That pretty much covers it. My backpack goes with me any time I suspect there’s even half of a chance that I might work away from home.

Q3: Handling pushy insurance agent

There’s a guy in town who just opened an insurance office and he’s trying really hard to get business, which is cool. The problem is that he pushes WAAAAY too hard for sales. I made the mistake of listening to his pitch once and now he seems to practically follow me around town asking me if I’m ready to sign off on that policy. It feels like I see him several times a week and he’s always almost immediately asking about the policy. How do I politely get him to back off? I might get a life policy but not from this guy.
– Dennis

I would simply take him aside and tell him that he’s being too pushy and that the pushiness is convincing you not to buy a policy from him. This is very hard for some people to do, but it’s a conversation that really needs to happen in some form.

If you’re uncomfortable doing this, find a way to send him an anonymous note. Drop it by his office or in his mail slot and clearly explain that some members of the community are being driven away by his self-promotion practices.

The self-promotion isn’t going to go away unless he’s made aware of the fact that his self-promotion is getting under the skin of his potential clients. As long as he continues to believe that such tactics are helpful to his business, he’s not going to stop with them.

I think that avoidance of such situations almost always backfires. It’s convenient for you in the moment, but it usually ends up making you look pretty bad in the long run. Others see the avoidance and you’re the one that comes off looking rude.

Q4: Old bank account emergency fund?

Several years ago, I switched to a new bank when I moved. I left the old one open with a few thousand in the checking account in case I forgot to switch over any automatic withdrawals and nothing has touched that account in years.

My husband thinks we should just close the account and move the money over to our main accounts. I kind of like having it there as an emergency fund of last resort.

Do you have any thoughts on the matter?
– Carrie

I’m completely in favor of the concept of an emergency fund, but I’m not sure this is the right situation for one.

First of all, I’d ask whether or not that money is earning any interest at all. If it’s not earning any interest at all while it sits there, you should move it into a savings account or some other vehicle where it can earn at least a little interest without losing liquidity. We don’t live in an era of high-interest rates on savings accounts, but 1% is better than 0% on several thousand dollars. $5,000 in a 1% savings account earns $50 the first year, $50.50 more the second year, and so on; leaving it in a 0% interest checking account isn’t wise.

Now, if your question is whether to leave the money in this particular remote bank, that’s a completely different can of worms. I’m not entirely sure what your husband’s objections are to this account specifically. Is it due to the fact that the bank itself is remote so you don’t have easy access to a physical location? If that’s the case, what might either one of you need to do that requires a physical teller?

Unless there is a clear situation where this bank is not useful, I don’t see any problem in leaving it there provided you move it to an account that earns a better interest rate (while still being easy to access).

Q5: Emergency fund size

I am a single mother (husband died in auto accident) with a seven-year-old son. I make enough for us to get by. Our house is paid for thanks to insurance settlement. No debts. My question is how much of an emergency fund should I have? Realize that I need to have some emergency fund but how much?
– Bonnie

If I were a single mother with a seven-year-old son, I would try to have about three months of living expenses saved up in a savings account so that if I ever lost my job, I could take care of things for a while without disrupting my son’s life while I found another job.

The less of an emergency fund you have, the less time you have to find a job without significant disruptions to your child’s life.

I am basing the three-month number on this article from Time Magazine where they estimate that an average job search takes a little over six weeks – a month and a half, in other words. Given your relatively tenuous situation in a single-income household, I feel it’s safe to double that here, particularly since emergency situations often seem to come in groups. I would actually add even more if there were additional children in the house.

Q6: Constant arguments over money

My wife and I argue about money almost every single day and I don’t know how to get it to stop. We are trying to save up for a down payment and we are making progress. The honest truth is that we both make spending mistakes and we both blame the other one for their mistakes as though it’s the other one that’s keeping us from the goals. Every time we try to talk rationally about it one of us says something even slightly blameful and we’re right off to the races again. I don’t know what to do to get things back in a good place.
– Samuel

There are a lot of approaches to this situation. It really depends a lot on your individual personalities.

One way to approach it is to have money discussions in writing, perhaps over email. This gives you the time to read through what you’re writing and ask yourself whether the things you’re saying to each other are really fair or are really the things you want to be saying to one another.

Another approach is to simply use “time outs” frequently during the conversation. If one of you feels that the other has said something that’s going to trigger an emotional response, simply pause the conversation right there before it gets going. Simply say, matter of factly, that the thing your partner just said is something you feel is unfair and that, instead of arguing, we’re just going to put this on the table for a while.

If those things don’t help, you may want to seek out marriage counseling. Most marriage counselors are simply conversation facilitators. They help you figure out how to communicate with each other without anger, something that many couples don’t quite have figured out before they get married and don’t figure out during marriage, either. It’s a vital skill to have, and it can make the difference between a successful marriage and divorce.

Good luck.

Q7: Preparing for interest rate rebound

It’s my belief that interest rates are going to start going up in the next year or two. Are there any good financial moves I can make right now to take advantage of that?
– Everett

Before I answer this, let me make it clear that I am not necessarily convinced that interest rates are going to rebound significantly in the next few years. While I believe our economy has recovered significantly since 2008, I don’t think it’s recovered to the point where interest rate hikes won’t slow it all down very quickly.

That doesn’t answer Everett’s question. What would I do if I believed that interest rates were going to go up in the next month or two?

First of all, I’d refinance any and all debts that I have. I’d refinance my student loans. I’d refinance my home mortgage. I’d even try to refinance my car loan, if possible. The goal is to lock in the lowest interest rate possible, even if that involves reducing the term of the loan and seeing small increases in the monthly payments. Try to get out of any variable interest-rate loans that you might have and get everything into fixed-rate loans.

Second, if I were on the path to home ownership, I would accelerate it a little, even if that meant buying that first home before saving up to 20%. As soon as there is definite word that interest rates are going up, home mortgage rates are going to go up, too. Getting a mortgage without a 20% down payment will usually mean that you have to get mortgage insurance, which is effectively adding another percentage point to your interest rate, but if waiting means adding a percentage point to your interest rate and it’s one that you can’t remove by paying off some of your mortgage, you’re better off making your move sooner rather than later.

As interest rates go up, so will the interest rates offered on bank accounts. I didn’t realize how good things were in 2007 when online banks were offering interest rates in the 5% to 6% range. At that rate, savings accounts return almost as good as the stock market while also being FDIC insured and without any risk of losses. Savings accounts become a very good bargain when their rates creep above 2% or 3%.

Those are moves I’d look into if interest rates go up again.

Q8: Survivalism and frugality

My husband and I aren’t really “survivalist” types, but we both feel like modern life is kind of… fragile. Lots of people have no idea how to grow their own food or take care of themselves and if something happened that caused widespread crisis, like say a pandemic disease or something, a lot of people would be in trouble just because they couldn’t eat or grow their own food.

Because of that, my husband and I practice a lot of things that we think would help us in such situations. We have a big garden, can a lot of our own foods, have a fire pit and many months of firewood, have solar panels on our roof, and so on.

It’s not hard to notice that a lot of the things we’re doing are also making our life inexpensive. We basically don’t have an energy bill at this point. We get our own water from a well with a pump on it. We produce most of our own food. We have very little expenses outside of property taxes and basic clothes and the cost of our van.

I know that people who identify as “survivalist” and people who identify as “frugal” often are politically at odds with each other (at least that has been my experience in other forums), but I think both groups could learn a lot from each other. I feel like we are practicing frugality while preparing for the future.

What do you think?
– Eileen

I agree completely. I think that the skill overlap between people who think of themselves as “frugal” and those who identify as “survivalist” is significant, and if they can keep political issues out of the forum, there is a lot that they can help each other with (I don’t think they’re entirely politically exclusive, either).

I have a friend who would describe himself as survivalist. He gets his water from a well on his property. He has a solar panel system on his roof with panels that he knows how to install himself, along with extra panels in his garage for replacements. He has probably a year’s worth of food in his basement. Although it’s never come up, I’m fairly sure he has weapons and gear for hunting for food. He’s got a huge garden. He’s basically well prepared for major societal changes, should they happen.

I don’t necessarily agree with some of his politics, but we often have discussions (usually via Facebook Messenger) that revolve around various strategies. I have a wider array of gardening knowledge than he does, so he sometimes picks my brains for things like where to get non-hybridized seeds and what varieties work well in an Iowa climate without disease. I asked him tons of questions about his solar panels when Sarah and I were considering them for our roof (we ended up deciding they weren’t cost-effective right now, but they’re temptingly close).

You can put political differences aside to talk about strategies for saving money and removing the shackles of bills from your life. It’s a big part of the reason why I try to keep politics away from The Simple Dollar – people of all political stripes can find use in strategies for saving money, building a better career, and putting themselves in a better long-term life position.

Q9: Is laundry service worth it?

There’s a local laundry service that will pick up laundry on your doorstep, wash it, fold it, and return it to your doorstep for $2 per pound, minimum 5 pounds. I’ve been trying to do the math on this to figure out if it is worth it. Thoughts?
– Fred

This question reminds me a lot of the first question in this post. What you’re really paying for here is time.

From this website, I’d estimate that the weight of a week’s worth of laundry for a single person is on the order of 15-20 pounds and probably half that for a child. So, for my family, a week’s worth of laundry is probably getting close to 50 pounds of clothes, sheets, towels, and so on.

If I were to pay $2 a pound for that service, it would cost me $100 to have them do all of the laundry in my house for a week.

So, the question becomes: how many loads of laundry is that, and how much time and money would it take to do it myself? My experience tells me that this would add up to a load of towels and washcloths, a load of bedsheets, a load of colored clothes, and a load of whites. This would end up costing about $8 or so in total energy use, soap, and water, and would take about two hours to wash, dry, and fold all of the clothes and other items.

So, in this case, my back-of-the-envelope math tells me it would take $92 to save two hours of work. This is not something I’d want to do in our current life situation.

If I were single, though, the equation would change. I’d probably still be doing two loads per week and it would end up eating about an hour of my time. The cost would be about $4. However, I’d only have about 15 pounds of laundry, so the cost would be $30. That means I’m spending $26 for an hour of time saved. This still isn’t worth it to me, but it’s closer.

I just don’t think laundry delivery services are worth it at those prices for most people in normal situations.

Q10: Financial independence from parents

I am a single woman aged 32. I have a solid career in marketing where I make approx. $70,000 per year. This is enough to pay my bills and have a nice life.

Since I reached age 21, my parents have given me $1,000 each per month as a gift, totaling $24,000 a year.

Though I believe I am perfectly capable of living without that money, I find it to be very useful at times. It permits me to travel and to own a much nicer car than I would otherwise own. While I want to be truly “independent” I also don’t want to give up those things.

My parents have stated that they plan on continuing the gifts until they pass away, at which point I will receive a full inheritance as I am their only child. They are very well off but not quite in range of the estate tax.

Given this situation, do you feel that I am financially “independent” while receiving these gifts and knowing that a large inheritance is coming? Does it make sense to try to make them stop giving me money?

I want to feel like I am truly independent, but at the same time I value that money.
– Meghan

My feeling is that if you want to establish true “independence” from your parents, then you should put all of the money they give you into savings for the future and then live off of what’s left. Your actual retirement savings should come out of the “leftover” portion of things.

That probably seems harsh, but I think the best rule of thumb for independence is that your life would almost entirely go unchanged if that income stream completely vanished.

Right now, you’re living a lifestyle that would change if the income stream from your parents vanished. You wouldn’t be able to afford the travel that you take or the cars that you drive. Your current lifestyle is dependent upon money coming in from your parents, because without it you wouldn’t be able to have those things.

You need to decide for yourself how important financial independence really is for you in comparison to the nicer car and the travel. Right now, it feels like you want to have both of them, but they’re incompatible with each other (unless you make some other changes in your life).

Q11: Best notebook for travel journal

I loved your recent ideas regarding a travel journal as souvenir and taping things in there as I find them like menus and napkins and stickers and ticket stubs. Do you have a particular type of journal that you prefer for travel journals?
– Diane

I don’t really have a brand that I prefer. In general, I don’t like journals with really thin paper for the pages as they don’t hold up to having things taped or stuck to the paper. I also don’t like journals with really tight binding – I want to be able to add items to it and still largely be able to close it.

My “budget” choice would definitely be a composition book with graph paper, which you can get at almost any office supply store and many department stores. In fact, that’s what my children are using on this trip for their travel journals.

I am personally using a Baron Fig notebook for my travel journal. I can’t find the exact model on their website, but it’s a softcover notebook measuring about five inches by eight inches that has a dot grid on the inside. I like dot grids because it makes it easy both to write neatly and to draw on pages.

Honestly, almost anything will work for a travel journal. I’d suggest using an ordinary composition book if you’re unsure what to get.

Q12: Low cost of living retirement

I currently live in San Francisco which has a very high cost of living. I am saving about 80% of my income and plan to eventually quit and move to a low cost of living area, likely a Midwestern college town since I grew up in one.

I know that the easy formula is to just compare cost of living numbers for San Francisco to the target city I’m looking at to figure out how much less I’ll need per year thanks to cost of living, but is there anything I’m overlooking in that comparison? Is there a noteworthy factor that doesn’t go into cost of living data?

Thanks in advance!
– James

Cost of living data is almost always an approximation of what the actual cost of living will be like in each area. It’s impossible, for example, to find the exact same house in Iowa City, Iowa as you would find in San Francisco with the same access to services and so on.

From what I’ve seen in general, I think that most “cost of living” indexes slightly underestimate the actual difference between the places. That’s because many of the assumptions rely on having the same exact lifestyle in each place, something I don’t find to be true at all.

From my own experience, the smaller the city/town you live in, the less pressure there is to spend money and the more culturally acceptable and normal and even expected it is to be frugal. This isn’t an absolute thing and it varies a lot from community to community, of course, but those kinds of cultural difference simply aren’t included in cost of living data.

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. 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.

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