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. The psychology of saving money
2. To refinance or not?
3. Parents selling off possessions
4. Highly repetitive meals
5. Personal growth and development books
6. Breaking online shopping addiction
7. Breaking free from excessive frugality
8. Spousal debt and rocky marriage
9. Large collection of CDs
10. Inexpensive tutoring for high schooler
11. Frugal sore throat strategies
12. Finding reliable lawyer
The Super Bowl is this coming weekend and with it comes a few invites to various Super Bowl parties. I’ll be honest – I have very limited interest in football (I follow baseball and enjoy watching an occasional basketball and soccer game, but football has almost no interest for me) and my wife has literally negative interest (she can’t watch it because of the head injury issue; it turns her stomach).
So we go to Super Bowl parties and intentionally seek out people who aren’t very interested in the game for conversation. We might watch the halftime show or we might find ourselves in another room talking about something else entirely.
I have a few friends that are hung up on the idea of why someone would ever go to a Super Bowl party if they don’t like the Super Bowl. For us, the key term is “party,” not “Super Bowl.” The Super Bowl is just an unimportant reason to go hang out with friends and have some great conversations, whether there’s a football game on or not.
If you’re on the fence about going to such a party, go. Look for people who aren’t completely engaged with the game and hang out with them if you’re not into football. You already have things in common with those people – you have friends in the group that were close enough to invite you both, but you’re not particularly into football. Chances are, if you ask each other some questions, you’ll find that you have even more in common.
Q1: The psychology of saving money
I need advice on the psychology of saving money. Each month I divert money from my paycheck directly into my savings account. Conventional financial advice says: “If you put the money directly into a savings account, you won’t miss it.”
I have read dozens of personal finance articles where they give this advice. But the part that no one has addressed is: How do you keep that money *in* your savings account? I can easily log in to my bank account online and just transfer that money into my checking account, which I often do. To me, the money is not “out of sight, out of mind” (i.e. in savings), it is just in a different account that I can easily access!
Do you have a psychological trick where I can make myself forget about that money in my savings account?
The trick is to put it into another bank entirely. Open up an online savings account at somewhere like Ally Bank and set it up to automatically transfer, say, $25 a week from your main checking account. Then, just forget about this account as much as you humanly can. If you get an ATM card, put it in a place out of the way somewhere.
This becomes a savings pool that you never actually have to see. You can’t access it through the ATM card of your normal bank. You can’t write checks from that account, either. You can’t access it at a teller window, either. The only way you can get at it is by logging onto that account and actively issuing a transfer, and if that account is barely on your mind to begin with, this won’t happen very often.
Let that account grow. Only use it in an extreme emergency to transfer cash to your checking account.
That’s really the only emergency fund strategy that’s ever really worked for me.
Q2: To refinance or not?
I’m trying to decide if refinancing my student loans is in my best interest. I’ve already paid off approx. $7,500 in loans in the 2 1/2 years since I graduated. I made my usual minimum payments and put all my additional payments towards my high interest loans. I have approx. $21,600 remaining at the following interest rates:
$3,135 @ 4.259%
$1,870 @ 6.550%
$8,908 @ 3.15%
$1,890 @ 6.55%
$4,983 @ 3.610%
At the refinance rates advertised (which are usually variable), I’m not sure if refinancing would make a big enough dent in my interest payments to be worth it. That said, I work in the private sector and will not qualify for any federal forgiveness programs. I plan to kill my two 6.55% loans this year.
Would refinancing would help me save money? Also, at what point (if any) would it be beneficial to start aggressively paying off the lower-interest, but higher balance loans over the lower balance higher interest loans? Those seem to be costing me a lot more in interest.
You can certainly shop around for refinancing, but the only loans that would probably benefit from it are the two loans at 6% or above, and those are the ones you should be paying off first anyway. If you’re making any extra loan payments, it should be on those loans.
For the loans at 4.25% or below, refinancing likely won’t squeeze any savings at all out of them. Again, you can certainly look into refinancing offers, but the savings won’t be tremendous if you can score any at all.
With interest rates that low, shopping around for refinancing probably isn’t the best use of your time. It really only helps if you’re looking at a big pile of loans that are at 5% or above, and that really doesn’t describe your situation at all.
Q3: Parents selling off possessions
My father is 83 and my mother is 81. They are still of sound mind and fairly sound body. Over Christmas, they told us that they were going to spend 2017 selling off almost all of their possessions so that it would be easy to clean out their house when they pass away or move to a retirement home, which is incredibly thoughtful of them and completely in line with the humble nature in which they lived their life.
I volunteered to spend a couple weekends a month to help them. I am a 55 y.o. widowed woman whose husband died several years ago leaving me with enough life insurance money to no longer have to work, so I have plenty of free time. So time isn’t a strong factor here, but I do want to be on a pace to eventually get things done.
I want to help my parents get the best return on their money for their possessions. Do you have any good strategies for these types of things? I don’t mind investing significant time into this.
Whenever you’re selling off a bunch of used items, you can always earn a little more by investing more time in the selling process. However, there comes a point where additional time earns you less and less as you approach something close to the best offer you’ll get for the stuff and additional time spent seeking a better offer isn’t earning you much at all. There might be someone out there willing to offer you $5 more for the item, but if it takes 20 hours to find that person, is it worth it? At some point, you’ve got to say “it’s not worth it” and accept that you’re earning a bit less than maximum because the time needed to find the person willing to pay more isn’t worth it.
So, how do you even start? First of all, I would go through and start cataloguing all of the items they want to sell. Choose a room, then go through everything in there and make sure they want to sell those items, then sell off everything there is to be sold.
I would not even consider shipping larger items. If it won’t fit in a box you could easily mail, I would sell it only via Craigslist (requiring someone to come and pick it up) or a yardsale. Don’t deal with shipping large items, as it’s always very expensive and troublesome.
Evaluate each item that seems like it might have value individually. Use the internet to your advantage and try to figure out the used price for each item that might have individual value. If something is worth more than a couple of dollars, sell it online using eBay or Amazon Marketplace. If it’s not, sell it locally on Craigslist and charge just $1 for it.
Just move from room to room this way. One strategy I’d employ is to spend a weekend day making an inventory of all of the items in a room, taking digital pictures of anything anyone might want to see an image of, then spending evenings and weekends where you’re not at your parents’ house selling them online. Then, the next time you visit them, spend a day packaging up the items for shipping. Then rinse and repeat the whole process.
Q4: Highly repetitive meals
Do you have any strategies for saving money and time for someone who eats the same meal over and over? My husband is happy eating rice, beans, and chopped up sausage four or five times a week or more and would even eat it for breakfast. We usually just cook a bunch of rice every few days and keep it in the fridge. Other advice?
If I were you, I’d do the same thing with the beans. I’d cook a whole bunch of beans on, say, Sunday, and keep them all in the fridge.
In fact, what I’d actually do is make a very large pot of this meal that he loves, making it all the way to completion, and then I’d get a whole bunch of individual meal containers like these (I actually use them myself) and prepare individual meals of this rice/beans/sausage meal. Put four of them or so in the fridge and the rest in the freezer and let him eat them to his heart’s content.
If he eats these meals so often, I would buy dry rice and dry beans in bulk whenever possible. If you’re not using dry beans, switch to doing so as it’s far cheaper than using canned beans and if you’re cooking a ton at once it actually won’t be much more work than opening many cans. The same is true with rice – if you’re using Minute Rice or something like that, switch to bulk dry rice and figure out how to cook it well. Buy your seasonings in bulk and also buy your sausage in bulk – you may want to consider talking to a meat locker to see if you can bet sausage like he likes in a bulk order and freeze what you’re not using at the moment.
Just make sure that he is eating some other things, too, for nutritional balance!
(I actually like spiced red beans and rice, much like your husband, but I also add a bit of okra to it myself, and I’ve made lots of individual containers of it in the past… I smell a future article idea!)
Q5: Personal growth and development books
I’ve decided to commit to reading two books a month in 2017 on personal growth and development. I have four or five already chose and I am emailing some people whose opinions I trust for some suggestions for this list. I plan to read anything that’s suggested in duplicate! Could you please share five or so non-finance personal growth and development books that you recommend?
This is like drinking from a fire hose for me. I love reading personal growth and development and psychology and philosophy books of all kinds.
Here are five I’d probably recommend to anyone. Outside of finance-related books, these five have probably had the best positive impact on my life.
How to Win Friends and Influence People by Dale Carnegie is a spectacular read if you ever regularly feel uncomfortable interacting with people and wish you were better at it. This book is basically a step-by-step manual for introverted people, explaining how to improve your social skills. I found it invaluable.
The One Thing by Gary Keller and Jay Papasan is probably the best book to read if you ever feel like you have 25 big goals you’d like to achieve but can’t ever make progress on any of them. It’s essential reading for a person with ambition and goals but without a strong sense of direction.
Getting Things Done and Making It All Work, both by David Allen, were key in terms of actually figuring out how to translate the things I needed to balance in my daily life and my big central goal into a strategy for focusing and actually accomplishing things each day. Getting Things Done was more strictly practical, while Making It All Work was more philosophical; I think they make for great complementary reads.
The Obstacle Is the Way by Ryan Holiday is a wonderful book that distills the very useful practice of stoicism into modern life, using the principles to help a person mentally handle the challenges of life and succeed not only in spite of obstacles, but because of them. This is a book that’s densely packed with ideas, so it’s well worth a slow read.
Q6: Breaking online shopping addiction
I am hopelessly addicted to online shopping and I don’t know how to break the habit!
Whenever I think of something that I want if it isn’t expensive I just go on Amazon and buy it in like five seconds. I get it just with two or three clicks. Even at other websites I just enter my password unconsciously and can complete an order in like fifteen seconds.
I usually regret the order but then it’s too late. Half the time I forget the order until it arrives at my door.
Don’t know how to break the addiction! Credit card bills are breaking me!
If I were you, the absolute first thing I would do is cancel the credit card you have memorized. Call them up and close the account or, at the very least, request a different card number and close the old one.
What this will do is break your ability to “one click shop” on Amazon as well as your ability to enter the credit card data online from memory.
When you get the new card, put it up. Don’t use it regularly. Start living solely from your checking account, without using your debit card online.
Yes, you’re going to be breaking yourself of online purchasing. It’s going to be difficult. There will be stuff that you believe that you need online. You don’t need it. Cut all of it out for now.
Spend some time living just off of cash and without any online purchases at all. See where that leads you.
This next question is almost exactly the opposite of Maxine’s question, so I thought it’d be fun to put them side by side.
Q7: Breaking free from excessive frugality
I am a 44 year old single male. I work as an engineer and make $86,000 per year. My job is exceedingly stable.
I live in a small one bedroom apartment that is functionally the loft over the garage of an elderly couple. I cook all of my own meals. I mostly just read and go on walks and jogs and go bicycling on the weekends. I have a few friends in the bicycling club and we have actually gone on group bicycling trips/vacations together the last few years. I’m not very social but I am happy with that.
Last year, I managed to save just shy of 83% of my income. I have enough money to retire in 3 years if I want to and have enough investment income to match my current salary but I spend only a small fraction of it as it is. But honestly I don’t know what I would do with all of that time.
I guess what I’m saying is that lately I’ve begun to feel like I am excessively frugal and I am trying to figure out how to break free from that excessive frugality. I feel like I am in a life rut and my low spending is part of the reason why.
Do you have any suggestions? I find your columns to be wonderful reading and you seem to have many insights into personal finance and how it intersects with psychology and philosophy.
I have two suggestions.
First, I would start trying out new activities in your spare time. Try checking out the various civic groups in your town just to see what they do and what they’re like. You can likely find a list of them on your city’s website. I would also visit Meetup and see what groups are in your local area and visit a lot of them, even if they don’t seem perfectly up your alley. The goal is to try things you’re unfamiliar with and see what sticks.
What you’ll eventually find is that there are things that you are drawn to doing. Don’t be afraid to dig deeper into new things that you discover during this process. There will be some things that click and more things that won’t, but it’s worth the process to find the things that click.
Once you find some new things, spend money on the things you spend time on. That’s a great principle to apply to your spending. I often figure that for every hour I purposefully spend on a particular activity, I’m okay spending $2 supporting that activity. You may even want to shoot for more than that, given your strong savings habits.
If you use that philosophy with reading, for example, you’ll probably be able to afford a new book for every one that you actually read from cover to cover. If you apply that to, say, board games, if you spend 20 hours playing games, you can probably afford a new one. If you spend 500 hours biking in a year, you’re probably okay investing $1,000 in a sweet bicycle. It really clicks well with almost every hobby.
Q8: Spousal debt and rocky marriage
I have been married for four years. When I married my husband, he was full of ambition and the two of us had great careers. In 2015, my husband’s previous employer went belly up, leaving him without work. Since then, he has become extremely bitter. He halfheartedly searched for work for a while but now he doesn’t even bother. I come home from work and while he has usually done some household chores, he’s usually camped out in front of the TV and very grouchy and doesn’t want to hear about my day. Our conversations are more and more limited and extremely negative.
We have been living off of my income for the last several months and part of that has been used to pay down his student loans. He refuses to put them into forbearance.
I love the man he used to be and not this grouchy leech. I am getting more and more frustrated with our marriage. The thing that keeps me sticking with it right now is that I know the man I used to love is in there and I see him peeking out sometimes.
I don’t know what to do. What would you do if you were in my shoes?
If I were in your shoes, I would basically tell my spouse exactly what you have written above. Tell your husband flat-out that you don’t mind that he is unemployed, but you do mind that he is unmotivated to do anything to fix that situation. I don’t think any spouse would be angry with their partner actively searching for a job, so tell him that.
Make it clear that you married a strong man who took care of life’s challenges, not a shell of a man who sits on the couch and looks for others to blame for his problems.
Be aware that there may be psychological problems involved here. This sounds like there may be some level of clinical depression involved, so you may want to give him an ultimatum that involves either searching actively for work or seeking medical help. If he’s willing at all to do either, then help him do it and get him there. If he’s unwilling to do either, then I would consult a marriage counselor as a first step to see whether this marriage is salvageable.
Q9: Large collection of CDs
What does one do with a large collection of CDs? I have about 500 CDs from my college years when I was a music addict and worked at the college radio station. They’re all in boxes and I just listen to Spotify nowadays. I can’t find a store that will even take them. Do I just take them to Goodwill or Salvation Army and get a donation receipt?
If I were you, I’d make sure each CD was in the correct case with original art and in good shape and is still listenable, and then make a giant list of those CDs.
Once that’s done, I’d send all of those CDs to Amazon in one bulk shipment to be sold on the Amazon Marketplace as “Fulfilled by Amazon” items. When you do that, Amazon handles all of the shipping for you to individual buyers, but takes a cut of each purchase.
Here’s a description of the Fulfilled by Amazon program. It’s just about perfect for what you’re wanting to do here.
Q10: Inexpensive tutoring for high schooler
My son needs a math tutor. He is in tenth grade. Tutoring services are expensive around here and I can’t afford them. Any suggestions?
The first thing I’d do is touch base with your social circle and see if there are any adults or children older than your son who might be willing to tutor him in math, then negotiate with that person directly for a fee that you’d both be happy with.
I have multiple friends who tutor high school and college-aged students in their spare time. Many of them negotiate directly with the students or their parents for a rate that’s lower than what tutoring services charge but pays the tutor more than they get from the service. They’re effectively cutting out a middleman for the benefit of both.
If you’re checking on people, don’t be afraid to ask for some evidence of their math skills, as you don’t want to pay someone who doesn’t have some level of mastery over the material.
Q11: Frugal sore throat strategies
My throat is incredibly sore and I cannot afford to miss another day of work. Feel tired too. How do I make it tolerable? My job mostly involves picking orders at a warehouse.
On days when I have a mild cold and don’t feel well, I have a bunch of little strategies that I use.
I usually start the day off with a healthy breakfast, something with protein and fruit in it. Eat an egg or toast with peanut butter on it and pair it with a banana or an orange. That combo does a lot to improve a sense of feeling good throughout the earlier part of the day.
Don’t drink coffee first thing in the morning. Wait until you’ve been up a couple of hours before drinking some, and then drink some more in the early afternoon. Yes, the first couple of hours might be a little rough, but you’ll get more benefit this way.
Be up front with your boss that you’re not feeling 100% today but that you’ll be doing your best. Most bosses are understanding of this, particularly if you’re reliable and a regularly solid performer.
Take your breaks outside and get some fresh air and sunshine. Don’t just collapse in the breakroom. Eat lunch outside if at all possible, too.
After work, go straight home and go to bed after eating something. Seriously. Bed rest is the absolute best thing you can do to help your body fight off a cold.
If you want to take a medicine, cough drops can help the roughness of a sore throat, but use a potent one like Fisherman’s Friend. A simple over the counter painkiller can help a little, too – I usually take Advil, but Tylenol can help.
Q12: Finding reliable lawyer
I need to find a reliable local lawyer to help me read through a contract and see if there are any loopholes that could be a ripoff. What do I look for?
In general, I’d trust my social circle more than anyone else. Simply ask all of your local friends whether or not they’ve had any experience with local lawyers, particularly in terms of reviewing a contract. Follow any recommendations you get.
When I’ve done this in the past, I’ve usually been loaded with suggestions.
You’ll find that when you ask for help in an area where someone can actually offer genuinely helpful advice, people will almost always jump at the chance to help. This is one of those opportunities. Talk to your coworkers, your friends, and your family and you will find some great suggestions.
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.