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. Kids and delayed retirement
2. Inspiring personal finance book
3. Clearing drains
4. Cheap coffee technique
5. External motivation
6. Three paycheck month
7. Rent is throwing money away
8. Professional photos for kids
9. Preparing for collapse
10. Figuring out early retirement target
11. Finding new social circle
12. Cheap decent notebooks for class
This past weekend, my oldest son got third place in his division in a 5K race. He was awarded a small trophy for the finish. At the same time, my youngest son got third place in his division in the same 5K race. He was also awarded a small trophy for the finish.
My daughter also ran in the race. However, she did not make the top three. She didn’t get a trophy or a ribbon or anything for participating.
So, why am I mentioning this? For starters, my daughter didn’t get upset over this. Instead, she decided after the race that she wanted to practice to get better at the 5K so she could perhaps win a trophy next year. Not winning motivated her to do better.
Second, both of my sons wished they could have won the larger trophies that went to the first place finishers in their divisions. They are similarly motivated to train in a 5K. Not getting first place motivated both of them to do better.
The motivation comes from self-improvement. They did well, but they know they can do better. They want to do better. The motivation comes from within.
I guess, in the end, it really doesn’t matter if everyone gets a “participation award” or not. If a parent encourages self-improvement tendencies, both in themselves and in their children, the children will naturally want to improve themselves. They’ll want to do better next time and they’ll want to figure out how to do better next time. That phenomenon is completely separated from any awards they happen to get.
The real reward isn’t a trophy or a ribbon. It’s doing better than you did last time. It’s hitting the goals you have for yourself in your head.
The goal of any of life’s journeys isn’t to beat others. It’s to beat your previous performance. You are your own metric for success, not anyone else, not participation ribbons, not trophies.
Q1: Kids and delayed retirement
Read your article on things to think about early retirement and I had a question about having kids. I don’t believe that having kids can delay retirement by ten-fifteen years. What evidence do you have for that?
– Larry
In that article, I was speaking largely about my own experiences raising children, but that experience really does line up with the statistics. The USDA estimates that it will cost $245,000 to raise a child from cradle to high school graduation. I have three children. The average American household brings in around $60,000. Ten to fifteen years is a pretty reasonable alteration in retirement plans given those numbers.
Now, that doesn’t mean that each child is going to cost $245,000. There are definitely some shared expenses – for instance, our two sons share a bedroom, and our youngest wears a lot of hand-me-down clothes and plays with hand-me-down toys. That doesn’t change the fact that each child has food costs, health care costs, and at least some clothing and housing costs.
That adds up, no matter how you slice it. Is it $245,000 per child? I don’t think it’s quite there, but it’s definitely enough to alter our retirement plans, especially since that’s really where most of the expenses for our children are coming from.
Q2: Inspiring personal finance book
I read Rich Dad Poor Dad and was really inspired to start investing. Then I did some homework online and found out that the book is actually junk in terms of how to actually do it. Turns out you can’t just show up at the courthouse and buy dirt cheap properties.
Looking for personal finance/investing books that are inspirational and actually have practical things that work.
– Lonnie
Personally, the book that inspired me the most to make financial changes in my life was Your Money or Your Life. It really opened my eyes to what was possible if I made good choices with my finances and it made me want to change things as quickly and as intensely as possible. It’s not really an investment book, but I would definitely describe it as an “early retirement” book.
I don’t think any investment book really “inspired” me, but the one that clicked with me more than any other was The Bogleheads’ Guide to Investing. It’s just a very strong guide to investing, from the philosophy behind it to how exactly to invest. It is a great pairing with Your Money or Your Life, in my opinion.
I’d also like to point to my own book, The Simple Dollar, where I use my story as the backbone for a lot of basic financial advice. My focus in writing the book was to keep it simple and keep it inspirational, so it’s fairly short, focuses on high-impact basic financial strategies, and includes a lot of inspirational stories from my own life interwoven with the strategies.
Q3: Clearing drains
The drain in my bathroom sink basically stopped emptying out the water so I went to the Home Depot and asked for help. The guy told me to buy a big jug of Drano and I did and it helped for a while but about 3 months later it’s barely draining again. Drano is expensive so what else can I do?
– Kristina
There are a lot of things you can try.
The first thing I’d try is to pour some boiling water down the drain. Fill up a tea kettle, get that water to boiling, then pour it slowly down the drain and see if that helps.
If that doesn’t help, get about 1/2 cup of baking soda and dump it into the drain, let it sit for a couple of minutes, then follow that with about 1/2 cup vinegar. This will probably foam up like crazy, but it will likely help.
If that doesn’t help, get out your plunger, fill the sink with some water, and actually plunge it for a while. If your sink has an overflow hole, you’ll need to plug it with a wash cloth for plunging to work.
If that doesn’t help, go back to Home Depot and ask for a Zip-It – I honestly can’t believe they didn’t tell you to buy this first. It’s basically just a long, thin plastic rod with a bunch of teeth on it that will cost you a couple of dollars. You just take it home and run it down your drain, twist it around a few times, and pull it out. The teeth grab onto whatever is clogging the drain (usually it’s hair) and yank that stuff out. It’s going to be foul when it comes out, but it will really help if the other steps don’t.
If none of that helps, call a plumber. Those steps above will clear basically anything that Drano will clear, so if those don’t work, a plumber is probably in order. They’ll likely bring a drain snake with them – imagine a larger and very long version of the Zip-It – and find where the clog is, because it might be far below your bathroom sink.
Q4: Cheap coffee technique
I just wanted to share a quick technique that I’ve used for really good cheap coffee. I have been a coffee drinker for 20+ years and have never used a coffee pot.
Take two cups of coarse ground coffee (I have my own coffee grinder) and put it in a quart jar with a lid. Fill it up with water until it’s basically full and then put the lid on and stick it in the fridge for 24-48 hours. Then take out the jar and pour it through a fine mesh strainer. The liquid is delicious cold coffee. If I want it hot, I microwave it, but I actually prefer it cold. I also sometimes make “coffee ice cubes” by pouring coffee into an ice cube tray.
You can add whatever extra stuff you want to it at this point.
I like this technique because I don’t have to wait for the coffee pot or anything. It’s already in my fridge ready to go and if I want it hot it takes about 30 seconds in the microwave. I don’t have to buy a coffee pot either.
– Kaylee
This actually sounds very appealing to me. I’m not much of a coffee drinker, but when I do drink coffee, I like it in the afternoon and cold with just a little bit of milk in it. I could see myself using this exact technique, except actually straining out the grounds and keeping the coffee in the fridge for a while afterwards in a sealed jar.
My wife is a coffee fan and she uses something similar when she’s in a hurry. It’s a special coffee cup she received as a gift. It’s basically a cup with an integrated straining section that functions like a tiny French press, so what she does is that she puts the grounds right into the mini-strainer while water is heating in the microwave, then she pours the hot water in and presses down to strain it through the grains. She then just tosses the strainer part in the sink and has a cup of coffee to take with her.
The point is that you don’t need a coffee pot to enjoy coffee, especially if you’re the only one in your house who enjoys coffee. At that point, a coffee pot is just another expense that you probably don’t really need.
Q5: External motivation
I am 26 years old and recently left the military for a civilian job. I have always thrived on external motivation. During my football career in high school, college, and one year semi-pro, I had a hard time motivating myself but my coaches could always push me. The military was the military – tons of external motivation. But now I’m basically on my own.
Where can a person find external motivation for financial success? I guess I could hire a financial advisor but they are quite pricy.
– David
There are a few routes you can follow here.
One route is to make automation your external motivator. Automate all of your savings and make that savings plan fairly intense. That way, you have to make ends meet on what’s left over.
Another route is to find a personal mentor of some kind. Look for someone in your life or in your workplace who has found the kind of success you’re looking for and start picking their brain. Ask them what they did to get there and take copious notes. Use their story and comments to motivate you.
My best motivator is kind of a mix of internal/external – it’s my “future self.” I want my “future self” to have a great unburdened life and I know that right now is when I need to be putting in the work to make that happen. I visualize my “future self” judging what I’m doing right now.
Q6: Three paycheck month
A few months ago I started turning my finances around and have paid off two credit cards so far. Feels good.
I have been doing this while planning around two paychecks a month since I get paid every other Friday. I pay some bills with the first paycheck of the month and others with the second.
This is my first “three paycheck” month since I started turning things around. I just realized it.
My question is what do I do with that extra paycheck? I used to just spend it on dumb stuff and that temptation is still there.
– Luis
From that third check, take out enough money to cover your basic expenses for those two weeks, like food and transportation and household supplies that you’ll buy. You can even keep a little more for some fun entertainment or hobby purchases if you like.
Take the rest of it and pay off or drastically pay down a debt. If you don’t have a debt, use it to build an emergency fund by putting it in a savings account. If you already have that, put it into a Roth IRA.
Regardless of what you choose, the idea remains the same: put it to useful personal finance work immediately so that it’s out of your hands and not just sitting in your checking account begging you to spend it.
Use that money for something financially responsible as quickly as possible and you’ll feel pretty good about things.
Q7: Rent is throwing money away
Can’t believe you ever advocate for renting an apartment instead of buying a home. Renting is just throwing money away. Better off making house payments to build equity.
– Terence
I’m going to make a counterargument to that using what’s happened to us in the last few weeks.
First, we paid our property taxes, which meant a few thousand dollars went up in smoke. This is an annual expense. If we rented, we wouldn’t have to pay this.
Next, we had to replace our damaged patio door. If we rented, we could call our landlord and have this replaced for free.
Next, our homeowners insurance bill came in. This is an annual expense. If we rented, this bill would be renters insurance, which would be way cheaper.
Next, we had to get an estimate on sidewalk leveling after the city sent us a letter regarding it. If we rented, this would be our landlord’s job.
This is the reality of home ownership. It’s pretty expensive. Even if the equity in our home is going up, it has to be going up awfully fast in order to make up for expenses like this.
That’s not even counting the expense of mortgage interest or mortgage insurance or homeowners association fees, either.
Renting isn’t always the best solution, but neither is home ownership. I think that both are good solutions depending on the specifics of the situation.
Q8: Professional photos for kids
We have a newborn and we would like to start getting annual professional photos taken of her so we have a series of photos as she grows. However they all seem so expensive! I don’t think I could make it look professional on my own either. How do I do this?
– Nikole
Depending on your desires, most school districts have an annual school photo package at a pretty reasonable rate that should handle this when your child reaches five years old or so, so you’re really only worrying about this for the first few years of their life.
My suggestion for baby and toddler photos is to use JC Penney portrait studio, if there’s one near you. They usually have a very good coupon available that you can use for your first package which will end up giving you a ton of prints for well under $100. Then, after that, they’ll start sending you coupon packages that are even better. I’ve seen coupons in recent years that were as low as $1 per sheet with no sitting fee, which meant that my kids could get pretty good photos taken for about $10 for a pile of prints.
I’m not as familiar with the offerings from other department store chains, but my guess is that many of them offer similar discounts and packages. You’ll just want to shop around. I mention JC Penney because they’re the chain I have experience with in the past.
Q9: Preparing for collapse
One of the things I have noticed about The Simple Dollar is that you have a pervasive optimistic view about the future. Your articles all have an underlying assumption that the world will be the same or better than it is right now for the rest of your life.
But what if you’re wrong?
My belief is that we are heading for a serious environmental collapse in the next 20-25 years that is going to have profound negative impact on our way of life. We are going to see intense dying off of lots of species that hold diseases in check leading to global pandemics, an enormous rise in ocean levels that will endanger pretty much every place on the coasts, and political and religious upheavals to match. I believe we are already on the downhill slide from the peak of human civilization for a very long time.
You’ve made it very clear what you think a person should do if they hold an optimistic future view. What should a person do if they hold a pessimistic view?
– Aaron
I think that the answer to that lies in some flavor of “prepping.” I assume you and most of the readers of The Simple Dollar are aware of the “prepper” movement, where people do all they can to prepare for environmental and cultural unrest.
If you believe that things are going to collapse, you should be investing in making a sustainable lifestyle for yourself that you’re happy with. By “sustainable,” I mean that you can continue to live that lifestyle without the services that people expect to have these days: no cell phones, no internet, no electricity, no running water. What can you do to build the best life if all of those services go away?
Your time should be invested in mastering all-around skills like carpentry, plumbing, gardening, mechanical repair, and so on. Your money should be invested in making yourself as independent from services as possible – having your own well, having your own sources of power (like solar panels on your roof or a small wind turbine), having your own sources of food (like stored dry goods and a robust garden), and having means to protect these resources as well.
The thing is, this is actually a form of financial independence as well. Once you have everything on your property that allows you to have a good lifestyle without the grid, what do you need to work for?
My vision of financial independence is not centered around this type of societal collapse. I think there will be some environmental changes in the coming years, but I also am a big believer in human ingenuity and problem solving. I think, in general, humankind will move forward rather than backward. Even in the so called “dark ages,” mankind progressed forward, even in Europe, but particularly in the Middle East and Asia.
The only source I can think of for global regression is if there is a catastrophe that eliminates a very large portion of the human race, at which point all the prepping in the world probably won’t help you.
Q10: Figuring out early retirement target
How do you figure out what you would need to retire early? What’s your “target number”?
– Stephen
For me personally, I want to have no debts and enough money in the bank that I can live and pay my income taxes off of 2.5% of the total balance of my investments each year without counting Social Security. 2.5% is a very safe long term withdrawal rate.
The question then becomes how much are my living expenses and how much taxes would I have to pay. This depends, of course, on how the money is invested. The majority of my investments are post-tax and quite a bit of that is in a Roth IRA, so my taxes are going to be pretty low. If most of your money is in a 401(k), you’re going to have a bigger tax burden.
My family currently lives on about $28,000 per year. This is for a family of five and covers our food, clothing, property taxes, property upkeep, health care, a bit of travel, some hobby expenses, and so on. We could cut that a little and we could also inflate that. I expect that inflation is going to creep up at about 3% a year going forward, so I’d probably use a number closer to $40,000 for this calculation taking everything into account.
So, I just take that annual target number – $40,000 – and divide it by 0.025, and I get $1.6 million.
Now, if I lived a little cheaper, that number would get lower. If I figured a 3% withdrawal rate, that number would get lower. If I were a bit less “future thinking” when it comes to inflation, that number would get lower.
My point is this: that magic “early retirement” number is the result of a lot of factors. This is just a really rough overview of what I consider for early retirement.
Q11: Finding new social circle
For many years I hung out with a group of people who all worked in the same industry in our town. We went to each others homes for dinner and had our kids play together and so on. Over the last 3 years, all of them have switched jobs and moved away and thus my family’s social calendar has basically gone from full to mostly empty. I have no idea how to “fill” a social calendar as an adult. My wife is a freelancer that works from home for remote clients. The new people at my job are all younger than me and single and mostly interested in going to bars all the time. How do you find friends as an adult?
– Chuck
Think of something you and your wife both enjoy doing. It doesn’t really matter what it is. Just think of at least one thing – and ideally a few things – that you enjoy doing together and would enjoy doing with other adults.
Then head to Meetup.com and look for groups in your area that touch on those things. Look for anything close to you and similar to your interests.
You also might want to look at your city’s website and the websites of cities nearby and see whether they have a list of community organizations.
You also might want to check in on businesses that deal with the things that you’re interested in and see whether or not they have any social events that they plan or are involved with.
Then go. Bite the bullet and go to some of these things. Do your absolute best to socialize; don’t expect the people there to just come and throw themselves at your feet. Talk to as many people at those groups as you can. You’ll click with some of them, and those people can become the beginnings of a new social circle for you.
You’ll cultivate friends. It’s easier than you think.
Q12: Cheap decent notebooks for class
Do you have a suggestion for an inexpensive notebook for college class notes? The one subject college ruled cheapies from Walmart always seem to utterly fall apart by the end of the semester and every recommendation I ever find is for $10 or more per notebook.
– Carrie
I agree with you in terms of the cheap spiral-bound one subject notebooks from Walmart. When I was in school, those notebooks were always in disastrous shape already by the time the first test rolled around. They were utterly falling apart.
What I’ve discovered with notebooks is that, up to a reasonable point, you get what you pay for with them. Sure, you can start getting into really expensive stuff that’s needlessly overpriced, but the vast majority of notebooks up to about the $15-20 range are pretty much as good as what you pay for.
The question really is: what do you define as “decent”? For me, the cheapest “decent” notebook would probably be a 1″ binder with graph paper in it, preferably graph paper with hole reinforcement like this. That would be my “default” choice if I were going into college again. I’d just buy some 1″ binders and a bunch of that type of graph filler paper (I use graph paper for almost everything). The biggest worry you have here is that your binder might break at some point (it happens), at which point you just move all of your papers to a new binder.
If I were spending a little more, I’d probably buy a Baron Fig Confidant for each class I was in. They’re just about perfect for thorough notetaking for a single college course for a semester, including lectures and reading. I’d also keep a folder in my backpack with some loose paper in it for things like quizzes.
I just don’t trust a spiralbound notebook over the course of a college semester, assuming you take it to class each time, take good notes with it, and review it regularly. I’ve never had a spiral notebook survive a full semester intact.
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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