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. Trailer home dilemma
2. Rolling annuity into IRA
3. Political encouragement
4. When to replace rechargeable batteries
5. Upgrading electronic devices
6. Maintaining electronic devices
7. Mobile device security
8. Dave Ramsey and his courses
9. Buying house with temp job
10. Small car for commuting
11. Seasonal affective disorder advice
12. Wedding advice
One of the most consistent problems I’ve found in my life – something that is also a pretty big inherent flaw in myself – is that the instincts I have in the moment don’t always line up with the best intentioned conscious plans that I have in my head.
If I give something a lot of rational thought outside of the heat of the moment, I’ll often recognize that certain behaviors and choices are really what’s best for me in the long run. In fact, it often seems obvious.
Then, in the heat of the moment when I am faced with a choice regarding that aspect of my life, I don’t always make the choice that is consciously the best one for me. Usually, this comes in the form of a short term desire subverting a long term desire or need (or, as my wife likes to call them, cookies).
The thing to remember is that it’s not all or nothing, and that the real battle is training those unconscious impulses so that you start moving naturally toward success.
For me, the real frontier in becoming a more financially successful person – and a better all-around person – is to continually work on those instincts and on the underlying principles that I unconsciously use to make instinctive decisions. That takes time, but if one can start to correct them and build better ones, one will end up with a much better life over the long term.
My husband is about to get a job offer that will advance his career. The position will likely last just a few years, but will be a stepping stone to move into the filed he’s been preparing for.
The big downside to the job is that we will be moving to Silicon Valley, which has the highest real estate costs you can imagine. Sub-1K sq ft houses go for $600K and up, and rent on a decent 2-bedroom apartment will likely be $2500/mo. His pay will be increasing, but not at the same rate that our housing costs will increase. I don;t want to jump into buying in that market, especially since we don;t know if we’ll stay more than 2-3 years. He doesn’t want to pay $30K a year for an apartment and just toss that money away. So we’ve hit upon what might be a crazy solution. We’re very seriously considering buying an RV-type travel trailer and living in an RV park.
Even looking at new prices, we could get a 26-ft trailer with a slideout (for more floor space) and bunks at the back with a queen up front for around $25K. If we buy used, we could likely find something for even less. RV park monthly rates in the area range from $1K-2K a month, but we’d own our trailer and would be able to sell it later or move it with us if we decide to move on. (Note, I am talking about a camping trailer, not a mobile home. Mobile homes still sell for about $400K in that area)
What makes this slightly crazy is that we also have two small children, ages 2 and 3. This is why we’re looking for a trailer with bunks at one end and a queen bed at the other, so the kids have space and we have privacy. We’ve gone to a local RV store and sat in a few trailers of this size, thinking about if we could seriously live in this. We would also have a pseudo-free storage space in the area thanks to generosity from a previous employer.
TL;DR: We’re moving to a very high cost of living area, and are considering living in a large camping trailer for at least a year with two small kids. Are we crazy? What would you do faced with this situation?
I have zero objections to this situation provided that the trailer is in a safe area. Your objective is to provide food, shelter, clothing, safety, and love for those children and for the two of you, and you can more than adequately do that in a large camping trailer for a very long time.
In fact, you won’t be alone in doing this in the Silicon Valley area. I know of a family – an old, distant college friend – who did that with his wife and a small child for a year in the Silicon Valley area, except they actually lived in a tent somewhere. I do not know the specifics, but they lived that way for about ten months before he found a really good job outside of the Valley and they moved on. That job and situation turned out to be the springboard for a very good life.
Part of the reason that such situations seem “wrong” is that many people are acclimated to the idea that families must live in a nice house somewhere or at least in a nice apartment. That’s often not true and is in fact unnecessary, particularly when they’re young. Young children mostly need love and appropriate attention and their basic needs cared for. You can easily provide that here.
Can one roll a pre-tax annuity into an IRA or other retirement vehicle (403b, 401k, etc.)?. My wife has a small annuity from early in her career when she wasn’t eligible for a retirement account. She’s since started a 403b with Vanguard while the annuity has just been sitting there. We’d like to simplify our retirement accounts and are interested in rolling this over, even though it’s only a small amount.
I don’t know the specifics of the plan in question. In general, IRAs and other retirement vehicles can only accept rollovers from qualified annuities. Since I don’t know the specifics of the annuity, I can’t answer your question.
How can you find out? Contact Vanguard and talk to them about the annuity you have and whether it is qualified to be rolled over. They’re going to want that money under their management, so if it can be rolled over legally, they’ll definitely tell you how to do so.
Don’t the current manager of the annuity, as they have no business interest in helping you roll it over. Focus on the recipient – in this case, Vanguard.
Just read your comment about possibly running for your local city council. I highly recommend it. I’ve been on our local council for six years and find it very rewarding and a great opportunity to contribute and positively influence (in my opinion ) the community. It takes a bit of financial investment for campaigning, etc., but well worth it. You’d be great. I’m also a moderate and there is still a place for us in politics!
Thanks for the encouragement. As I have become slowly more involved in my local community, I’ve begun to really notice the impact of lots of local issues and it has raised some desire in me to become a more active participant in the decision making process.
However, it turns out that a good friend of ours, someone we are very much on the same page with in terms of community issues, is strongly considering running, and I have no interest in running against her. In fact, I’m much more likely to help out her campaign, along with my wife.
The words of encouragement are appreciated, though.
Next, we have a series of interrelated questions from the same reader.
1. My laptop (7 years old old) and smartphone (3 years old) are both starting to get a bit sluggish when it comes to performance. How do I know it’s time to replace them?
It’s time to replace them when you can no longer do the tasks that you need to do with those devices. What tasks are you trying to do that are severely impaired or impossible? If you can’t name any, then it’s not time to upgrade yet.
In general, I replace hardware only when it fails or when software or hardware support begins to disappear for the key pieces of software that I use. That’s why I’m using several-year-old computers for quite a few things and I still have a several generation old smartphone.
I don’t see the need to upgrade anything if my current devices can already do all of the things I need.
2. When replacing devices, should you try to buy the same model you had previously, the next one in line, or the latest version? For example, should you replace an iPhone 5 with another iPhone 5, an iPhone 6, or an iPhone X?
Here’s how I figure things out. I estimate how many years it’s been since the device I’m replacing was brand new. Let’s say it was four years.
Then, I look at the devices for sale and ask how many years are left in that device before I replace it. A brand new phone would have four years. A year old phone would have three. A two year old model would have two.
Based on that, I figure out the cost per year of my use. If the brand new phone is $500, then the cost per year of use is $125. If the one year old phone is $300, then the cost per year of use is $100, and the one year old phone is a better bargain.
I do that with almost every hardware replacement, whether it’s a phone or a tablet or a laptop or a desktop computer.
3. When you get new devices, what’s the best way to keep them working at their peak?
Honestly, it depends on the device, so your best bet is to simply read the manufacturer’s instructions (for starters) and any usage guides out there. They’ll usually tell you whether you should completely run the battery down before charging it or whether you should leave it on the charger or not.
Different battery types and different devices have different optimal usage, so there isn’t just a ready-made answer for anything. Some devices work better with one practice, while others do better with a different practice.
The key is always to do the research regarding the exact device you have.
4. How do you make sure all your data is safe on your devices? I’m paranoid about having one of them crash and/or stolen, which would be a hassle from a security perspective and a pain in terms of getting everything set up again.
No data online is ever perfectly safe. What you should be doing is making sure that your data isn’t “low hanging fruit,” meaning that the work needed to get at your data is going to be long and intense enough that a hacker won’t bother.
A few simple steps to take:
– Have different passwords at each important site that you use. If you don’t want a random person in that account, it should have a unique password. Make it something uncommon, too – don’t just use a common word. Mix it up with letters and numbers and symbols.
– Don’t store passwords on your device for any important accounts. While it’s inconvenient to do so, it’s far more secure to type in the password each time you use it.
– Get software updates for everything as soon as they’re available. Check for updates every time you turn on the device. 99% of the time, this is the route for best security.
– Never click on a link in an email. If you get something from, say, eBay, go to eBay in a web browser without clicking a link.
If you follow those practices, you’re ahead of the vast majority of people and your devices aren’t going to be easy targets.
Dave [Ramsey] doesn’t exactly avoid the trappings of consumerism. Have a look at his newish house. He tends to get snappish if questioned. I took [his] course expecting some major revelations; however, anything worthwhile in it can be found online, free.
I think it’s sometimes difficult to compare lifestyles. If you have two people – one making $30,000 a year and the other making $300,000 a year – and both follow a basic principle of saving 25% of their income each year for the future, one will have to live on $22,500 a year, while the other lives on $225,000 a year. The latter one is going to have more luxury trappings, even though they’re following the same principles.
This is why income is such an important part of looking at personal finance. It’s also why it’s sometimes hard to compare nitty gritty specifics between people and why broader principles tend to make more sense across lots of different people and situations.
I do agree with you that virtually everything one would need to know about personal finance can be found for free online. I think what people pay for is a particular voice and style and consistency. Dave is a “coach” – sure, he’s saying common sense things, but he does it in a particular strong “coaching” style that really clicks with some people. The things he’s actually encouraging people to do are straightforward and found everywhere.
I work at a public hospital as a temp. Replacement. On call unless I receive a contract. I have been with my partner for about 3 years now and have been looking at buying a house. I have no debt and in the last 4 years I have been able to put 15k away (which is around the 5% needed for downpayment in my province). For the first 2 years on the work force, I had a full time permanent 40 hour week job. No pension, low pay scale. I decided to further my career and work for the goverment for the past 2 years. So far out of 2 years I have had only 9 days no pay because of no work. This summer we made an offer on a house and were about to buy it for 230k but in the end, because of events on the sellers part (death, lying on reports, water damage, etc) we pulled out. In the spring, I sold my old beater car and leased a 2017 Corolla at 0% interest with the intentions of buying it out. My coworker who has been a permanent employee for years was giving me advice and was saying that I should not buy a house until I have a permanent post ( which can take 1-8 years to acquire) or wait until I have the money. Is it wise for me to continue looking at houses to buy in early spring or am I making a mistake and should wait like my coworker mentioned? What is your take on this?
You are a temp employee, which means that it is extremely easy for your employer to let you go if they decide you aren’t needed any more. What happens to that house, should you buy it, if you go in the next day and your employer says goodbye?
Do you have the financial resources to keep the house for a while? Does everything fall apart immediately? How easily can you become re-employed? Can you sell before you can’t pay the mortgage?
Part of a successful mortgage is the reliability of employment of the homeowner. If your job is a temporary one, not only are you running some risk with that mortgage, you may find that banks don’t want to lend you money, either.
I think you should wait until you’re permanent unless you have substantial unmentioned financial resources.
I now have my first job that’s not within walking distance of home. Which means I need to buy a car for the first time in my life. What do you suggest for a vehicle that’s primarily for commuting? I don’t want a tiny car that I feel cramped in but other than that no requirements.
My default manufacturer of choice is Toyota. If I don’t have any extra reason to move to another manufacturer, I’ll choose a Toyota, as I feel they offer the best bang for the buck of any major car manufacturer.
I would shoot for a late model used Toyota entry-level car, preferably with a hybrid engine to get really good fuel efficiency. Look around for a two to four year old Prius, Camry, or Corolla. The Camry is the largest of the three and probably the least fuel efficient; the Prius is probably the smallest and the most fuel efficient.
If I were you, I’d go to a Toyota dealer and test drive all three to see what fits for you, then leave the lot without buying. After that, I’d several dealers and tell them you’re looking for a 2-4 year old well maintained version of your model of choice. See which one offers you the best deal and take it.
I get the winter blues pretty badly each year. A good friend says that I probably have seasonal affective disorder. I looked into things you can do for it and they’re all expensive and seem unnecessary, like buying a light box. What are some frugal ways to handle this?
I get the winter blues, too. I do have a light box that I purchased a decade ago but I actually don’t find it to be all that effective and haven’t actually used it in a few years. Instead, I do four things that I actually believe make a difference for me.
First, I eat more vegetables and fruits. I eat a plant-heavy diet all year, but I make a strong effort to eat lots of fruits and vegetables in the late fall and throughout the winter.
Second, I have full spectrum lighting in areas where I spend a lot of time. My office has full spectrum lights, as do some of the lights in the main living areas of our home.
Third, I go outside whenever I possibly can. Iowa winters are cold (it’s really cold as I write this), but I still try to get outside as much as possible. I’ll take our dog for a walk or go on foot to the post office or just challenge myself to walk around the block. This is admittedly much easier on milder days.
Finally, I just move around as much as possible. I do some exercises at home, like jumping jacks or leg lifts or squats or planks, just enough to make myself sweat a little, and I do that a few times a day. I find that there’s a nice burst of energy after doing this, there’s a long tail of improved wakefulness that lasts for quite a while with a low intensity.
I am 28/F and getting married in the fall after accepting a proposal on NYE! Yay! I do not want an expensive wedding though and my husband to be is on board too. The problem is that both of our mothers already have visions and plans of some crazy wedding which they seem to assume we’re going to pay for. Advice? Did you deal with this for your wedding?
This is your wedding. Do it how you want. If your mother and your future mother-in-law want to throw out grandiose visions, let them. In the end, though, it is your wedding. Just make that clear to them.
This is particularly true if you’re the ones footing the bill. If someone else is paying the bills, sure, you can let them have some input, but even then, they don’t control your wedding. It is your big day. If it’s all on you financially, though, then it is your event and they can decide whether or not they want to accept the invitation.
Listen to their daydreams. Nod. Smile. Then plan the wedding that the two of you want. If your mother or his mother isn’t a fan of that, well, it’s not their wedding and they can decide for themselves whether they want to accept the invitation to your wedding.
Got any questions? The best way to ask is to 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.