What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Blaming the lazy people?
2. Homemade cider kits
3. Building blog traffic
4. Capital in the Twenty-First Century
5. $300 a week on food
6. What happens when market drops?
7. Money rich and time poor
8. The purpose of dryer sheets
9. Stockpiling in an apartment
10. Fast food and frugality
12. Coaching and selling seminars
This Wednesday, America celebrates Veteran’s Day.
Whenever I think about Veteran’s Day, I think about a particular veteran that I know very well. Not only do I think of his heroism in serving our country during the first Gulf War, I also think of the challenges that he faced upon returning home and the impact that the experience has had on his life, both positive and negative.
Veterans have given a lot for this country for very little pay and often come home with scars that we can’t see. Paying them respect is a valuable thing.
At the same time, to me, it’s also a call that we should try to avoid creating more veterans if possible. Whenever we call our soldiers onto the battlefield, we need to be absolutely sure that we’re doing the right thing because the cost to those soldiers is immense. Over the last twenty or thirty years, there have been far too many situations where we have rushed in without considering the long-term impact on the lives of the soldiers we are sending to the front lines or the long-term impact of executing whatever plans we might have.
Veteran’s Day should be a day for honoring veterans who have given so much for us, but it should also be a reflection on the huge amount they have given and whether or not it makes sense to turn more of our young men into veterans. That is a heavy, serious question and one that should never, ever be taken lightly. Our veterans – and potential veterans-to-be – deserve that careful consideration.
Mr Hamm, while I enjoyed your article named “pretend to be rich“, you failed to address the question: “Why is it that pensions and social security are no longer part of the American fabric”. The problem with financial writing is that….all writing is the same. Yes , we do have a problem in this country when people “pretend” to be rich…but that is not a huge amount of the population. Instead, all the financial writing seems to be gently and subtly putting the blame on “the lazy people”, rather then tackle the problem straight on – which is a combination of consumerism coupled with political will to destroy security nets (moochers as the rich called it). If you are truly a good writer, then you should tackle that problem. Be balanced. I’m not sure how things in Iowa are, but I’m pretty sure there are plenty of old people who don’t pretend to be rich and whose pensions disappeared. …. I know it’s easy to write for a living, out of the house.
The problem with your statement is that it quickly becomes a political issue, and that’s not something I’m really interested in writing about. Politics today are so divisive that rational conversations about broad solutions across society are essentially impossible, particularly online where many people use anonymity as an excuse to toss around insults and disrupt conversations.
My interest is solely in the individual. Given the political and economic environment that we’re currently in, how can you as an individual person improve your financial situation?
The reality is that the economic problems people face today are a mix of broad political and economic issues and individual choices. Both sides of the coin are involved.
I actually feel as though the individual issues are a harder problem for many because it requires people to stop blaming broad political issues for their problems and instead look at themselves and their behavior.
You can start fixing yourself today. Unfortunately, you can’t do the same to Washington – even the most hopeful avenues for political change take years and years to occur.
I’ve seen you write about home made beer kits. What about making cider at home? Do you know anything about this? I’d be interested as my wife is gluten free so beer is a no-go for us. Please let me know if you have any recommendations!
I examined a bunch of cider-making kits and found that this one from Crooked Apple is probably the best one if you’re going to be making repeated batches. This kit has all of the gear you need for one batch right in the box, but for future batches, all you’ll need is apple juice, some yeast, and any other ingredients you might want to add (cinnamon, etc.).
That kit is a little bit expensive, but based on what’s in the box, it’s the most reusable kit. Many of the other “all you need in one box” cider making kits that I looked at either were lacking some key components that you’re going to want if you’re making several batches over time or else locked you in to buying specific refills from the company, neither of which you want.
This might make a good Christmas gift for one (or both) of you this year. After that, to make future batches, all you’ll need is apple juice, yeast, and any additional things for flavor that you might want to try (try adding some ginger or some hops).
I’ve enjoyed some of your posts which touched on blogging in recent months, and I wonder if you might have any advice for me to take my blog to another level. I recently started blogging or the first time about 2 months ago about a topic on which I’m very passionate. I also haven’t been able to find many other blogs at all on this specific topic, yet I know that many people are interested in this topic. So far my focus has been on creating content– I post 2-3 times a week with completely original posts of appropriate length. I have spent a decent amount of time turning a free blog template into something somewhat attractive. To date, my average article only gets about 10-20 views within a few weeks. I acknowledge that I have spent little effort promoting the blog– I do have a target audience in a closely related topic that is covered by MANY blogs, and I plan to try to tap into that once my website becomes easy enough for new visitors to share and follow. My main goals with this blog are to establish an expertise in order to lay the groundwork for a service-based research business, and also to force me to get my own research down on paper by writing about it. Do you have any advice for a novice blogger like me at this stage? Is there a “critical mass” of content when google searches might start bringing in more traffic?
If I were you, I’d attempt to write a few articles that were home runs in that they offer compelling information and a compelling viewpoint and really exemplify the best of what you think you have to offer. Make sure that those articles include some links back to your earlier articles.
Then, you’ve got to promote those articles. Find forums and other places where people interested in your topic gather and then look for discussion threads related to what you wrote about. Offer up your article. I found that actually quoting key parts of my articles worked best – I’d actually copy and paste in some material that was really relevant to the topic at hand on that message board and then provide a link back to my own article. You can do this on messageboards, on Twitter, in Facebook groups… there are all kinds of places out there to do this as long as they’re places where people gather.
You need to spend some significant time doing this. What this does is it gets some eyeballs on your articles from people actually interested in your specific topic while also helping Google (and Bing) to find your pages. If a more influential blogger finds your article, he/she may link to it.
The thing to remember is that you can write the best articles in the world, but if no one knows about them, no one’s going to read them. You have to take some steps to help people find them, but at the same time, few people like blatant self-promotion. Look for the right situation to share your articles. In particular, look for situations where your article really addresses a topic that someone else has introduced.
Did you ever get around to finishing Capital in the Twenty-First Century? Do you have any thoughts on it especially as it relates to personal finance?
I did finish it, I enjoyed it deeply, and it’s on my list of books I intend to re-read in the next year or two. While I do agree that what he says is fairly troubling, I don’t agree with people who write the book off as “socialist.” I think it’s a book about preserving capitalism.
Piketty’s basic argument is that whenever the rate of return on capital – in other words, investment income on things like stocks, business profits, and rent – is higher than the rate of economic growth – in other words, the growth in the value of everything we produce as a nation – then the wealthy are going to gradually get a bigger and bigger piece of the pie. Eventually, when that inequality gets big enough, the people who aren’t wealthy will get tired of it and there will be some extremely negative consequences on both sides and, likely, a move away from the capitalism we know today.
He argues that between 1930 and 1975, we had a period where economic growth was higher than the rate of return on capital, but since 1975 it’s been moving in the wrong direction.
I think most of the “controversy” about the book is about Piketty’s solutions, which are pretty radical and basically force economic growth to be higher than the rate of return on capital. They involve things like a 2% annual wealth tax and a very high income tax, things that won’t happen in the United States for a very long time, if ever.
I think Piketty is spot on in identifying the economic problems of the moment (increasing economic inequality leading to social conflict), but I think his solutions are really heavy handed. They would achieve his desired goal, but everyone with accumulated wealth would fight those things tooth and nail.
I enjoyed the book because the arguments Piketty makes are so well laid out and provide real food for thought.
Does it say anything about personal finance? I think it’s mostly a case for why it makes sense for people to start investing their money so that they can get their piece of the pie on investment returns.
I tried your suggestion for going through my credit card statements (I use my cc for everything) and categorizing my spending. Most of the numbers seemed reasonable except for food. I had no idea that I spent so much money on food. I spend about $300 a week on food which is crazy out of line for a single person. At first I didn’t think it was too bad but then I looked up the USDA numbers and it said that even at their “liberal spending” level I should be spending only $86.50 a wek on food.
I know some of the big strategies like not eating out so much and eating less expensive stuff and so on but that doesn’t seem like it would be able to cut $200 a week out of my food spending. How do people do this?
I’ll be honest – I don’t know how you’re spending $300 a week on food as a single person. If you ate out at an upscale restaurant for literally every single meal, you might get there, or if you ate out for most meals and only ate at home when you were having steak or something, or if you spent a ton on beverages (like drinking Dom Perignon with dinner every night). My entire family of five doesn’t spend $300 a week on food – we’re actually not even close to it.
I guess my first suggestion would be to prepare as many meals for yourself as you can during the week. Avoid eating out as much as possible, because that’s where big food expenses come from for most people.
When preparing meals at home, stick to simpler things made mostly from fresh ingredients. This might mean a little more effort, but almost every time I examine the price of a prepackaged meal, it’s far higher than the cost I would expect from just making the same thing myself out of the base ingredients (or else it’s a very low quality version).
When you do make meals at home, pack up any leftovers into individual meal containers and eat them over the next few days. They make for really inexpensive meals.
I’ll give you an example. Yesterday, for breakfast I had two scrambled eggs that were well seasoned an apple and a piece of toast, which cost perhaps $2. For lunch, I had some leftover soup from the night before, which didn’t cost very much at all (it was basically another meal from a batch of soup that cost $10 to make and had already produced six other family meals). For dinner, we had enchiliadas with seasoned rice and vegetables, which cost about $17 for the entire meal. Five of us ate meals there and we packaged enough for two more lunches the following day, meaning the cost for my meal was about $3.40. I drank water and didn’t snack on anything, so my total food cost for the day was somewhere around $7, which would add up to $42 over the course of the week.
Again, like I said, I’m not sure where the $300 a week is coming from, but there are many good food strategies out there. You should be aiming for something close to $300 a month.
I graduated in December 2008 and immediately got a job in my field. I started off not contributing much to retirement but found your blog and others in 2009 and bumped it up to the max. I’ve been contributing about 20% of my income and my employer has been matching 5%. Right now, my balance is about $230,000 in retirement and I haven’t even hit 30 yet!
Many people are talking about how the stock market is going to turn around soon. I understand that the value of my investments will drop significantly, but do target retirement funds do anything like moving your money into a safer investment for a while? What happens when the market drops?
What happens when the market drops is that your investment, if it’s heavily invested in the market, drops in value as well. Unless you’re in a managed fund of some kind, and most target retirement funds aren’t, your investment is going to stay high.
A lot of people panic when this happens. You shouldn’t. It’s a natural thing and you shouldn’t panic about it at all.
Here’s the way I look at it. Imagine if the stock market went up at a steady 7% each and every year from the day you started buying stocks. If it had done that, your stocks would be worth a lot less today, right? Now, imagine that the value of your stocks suddenly drops through the floor, to the point that those 7% annual return stocks would be worth more than your actual stocks today. I would argue that the stocks today are overvalued and they wouldn’t be undervalued until they go below that 7% level. (Remember, 7% is Warren Buffett’s long term estimation of the returns you can expect from the stock market.)
In other words, you can easily look at it as though you’re buying overvalued stocks right now and that they won’t be undervalued until after there’s a correction.
Basically, I think that worrying about day-to-day drops in something that you’re investing in for the very long term isn’t really worth your time. Just keep up regular contributions and don’t worry about it for, say, thirty years.
Saw this article and thought of you guys. Thoughts? http://www.theatlantic.com/business/archive/2015/11/work-life-balance-pew-report/414028/
The article’s title is “Money-Rich and Time-Poor: Life in Two Income Households,” and it’s an extremely accurate title in terms of describing my life and what life seems to be like for any family with two incomes in the sandwich generation. The subtitle is also dead on: “For families without a stay-at-home parent, there just aren’t enough hours in the day.”
There were so many sentences that rang true in that article. I liked this one – “My husband likes to say that the work is probably evenly split if both partners feel like they are doing upward of 60 percent of the work, since a lot of what one partner does is necessarily invisible to the other partner. If you feel like you are doing half, you’re not.” That’s literally the basis of some of the conversations that Sarah and I have. We both often feel like we do most of the work regarding household upkeep and parenting, even though it’s often close to a 50-50 split when we break it down.
Time is absolutely the real pressure in our lives these days. Our biggest temptation for spending comes in the form of methods to increase our spare time or to increase our family time or, sadly, to somehow increase the quality of our family time. I am thrilled that I can work a schedule that allows me to be there when the kids walk out the door to school and be there when they arrive home, but that means that some of my work gets moved to the hours before they wake up or after they go to bed. Sarah works a more traditional work schedule, so that means in the early evening I’m often the one responsible for making sure that they do their homework, helping them with it, and getting them to any early evening activities that they have, and I’m also often making dinner, too.
The end result is that our free time is pretty limited. We both have to carefully “box out” free time in our schedules. I have worked hard to make several hours on Sunday for a community game night most weeks, as it’s my major leisure time of the week. Sarah participates in a community singing group which takes time each Wednesday and then participates in a martial arts class on Tuesday and Thursday with two of our kids (the ones old enough to participate in an adult class). Other than that, there isn’t much free time at all, so methods for managing time are really, really valued around here.
It’s a great article that speaks to what life is like for people with two incomes and children.
When I was a kid my parents always used dryer sheets in order to make the clothes soft. I used to use them too but I stopped recently and I honestly barely notice any difference at all. I suppose that things like jeans are a little softer but after wearing them for like ten minutes I can’t tell any difference. Isn’t this something everyone could cut from their budget?
I agree with you that dryer sheets are kind of a limited use item. They do exactly what they claim to do, which is make clothes feel a little softer when they come out of the dryer.
For some people, that’s a big deal. For others… it really isn’t. I don’t use dryer sheets on my own clothes and haven’t for years, nor do I use them on the clothes I wash for the children. My wife uses them occasionally for some of her professional clothes, but our box of sheets goes down really slowly.
If you automatically include dryer sheets with every load, try a few loads without the sheets and see whether you notice enough of a difference to really care. Don’t be surprised if you barely notice that you’re not using them.
Almost every financial book I read that includes frugality tips talks about stockpiling. How do you stockpile when space is really limited? Like in a small apartment?
First of all, stockpiling means buying a lot of a particular item when it’s on sale, particularly when you can stack some coupons or something like that on top, too. For example, if you see your favorite kind of body wash on sale for $1.50 per bottle when it’s normally $3 and you also find a coupon for another $1 off, you might print off a bunch of those coupons and buy a ton of that body wash for $0.50 per bottle, enough to last for a year or two. Then, you don’t have to buy it again until you notice another big sale on it.
The problem is that this requires at least some storage space. If you buy ten bottles of body wash, that means you have to store ten bottles of body wash.
The key to stockpiling in a tight space is to just be selective about what you’re stockpiling. Stockpile things where the savings is really big over the course of a month of normal use. So, let’s say you take a daily shower and use a bottle of that body wash over the course of a month, which means that stockpiling will save you about $2.50 a month. Something else, like laundry soap, for example, might save you $4 per month and take up about the same amount of space, so you should prioritize the laundry soap.
This requires you to have a good estimation of how much space you have to give to stockpiling, how much space the various items take up, and how quickly you use some of the common items you might stockpile. They don’t have to be perfect estimations, of course, but you can usually tell what the most efficient items are with just a few seconds of thought and maybe a bit of calculator use. You’ll want to stockpile the items that give you the best bang for the buck.
I live across the street from a Taco Bell. I can walk over there and get plenty to eat for $2.50 which is more than enough to fill me up. I don’t see much motivation to cook dinner at home or lunches on the weekends when I can get dinner for $2.50 right across the street.
Based on that amount, it looks like you’re probably buying two things off of the dollar menu at Taco Bell with a substitution or two. A lot of the items on the dollar menu are between 200 and 250 calories, so such a meal is going to add up to 400 to 500 calories. For me, the biggest criticism of food from Taco Bell is that it is very salty, but depending on what you buy, there are far worse things you can be eating (and far better, too).
Still, I can fill myself up for most meals for less than $2.50. I make scrambled eggs pretty frequently, spicing it with some ground pepper and maybe a bit of cheese, too. I like to saute some diced onions first before adding the eggs – it’s so delicious. I also make a lot of stuff in my slow cooker that’s well below $2.50 per serving – chili, soups, stews, casseroles, and so on. If you package up the leftovers in individual containers, it’s going to be more convenient and cheaper than Taco Bell.
None of those things are very hard. They’re cheaper than Taco Bell and probably healthier, too. That’s not to say that a vegetable-heavy item from the dollar menu from Taco Bell is always a horrible idea, but don’t let it be your only idea for an inexpensive and really easy meal.
I’ve noticed that Bitcoin has doubled in value in the last two months. Is it a good investment choice?
Well, let me elaborate. Bitcoin is extremely volatile. It is a far more volatile investment than gold is. Less than two years ago, it was over $1,000. Today, even after doubling in the last two months, it’s hovering around $400.
That’s not investing, that’s gambling.
Bitcoin is extremely interesting because of the technology behind it. To me, Bitcoin is a proof of concept for how one could make a secure currency in the future and it obviously works.
However, unless a state subscribes to Bitcoin as their official currency, it’s going to remain incredibly volatile. It needs a large userbase to overcome that volatility, and by userbase I mean people using it for buying and selling things in an over-the-counter fashion on a large scale so that prices begin to stabilize. Bitcoin is being used for a few transactions, but not nearly enough to stabilize the value of it.
What’s much more likely to happen is that a nation essentially creates their own version of Bitcoin once the remaining technical hurdles (which are pretty small) are ironed out.
The technology behind Bitcoin is really brilliant, but that doesn’t mean Bitcoin itself is a great investment. Instead, it’s simply a great proof of concept of how other currencies will work in the near future.
Have you ever considered coaching or online seminars or teaching an online class on personal finance to boost your income? A lot of other top personal finance writers have done that.
Here’s the flat-out truth: I couldn’t stomach myself if I did that.
When I was in real financial trouble, I didn’t dig out of that by throwing even more money after taking a class or a seminar. I did it by reading articles written by people online who were sharing their content for free and also by reading books I checked out from the library.
Back then, if I had found a writer I believed in, I very well might have shelled out to take their online course, but the truth of the matter is that the material in those courses isn’t any different than what you can find for free if you look around. The only difference is that your wallet is lighter and their wallet is thicker.
I was actually in a desperate financial situation once. I was helped by writers who made their material available for me to read for free, and I used that knowledge to dig myself out of it. I would personally feel pretty hypocritical if I didn’t do the same.
Could I make more money doing paid online classes and seminars? Sure. I’ve had offers to do just that, but I’m just not interested. I’d be happy to do seminars in a lot of areas, but doing seminars that require people who are already in dire financial straits to give me more of their money that they really can’t afford would leave me not liking myself very much.
This isn’t a criticism of those who have done differently. It’s simply a reflection on the various reasons we have for creating content online. For me, a sense of “paying it forward” is a huge part of why I do this, and paid seminars are just in opposition to that.
A big part of the reason I do Money360 is that I know I have helped thousands of people turn their finances around without taking a dime out of their pockets. That makes me feel good and as long as it continues to make sense for me, I want to keep doing that.
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.