Questions About Toothbrushes, 529 Transfers, Bullet Journals, Roth 403(b)s, Credit Card Destruction, 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. Roth 403(b) versus Roth IRA
2. 529 funds transfer and taxes
3. $40 a week for food?
4. Contents of “portable office”?
5. Retirement portfolio diversity
6. Bullet journaling
7. Debt versus retirement savings
8. Cheapest way to cook turkey?
9. Cutting up credit cards
10. Social pressure to spend
11. Voting
12. Thoughts on electronic toothbrushes

I wanted to mention that quite a few of the questions that come from readers are excerpts from much longer emails that I trim down and often edit, for several reasons.

First, there’s often a ton of very personal information intertwined, enough so that even with giving that person a pseudonym, others might be able to figure out who they are, and I don’t want that to happen on Money360 if I can avoid it. It happened once in the past when I didn’t really understand what to do regarding protecting identities; thankfully, it was a minor thing, and I’ve been very careful about it going forward. The purpose here is to help, not to hurt.

Second, much of the information is irrelevant to the key question, so including that information doesn’t really help. Sometimes, I do post detailed stories from people because capturing a bigger picture of their financial state is helpful, but that’s actually more rare than you might think.

Finally, shorter questions mean that this article doesn’t go on forever. I shorten some questions just to make this article more readable.

So, if a question seems really short and pithy, it’s probably because I edited it to be that way, either to protect someone’s identity or to get directly to the subject.

On with the questions this week!

Q1: Roth 403(b) versus Roth IRA

How should I prioritize contributions to a Roth 403(b) vs. a Roth IRA? I work for a non-profit organization that offers a 403(b) and employees can make contributions pre-tax or or after-tax. I’ve selected an after-tax contribution and currently contribute 6% of my salary (about $185) for each paycheck. My employer also makes an 8% nonelective contribution (about $280 per paycheck). In total, I have about 70k in this retirement account. I also have a Roth IRA through an online brokerage firm – I currently contribute $200 per month to that, and have a total of about 10k in that account. My question is whether I should focus on maxing out my Roth IRA before contributing to my Roth 403(b)? Or should I keep making these approximately equal contributions to both? My employer contributes to my 403(b) whether or not I contribute, so there’s no matching consideration there.
– Nina

If your employer is contributing to the account regardless of whether you contribute, then I would focus on the Roth IRA and only contribute to the 403(b) at work if you’re maxing out the Roth IRA. The Roth IRA gives you much more control over things and, given the conscientiousness with which you’re describing other elements of your retirement planning, I’m confident that you chose a good one.

My quick back-of-the-envelope math (with a few assumptions, such as the frequency of your paychecks, based on the numbers you gave) tells me that you’ll probably be pretty close to maxing out the Roth next year if you follow that plan. You need to keep careful track of your contributions to make sure you don’t go over. Contributing $450 a month will get you very close to that limit. If I were you, I’d contribute $450 a month to the Roth IRA, then contribute anything above that to the 403(b). Sometime during the year, make an extra $100 contribution to the Roth and you’ll hit the cap.

Regardless of what accounts you choose, you’re doing fantastic in terms of retirement savings.

Q2: 529 funds transfer and taxes

My wife and I live in Missouri and have a single 529 plan in my wife’s name that we contribute money to, with the intent of spreading it out to all our nieces and nephews (or “niblings” as we refer to them collectively). The plan documentation states that money can be transferred to the 529 of a family member, including nieces and nephews. Our thinking was that when the child begins thinking about life after high school, we’d alert them to the existence of the plan and offer to transfer a portion to a 529 account of their own if they’d like to set one up. This allows us to contribute in secret for awhile and also doesn’t require security-conscious parents from giving us their children’s social security numbers. Your comment about tax implications has me concerned though — as I can’t figure out what tax implications you’re referring to. Would you be able to provide a little more detail, or point me in the right direction please?
– Dinah

You should be in the clear here, though I would check up on specific state taxes as well as who is considered a “member of the family” on the specific 529 plan you’re using.

The issue with 529 plans and transfers is that they’re not all handled quite identically, though things are better than they used to be. 529 plans are generally managed by states, with some variations from state to state. Plans have become a lot more similar over the past ten years and, in general, I believe all states include nieces and nephews as part of the “member of the family” in their plan description. It is really difficult to say “you will be fine in all states” because the 529 plans in all states aren’t perfectly identical, but they are very similar.

As I said, I’d do some checking regarding how state income taxes are dealt with regarding the specific plan you wish to use. In terms of federal taxes, I believe the transfer you’re describing is fine with all plans.

Q3: $40 a week for food?

Saw that budget you linked to. How can a single person get by only spending $40 a week for food? Unrealistic.
– Jim

First of all, don’t eat out. Don’t visit a fast food restaurant. Don’t visit a nice restaurant. Don’t get takeout.

Second, start the week off by making a giant batch of rice and a giant batch of beans, cooked from dry. Save them in the fridge and eat them for as many meals as possible.

Third, eat a big bowl of oatmeal, cooked from a container of rolled oats, every morning. Sweeten it with a bit of honey and/or a chopped up fruit.

Fourth, buy some bags of frozen vegetables and cook them as a side for most meals.

Fifth, if you need to have meat as a core part of your diet, look at your grocery store flyer for what’s on sale. If nothing is on sale, look at chicken breasts and whole chickens. Meat is expensive.

Sixth, when you go to the grocery store, have a list that you planned out before you walked in the door, and stick to that list.

If you do those six things, you’re going to be eating pretty cheap. $40 a week shouldn’t be an obstacle.

Q4: Contents of “portable office”?

You mentioned that you have a North Face backpack as your “portable office” and you just leave the stuff you need to work outside the house in there. What do you keep in it?
– David

I answered this a few years ago, but it’s worth an update.

Here’s what I kept in there circa 2015: “It has an older (circa 2012-2013) MacBook Pro in there with a charging cable and a more recent iPad with a charging cable. I have a Nalgene water bottle in there. I have an external mouse in there – a cheap generic Amazon one for when I’m doing things on my laptop that go beyond what I want to be doing with a trackpad. I have a legal pad in there and a smaller notebook with some pens. I currently have four books in there – one is a dog-eared copy of Your Money or Your Life that’s been in there for years. I have a toothbrush and a small tube of toothpaste and some dental floss and a stick of deodorant in there. I have some aspirin in there. I have a few granola bars in there. I have a couple of mix-in packets for my water bottle in there. I have a small flashlight and a multi-tool in there. That pretty much covers it.”

That list pretty much remains the same. The old Nalgene that I kept in there got left behind somewhere in the last year or two, so I have a different water bottle in there (I think it’s a Camelbak) but I kind of miss my old Nalgene.

Other things that have been added in the last few years: I now have a comb in there. I keep my Kindle in there by default, too, along with a charger for it. I have a little USB SD card reader in there. I keep a short extension cord and a six port USB hub in there, which I sometimes pull out at the library and find that if I’m at a table with other people, they’re thrilled to have another USB port they can use (I’m usually just using two or three of the ports and let others use the other ports). I have a pair of noise cancelling Bluetooth headphones in there that I don’t really like and a pair of earbuds that I do really like except they’re not good at noise cancelling.

That’s pretty much it!

Q5: Retirement portfolio diversity

I’m a professional in my mid-20s (unmarried, no kids) focused on saving for retirement. I currently have all of my retirement savings split fairly evenly between two accounts: my Vanguard Roth, which is invested in VFFVX (the 2055 target-date fund) and my 401k invested in VTSMX (the Vanguard total stock market index fund). With the recent market volatility, I’m sticking to my plan of doing nothing while the market corrects itself and taking the opportunity to fund my Roth at lower share price. I know this is a common tactic for long-term investments, one that I’ve seen you recommended on TSD before. That said, I’m concerned my portfolio isn’t diverse enough. With so much money in stocks, it’s super susceptible to market changes. My questions are: Should I diversify to include more low-risk investments like bonds? (Personal Capital definitely thinks I should) And is there Vanguard fund you’d recommend to accomplish this?
– Annie

This is more of a question of personal risk tolerance than anything else. Since your target retirement date is more than ten or fifteen years in the future, you’re likely to go through several stock market ups and downs, and your primary concern should be the long term average annual return on your investment, and the stock market blows away bonds in terms of long term average annual return.

However, some people simply can’t tolerate the losses in the short term. Watching your retirement saving purge 30%-40% of its value over the course of a year unsettles almost everyone. The math might indicate that it’s nothing to worry about if you’re young and far from retirement, but that doesn’t change the fact that it can be hard to stomach.

If that sounds like you and you want to supplement your stocks with something that has lower risk and lower long term return, the Vanguard Total Bond Market Fund is a solid choice. The relatively low returns compared to stock indexes are the result of the relatively low returns of the bond market over the past decade as compared to stocks; however, that fund is not going to dump 30% of its value in a year. (If that happens, America has some huge financial problems and it’s not going to matter where your money is invested.)

Q6: Bullet journaling

Do you have any experience with bullet journaling? I’ve been thinking of trying it and I saw a good book on it at the bookstore.
– Jamie

To me, honestly, it’s just another journaling format. It’s a nice one in that it organizes your thoughts into lists and formats that you can reference, but the real value in journaling is simply slowing down enough to articulate the thoughts in your head clearly and get them out of your head onto paper.

As I’ve mentioned, I like to do “three morning pages” as my journaling practice (open up a notebook and just write until I fill three pages). It’s disorganized chaos, so I often end up extracting key things from it and put those into other places (my to-do list, my calendar, and so on).

Bullet journaling has more structure in the stuff you write down. At the same time, it somewhat makes you be more structured in your thinking. I felt that bullet journaling was easier for me in terms of structuring my thoughts and making lists, but harder for me to just throw down unvarnished thoughts to make sense of later. Over time, I found that, for me, there was more value in the unvarnished thoughts, and that there were good electronic tools for the more structured thoughts.

Q7: Debt versus retirement savings

Looking for some advice regarding debt and my TSP (federal employee’s 401k style plan).

Biweekly salary: $1108

Bills (monthly)
Rent: $825
YMCA: $55 (I get a portion of this reimbursed, I submit annually)
Internet: $60
Electric: $50-90
City water/sewer/trash: $50
Cell phone: $52
Renter’s insurance: $15
Hulu: $13
Natural gas: $20

Debt:
Card A $1000, 22%
Card B $300, 23.9%
Card C $800, 24.4%
Card D (closed) $1000, 24.4%
Card E $2000, 23.5%
Unsecured loan $4100, 8%
Card F $4200, 23.4%
Card G $800, 27%
Card H $1000, 23.5%
Student $23000, 6.55%
TSP loan (this comes out of my pay automatically, and is already factored into the salary above) $5410, 2.125%

I have the option to withdraw money (my contributions) from my TSP, just a hair over $5k. This stops any TSP deposits for six months. The total I have in there is a little over $41k as of today. I am 32 years old. I understand that the tax penalties are brutal for withdrawals.

The salary above is after I add 5% to TSP for my retirement to get the full match.

I am divorced, two kids. I spend the maximum amount of time that I can with my kids. Child support is a large factor in my current situation (not an excuse, just a fact), but it comes out of my pay automatically, so I don’t worry about that in the math here.

I have no savings to speak of, I live paycheck to paycheck.

My car is paid off (thanks to that unsecured loan above actually), but it’s ten years old, 195k miles, and it won’t last forever. I suppose I rely on having that TSP money accessible in theory so that I could replace the car. I can walk to work, but my children are three hours away so I need wheels in order to see them.

Rentals are hard to come by here, but I have a fair deal where I am now on our 3-bedroom. The only way to go cheaper is to get a studio or something of that nature, and I am always afraid of cutting back too much on their luxuries as I am worried about a judge or social agency being like a bogeyman and keeping my kids from me due to perceived mistreatment.

Dave Ramsey talks about “living like no one else”, and I could see myself in a tiny apartment eating rice and beans, but I feel like a single divorced dad doesn’t have the social capital to impose these conditions on his kids without severe repercussions.

I could kill the internet and Hulu bills, but I do work at home about once a week, especially when the kids are around.

I think I can make ends meet if I defer my student loans every year until the kids age out of child support, but… I can’t imagine paying off debt forever.

I have a good job now, but I don’t think my mental health could handle a second job. I’ve worked around the clock before.

I’m looking for advice on next steps. When I buy a couple tanks of gas and some groceries, my income/expenses are a wash for the month. I have money in my retirement account, but even that isn’t enough to kill my debt. I can’t imagine just walking away and not paying the debt that I owe either. I’ve been taking it one day at a time for years, but nothing has changed.
– Alex

It’s time for one of those good old-fashioned long story questions. I haven’t dug into one of these in a while.

Here’s the hard reality: if you choose to maintain this lifestyle because of your kids without adding some additional income, this is a hole you probably can’t climb out of. The margin is so low that emergencies are likely to devour the difference.

My honest advice to you comes from the experience of other divorced parents that I know. Don’t worry about having a modest home. Get a small one, and keep it clean and neat and uncluttered. Get a fold-out couch and, if needed, sleep on the floor yourself when they come to visit. When they come to visit, though, don’t just sit around that apartment. Go find things to do. Go on a hike. Go on a picnic. Go to a free concert or a cultural festival. Go to a community game night. Go to the park and play soccer or ultimate Frisbee. Figure out what your kids like doing and do that to the extent of your ability without spending much money. Have them go to their other parents thinking of the fifteen things they did with dad rather than how they hung out at his “kinda nice” apartment.

You aren’t going to be perceived as “mistreating the kids” if you happen to have a small clean apartment with beds for them and you spend time actually doing things with them when you have them. If they’re bothered by it, tell them the truth – you send a lot of money each month to their other parent to help take care of them, and because of that, you can’t afford a huge apartment. Make it clear to them that you live in that small apartment because they are your priority.

When they’re not there, “live like no one else.” Make a big pot of rice and beans and eat it all week. Go as cheap as you can with everything in your life as long as you keep yourself nutritionally balanced and clean. Buy your clothes at Goodwill. Spend your spare time on freelancing gigs where you can define how much time you spend so that it doesn’t stress you out – things like are perfect for this.

Take a TSP loan big enough to pay all of those credit cards off, then repay that loan as quickly as you can. Going from 20%+ interest on more than $10,000 to 2% interest, that alone is going to save you $2,000 a year.

Those are the steps I’d be taking in your shoes.

Q8: Cheapest way to cook turkey?

My mother and I are arguing whether it’s cheaper to cook a turkey in the oven or in a large wood grill. Thoughts?
– Stephen

It depends on where you’re getting your energy, honestly.

A home oven is typically going to be getting its energy from electricity. A baking element usually draws around 2,000 watts, so for every hour you’re cooking a turkey, you’re using about a quarter in electricity.

On the other hand, with a grill using wood as the fuel, it comes down to the cost of the wood. If you have a free source of wood, then it’s going to be much cheaper than using the oven. If you’re buying wood… it’s probably going to be more expensive than the oven.

Q9: Cutting up credit cards

If you cut up a credit card, can’t someone just put the pieces back together and figure out your number?
– Barry

Obviously, the best way to destroy a credit card is by fire. Burn it the next time you have a fire going someplace and you’re never getting the number off of it!

Provided you don’t have such an opportunity or don’t wish to do so because of the minor environmental impact (although, honestly, putting it in a landfill isn’t great, either), the best approach is to take the card and put it on the strongest magnet you own for 24 hours or so, then cut it into small pieces. Cut it into four pieces, each with four of your card numbers on it, then cut each of those pieces in half right through the middle of the number, then cut each of those pieces into three pieces (each with a bit of the number on them).

Then, dispose of the pieces in separate trash containers. Put three pieces in your kitchen trash, then three pieces in the bathroom trash, then three pieces in the trash at the store, and so on. If you distribute the pieces widely, the full info can’t be recovered.

Q10: Social pressure to spend

Whenever I see my friends, they either want to go out to clubs (which usually means $50 disappearing into thin air) or go shopping for “retail therapy” or go out to eat. I feel pressured into spending money just to hang out with them and it’s starting to make me want to avoid my friends and I hate that.
– Jane

First of all, you absolutely should not have to spend money as a requirement to spend time with your friends. At the very least, they should be open to activities that don’t involve spending money.

Often, people fall into the social routine of doing things that cost money when they first start having a steady income and have some disposable income to spare. It starts by doing lots of stuff that they wanted to do when they didn’t have a lot of money, then it just becomes routine and ordinary. It certainly happened to me with my circle of friends when everyone went from being broke college students to young professionals.

For me, the best solution was to start inviting those friends to do things that didn’t cost money, declining some of the invitations that involved spending lots of money, and seeking out friendships that didn’t center around spending. Back in the day, I just started going to community stuff I learned about at the library or from city hall; today, you can just check or your community’s websites.

Q11: Voting

Do you have any recommendations for specific candidates to vote for on November 6 in terms of what’s best for individual finances? Any candidates that really stand out?
– Denise

I don’t endorse specific candidates or political parties. What I do endorse is voting. Get out there and vote on Tuesday, November 6.

Even more important, before you do go out there and vote, take a moment to in your area, and then find out a little more about those candidates.

Every race is important. It’s very likely that you’re voting for a member of the US House of Representatives. It’s somewhat likely that you’re voting for a member of the US Senate. On the state level, you are somewhat likely to be voting for Governor, as well as representatives for you in your state legislature. There are likely many other offices and ballot proposals up for a vote, too.

Take some time to know who’s running and what the proposals are. You can learn quite a lot with even fifteen minutes of reading, and then you can know who to vote for in those key races.

Money360 is a nonpartisan site and doesn’t endorse any candidates or political stances. Comments regarding specific candidates or political stances are unwelcome here. We help everyone with their finances. However, part of your financial future is voting for candidates invested in the type of government you want going forward, and the best way to secure that is to vote.

Q12: Thoughts on electronic toothbrushes

I brush and floss daily, yet I have had several dental problems over the last few years. Talked to the dentist about it and he suggested that I’m probably not brushing properly and that an electronic toothbrush might help and recommended a couple of Sonicare or Oral-B models. I just use the free toothbrushes from the dentist until my next visit and ask for two of them when they give me dental supplies. Can’t justify spending $60 on a toothbrush. What other solutions are there for better tooth care without spending $60?
– Daniel

Honestly, Daniel, I’d trust your dentist on this one. He probably knows your teeth quite well and can tell that your brushing technique isn’t doing the job, and if he thinks an electronic toothbrush will help, it probably will.

I’d ask your dentist whether they have any coupons or discounts on Oral-B or Sonicare electric toothbrush models. Some dentists actually sell them directly through Philips or Oral-B at a discount.

Really, the issue here is that whatever you’re doing with your regular brush isn’t cutting the mustard. You either need to figure out what’s wrong with your current brushing technique or get a brush that covers up the problems (which is what electric toothbrushes do).

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.

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