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. What’s next for investing money?
2. Dumpster diving for cash?
3. Health insurance steps after divorce
4. Buying winter socks
5. How to handle earnings increase
6. Food items made from scratch
7. What’s a “goal-oriented planner”?
8. Whole Foods question
9. Hidden sales at grocery stores
10. Bulk spices online
11. Finding “pieces of inspiration”
12. Why be frugal?
Most of the time, I manage to pull off the things I talk about on Money360. I resist impulses. I make good choices. I spend less than I earn. I stick to my budget. I’m frugal. I’m usually a good friend and husband and father, the kind of friend/husband/father that I want to have.
But not always. Things aren’t perfect.
This morning, I overshot my hobby budget for the month because I forgot something that I spent money on earlier this month and didn’t write it down.
Yesterday, I realized I waited too long to use a gift card and the business had gone out of business. Prior to this, instead of using that gift card, I had gone to other places and actually spent money.
I completely failed to reach out and communicate to a friend that was obviously in need a few days ago. I told myself that I needed to write something thoughtful… and then I just let that moment pass. I shouldn’t have – I should have just said something, even something like, “I don’t know what to say, but I care, and if you need to talk, I’ll listen.”
I’m not perfect. In fact, I’m pretty bad at things sometimes.
The one thing that keeps me going is remembering that the perfect is the enemy of the good. I can’t expect perfection because I will never live up to that. Instead, all I can expect from myself is to be a little better than I was, to learn from what I messed up on, and to move forward from there in a better direction.
We’re talking fractions of a degree of permanent change, but it only takes fractions of a degree to put yourself on a whole new path.
That’s all that a person can do, really.
I am currently in year 3 of a 15 year fixed rate mortgage at 3.0% APR. I fill up my Roth IRA every year, and am looking for the next step in putting money away. The two options I’m considering: Paying x number of dollars each month into my mortage, or setting that x number of dollars into vanguard index funds. I realize my interest rate is pretty good, so the index funds would seem wise. What about this (this will sound a lot like trying to time the market): each month, I look at how the market performed the month before. If the market went up, I put money into my index funds. if they market went down, I put the money into the mortgage. Will this be effective longterm? Or should I just pick one?
My first question is whether or not you’re 100% sure that you’ve got equity in the house. In other words, has the real estate market in your area stayed healthy, with either prices holding steady or going up? If you sold your house today, would you pocket money after paying off the mortgage? If so, investing that money outside of your mortgage is a good idea.
Now, as for your investment strategy itself, I don’t think that’s a good idea. That’s market timing, and market timing simply does not work over the long run.
Stock market investing is a long term investment unless you are an active trader. It has very little to do with how the market performed over a given month. The best approach for a passive investor – which is what almost every private citizen is – is to buy in on a regular basis (say, every month) and sit on it, regardless of what the market is doing that month.
Furthermore, stock investing is a bad idea unless you’ve got a long term goal – something that’s at least a few years down the road and ideally ten or more years down the road. With timeframes shorter than that, the returns on a stock investment get more and more and more volatile. You’ve got almost no chance of losing money in a total stock market index fund over the next ten years, but over any three year period, there’s a real chance of losing money. Over a one year period? You have something like a 25% chance of losing money, and a decent chance of losing a significant percentage (look at 2008, where it dropped about 40%).
My advice to you is this: sit down and think about why you’re putting money into that index fund. What’s your goal?
If your goal is retirement, open a Roth IRA and put money in there every month.
If your goal is long term but not retirement, put money into the index fund every month.
If your goal is short term (less than five years or so), keep that money in cash or put it into your mortgage (if it involves selling your house and moving).
If you don’t have a goal, pay down your mortgage or put money into a savings account until you decide on a goal.
A friend of mine told me that her father’s hobby is dumpster diving for extra money. I don’t get this. I wanted to ask more but it didn’t really fit into the conversation. How does one do this? You can’t sell garbage for cash at least not more than a few nickels?
I have a friend who is into “dumpster diving” for profit. She does it with her father.
What they do is, once a year, they go to a nearby college town for a few days right before the annual apartment leases roll over. Most of the apartments in the town run on annual leases, with almost all leases running out at the same time. So, during a short period of about a few days, tons and tons of leases run out all at once and tons of undergrad and graduate students are moving, all at once.
Many of those students are heading out of town, some to different countries, so they tend to leave a lot of stuff behind – perfectly good stuff that Goodwill would be happy to accept. That stuff is often thrown to the curb when they realize they don’t have enough room for it in their car or in their luggage. So it winds up on the curb or beside a dumpster.
My friend and her father just go to the apartment complexes and harvest the stuff. They sift through it throughout the day and night, finding stuff that might have value, and they load up a large truck with it. Then, they sift through their findings and have a giant yard sale with the best of it.
In a given year, they make several hundred dollars each doing this. However, it’s a lot of work compressed into a tight timeframe. I don’t think they’d do it if they didn’t enjoy it and didn’t enjoy the time together.
Long story short, my marriage of almost 30 years will soon be ending. We’ve come to an agreement on most items (house, cars, bills etc.), and now things should move fairly quickly.
I worked in the same industry for 20 years, and after my bosses elected to close down the business, I’ve been self-employed in the same line of work for about a decade. Due to this and the nature of my husband’s career, we’ve been without health insurance multiple times. He has health insurance in his current position, but I’ll be losing that as soon as he moves out. So, obviously, my number one concern now is health insurance.
I live in a sparsely populated state, and there is literally only one option in our state that is available for people, who, like me, have to find and pay for their own health insurance.
Do you have any tips or advice?
Unfortunately, it is very hard to give solid health insurance advice right now. The nature of health insurance in the United States is rapidly changing on what feels like a weekly basis, with executive actions being signed and major bills overhauling the whole system trying to get through Congress. It is really, really hard to tell what the future holds for health insurance.
Given that you’ve been married for almost 30 years at this point, you have to be in your early 50s at least, and perhaps older than that. My first thought is that, if you’re old enough, I would look at Medicare coverage and see whether you’re eligible and what the right option is for your situation. I believe Medicare is at least somewhat stable right now – at least, it’s not going to radically change.
If you’re younger than that, you should check and see what insurance offerings are available on the health insurance exchange in your state. Head over to and see what’s available in your state. The 2018 open enrollment period starts on November 1. That should help you find a plan for at least the next year. After that…. it really depends on what happens in Washington.
I’m sorry I can’t give you more specific advice than that, but the reality is that health insurance in America is really unclear moving forward. The ideas being proposed and on the table are incredibly varied, from a nearly Wild West version where it’s open season all the time for private insurance to full national health care for all. What will win out? The upcoming elections will have a big impact.
My wife and I just moved to MN and we’re already seeing the need for warm socks this winter. Previously lived in FL and I wore athletic socks when running or about three days a year – sandals the rest of the time! So I need a bunch of winter socks to keep my feet warm. What should I be looking for? I know you live in cold weather too! What do you do?
I live in central Iowa and it does get quite cold here during the winter.
I will say this: absolutely avoid cotton when it comes to winter socks unless you’re going to only be inside. If you walk around in a snowy environment and snow or ice gets down in your shoe or boot, it’ll initially melt, then it will soak the sock, then the sock will get cold, and your feet will freeze. Cotton absorbs water but doesn’t help with retaining heat when it’s wet. Just avoid cotton winter socks.
Instead, get wool socks, preferably merino wool ones because they’re not itchy. Wool wicks away moisture from the feet and keeps it outside of the sock, so if it does get wet in there, your feet will stay dry and warm for as long as possible.
I don’t really have specific brand recommendations – most of the merino wool sock manufacturers make good socks. I like Darn Tough socks, but they can be expensive. Just shop around for wool socks and find them at a good price.
If you’re going to be outside a lot, look at getting winter footbeds for your shoe, as they will help keep your feet warm when the sole of your shoe gets really cold. Thinsulate makes a good winter footbed.
A final suggestion: take at least one extra pair of socks with you wherever you go. That way, if your sock does get soaked, you can duck into a bathroom and change them so your feet don’t freeze.
For the first time in the 3 years that my wife and I have been married, we are at a point where we are bringing in enough money to set a significant amount aside. We have been able to avoid any debt (aside from one car note and a new mortgage), but I am a bit torn on how to invest the extra funds that we now have. Our new mortgage is a result of us buying a house, last month, and, when playing with amortization schedules, it really makes me happy to consider investing an extra $2,000 or so, each year, and saving on mortgage interest, in the long run. However, our mortgage rate is 4.5%, and my 401(k) is currently pulling in about a 17% return. Plus, I was considering starting an IRA, in order to diversify a bit. I know the simple answer is to go with whatever gives you the biggest return, but it is in my nature to avoid the risk of the investment side and contribute to the savings that I can control (early mortgage payoff). It is also highly unlikely that we will live in our current house for more than 10 years or so. I know that this scenario is loaded, but I would appreciate any advice.
First of all, you should never ever ever decide to invest in stocks based on the return of the past year. Stocks are a pretty poor long term investment, as they are very volatile. That means they can turn on a dime and go from a year with a 17% positive return to a 40% loss. For example, in 2006, the stock market returned 15.8%, in 2007 it dropped to 5.5%, and in 2008, it dropped 37.0%. If someone looked at 2006 returns and put everything into stocks in 2007, they would be sorely disappointed.
Stocks work best over a long timeframe, where the ups and downs average out. Over a time frame of more than a decade, the stock market has historically settled in at an average return of 7% to 8%. If you invest on a shorter timeframe, the volatility will change that range a lot, making it possible for you to lose money and also for you to have a better return.
In other words, unless you’re okay losing money, you shouldn’t invest in the stock market unless you have a long term plan. What is your goal with this money? Is it to buy a better house somewhere in the next five or so years? If it is, you’re probably better off dumping it into the mortgage, which effectively guarantees you a return on that money.
What foods do you make from scratch rather than buying at the store? Trying to figure out what things are cost and time effective.
So, that’s a tricky question. I make a lot of foods from scratch that I would have bought at the store a decade ago, but it’s tricky to say what’s “cost and time effective.” A lot of the things I make are of higher quality than you can buy at the store.
Some things that I think are cost effective are liquid stocks (just put vegetables or bones in a slow cooker for many hours and reserve the liquid), bread, seasoning mixes (buy various bulk seasonings, make your own jars of it), oatmeal “packets,” salad dressing, baked good kits (like cookies or cake), salad dressing, pickles, kombucha, and sauerkraut. I don’t know if you’d include dried beans here, but that’s definitely a money saver.
I make beer at home but I’m not sure it’s cost effective – I do that more because it’s fun and I like the results. The same is true for homemade soda.
I like making homemade pasta at home, but it is a lot of work without a machine to handle the manual labor of it. It’s cost effective for the ingredients versus buying a box of pasta, but it is very labor intensive.
I’m sure there are more things that I make regularly, but they’re not popping into my head right now. That first paragraph is a good listing of things, though.
I enjoyed your post today about scheduling. You mentioned using a “goal oriented” planner. Could you give a specific example of what this is? Thanks!
A “goal oriented” planner is one that focuses heavily on you identifying goals for yourself to complete over the next quarter or the next year. The planner basically nudges you every single day to make progress on those goals and incorporates that concept right into the design of the planner. One example of this is the .
There are a lot of these on the market right now that use different approaches. I really like them and I’ve been trying several different ones to find the perfect one for me, so a few weeks ago I offered up the idea of a post where I compared the ones I’d tried and examined and a lot of people wanted to see it, so that’s a post that’s in progress.
I will say this much: a planner is really only worth what you put into it. A planner is a tool, and just like handing someone a hammer won’t turn them into a great carpenter, handing someone a goal-oriented planner won’t make them organized and goal-oriented. Instead, what it does is it makes the whole process more efficient for someone who is goal-oriented, like I am. Not everyone is wired that way, though, and that’s cool.
What do you buy when you shop at Whole Foods or food coops or other super expensive grocery stores? Don’t understand why people spend their money there other than advertising.
I mostly use stores like that for items that are fairly unusual that I can’t find at my usual discount grocer (my preferred ones are Fareway and Aldi). Stores like Whole Foods tend to stock items that Fareway and Aldi don’t stock, like less common types of fresh produce and a lot of vegetarian items.
At Whole Foods specifically, their store brand food items – labeled as 365 Everyday – are particularly high quality for a store brand and the prices are reasonable. Their canned beans are amazing for the price, as are their olives. In terms of “bang for the buck,” they’re pretty high.
You have to learn to be selective when shopping at those stores. Everything there looks good, but you have to keep in mind that you can get most of the items cheaper elsewhere. I usually make a list in advance for trips to food co-ops and Whole Foods and other such stores.
Hi Trent, do you know a good way to find items on sale at the grocery store when they aren’t listed in the weekly ad? I’ve found my local store will have deals on the store brand coffee, but because I don’t go down that aisle unless I’m buying coffee and it isn’t listed in the flyer, I miss out on stocking up when the price is cheap.
There isn’t an organized way I know of to do this. It’s a pretty common tactic that stores use – they’ll put a few sales not listed in the flyer throughout the store so that customers feel like they’re discovering bargains there every time they shop. It’s really effective, too.
The best strategy I’ve found is to simply find a friend or two who also shops there and suggest sharing these sales with them. I have an ongoing Facebook message with a couple of friends who shop at the same stores I do and we just share those sales, often by just snapping a picture of the sale and sending it to the group. I’ll often look at that group’s recent postings when making a meal plan.
Where is the best place to buy bulk spices online? I want to get plenty of various spices high quality at a good price but no stores locally sell bulk spices.
My favorite place to buy spices online is . I have been to their shop in the past and bought unusual ingredients from them online before and always liked the quality. The prices are very reasonable for the quality of what you’re getting.
Most of my spices, however, come from local grocers. I tend to wait until there’s a spice sale and stock up on what we need, buying them in bulk and keeping them mostly in bags. I’ll refill a bunch of little jars that we have from the spice bags and make mixes from them.
So, unfortunately, I can’t comment on the wider world of online spices, but I can say I like World Spice Merchants (because they’re the only one’s I’ve used for much of anything).
Where do you find all of the stuff in your pieces of inspiration columns?
I don’t find them in any one particular place. I just keep a bookmark folder of interesting things I come across during the month, then purge it once a month when writing the column.
As for the quotes, I maintain a commonplace book. A commonplace book is simply a journal where I write down quotes, poems, song lyrics, ideas from books and articles, quick things that I want to reflect on in the future, and so on. For the inspiration column, I dig through the last month or so and pull out six or seven that stand out to me that feel particularly inspirational.
I love my commonplace books. I have been keeping them for a while and they’re the one kind of journal I’ll never discard when they’re full. I love picking them up and reading through them because the material in there constantly inspires me, makes me think, and puts me in touch with where my mind was at a particular point in time.
For me being frugal isn’t a money thing though that is a secondary benefit. I do it because it pushes me toward owning less stuff making it easier to keep clean and maintain what I have and move later. I’m frugal because it helps the environment because I’m buying less disposable stuff. Best of all I have money for the things I do care about like travel and doing things with my niece and nephews – I swear I travel with the three of them more than their parents do.
Exactly! Frugality is a great money-saving tool, but there are more reasons to be frugal than just money.
I have one friend who is frugal for spiritual reasons. She spends as little as possible as part of her own spiritual quest, then uses the remaining money to give to charities of various kinds, usually locally.
There are so many aspects of personal finance that overlap with other areas of life. It’s all interconnected. Money doesn’t have to be over here in its own silo – it’s part of the pastiche of life!
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.