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. Pension distributions options
2. Distributing leftovers
3. Degrees over the internet
4. Dangers of hiding cash
5. Political fliers as kindling
6. Shipping clothes?
7. Bookshelf limitations
8. Buying it for life?
9. Recipe archives
10. Kids and alarm clocks
One of the big discussions around our house has been pet ownership.
All of our children (and Sarah, to some extent) have strongly been in favor of pet ownership. They want to have a dog.
On the flip side of that is my father. He has a strong dog and cat allergy, to the point that he would basically no longer be able to visit us if we got a dog.
Our “compromise” has been for us to have fish. We have an aquarium and our children do a great job of taking care of those fish.
Yet there’s still a drumbeat of desire to own another pet.
My suggestion? A turtle.
1. Annuity of $166/mo, starting at age 67 (current age 50)
2. Annuity of $38/mo, starting now
3. Lump sum rolled into an IRA: about $10,000 (small pension, indeed!)
4. Lump sum taken as a distribution: $10,000 minus taxes (25%) and penalties (10%), net take about $6500
Since I already have a large 401k account, I don’t see the point of choosing the annuities in options 1 or 2. If the distribution was a larger amount ($20,000 or more), I’d open an IRA and do #3. But I’m tempted to do #4, netting about $6500, and use the funds to pay off the last of my credit card debt ($3200) and put the rest into landscaping and home improvements. What do you think? Are there hidden pitfalls in this approach?
I would only consider #4 if you are absolutely sure your retirement is fully taken care of via other sources and you’re fine with taking a sizeable loss on your money.
Given the information you shared, I would choose option #3 and look at it as part of my retirement savings. The loss I would take on an early withdrawal (the income tax the 10% penalty) would be too much for me to stomach at this point.
I do agree that options #1 and #2 aren’t the best choices.
In the past, my parents have sent home leftovers with each guest, which is awesome. The problem is that they put these leftovers in Ziploc bags all jumbled together, resulting in an inedible mess. It was so bad last year that my brother and I joked a lot about it on the way out to our cars.
I’d love to have leftovers and so would everyone else. How can we do this in a non-disastrous way?
Honestly, I’d give your parents a big bundle of clamshell takeout containers, like these. If you buy them in bulk, you can get them for about a quarter each.
Essentially, you can have each person prepare their own meal to take with them in that takeout container. It keeps the food separate and neat as long as you don’t tip it over.
This works well if you’re not sure if you’re going to see the guests regularly. If you do see the guests regularly, just use reusable containers, the type of thing you might pack your lunch in, and ask for them to be returned after the food is eaten.
My take on schools like University of Phoenix is that your success level there is what you make of it.
If you’re self-motivated and truly wanting to improve yourself, it can be a springboard to better things. If you’re just looking for something to pad a resume, it probably won’t help much at all.
From my perspective, I’d only include an online school like the University of Phoenix in my education options if I was holding a full-time job while pursuing further education and could not take the time to be a full-time student. Even in that situation, I would consider it alongside other educational options. There is far more value in the college experience than sitting in front of your computer at home watching lecture videos.
Q4: Dangers of hiding cash
My father hid what he told us what ‘a substantial amount of cash’ in his house before he died. He left my sister and I a letter telling us that there was “money in that house” with his will. We looked where we were told, but there was nothing there. We spent the next 6 years frantically combing every nook and cranny of the house for that cash. We checked every place you could think of. My sister hired a psychic. We asked a relative who worked as an investigator to go through the house. We thought about trying to hire a police ‘sniffer’ dog. We did everything we could think of, yet we never found a single thing.
To this day I don’t know what happened to that money. It’s possible that my dad moved or removed the cash — we had a catastropic house fire in the family a few years before he died, which might have convinced him to move it to a safety deposit box (he had one, and there was cash in it) or a bank, and never updated his instructions. It’s also possible that it was stolen by another friend or family member in the chaotic period after he passed away.
The real issue for my sister and I was that we could never be sure there was no money in the house and kept it, unoccupied, for far longer than we should have. We were terrified of selling it, even though hanging on to it was a bad financial and emotional choice. It took the beginning of the housing crash for us to finally make one last search and then sell up. I’m sure that we lost far more in mortgage payments and lost value than we ever would have gained from ‘Dad’s hidden cache’.
IF you hide money in your house (and, like I said, I’m against this!) leave a letter that clearly explains how much money and where it is hidden. Leave more than one copy. And absolutely make sure to change that letter the moment what is actually in the house deviates from what you wrote down. Or, you know, get a safety deposit box. Much easier — for you and your heirs!
I totally agree with this advice.
If you are in a situation where you feel it appropriate to place any significant amount of cash in your home, you are well-advised to leave instructions for finding that cash in multiple places. Without such instruction, that money will basically vanish if you were to pass away.
I know of a family where an elderly person buried some money in a coffee can in his back yard. He told several relatives it was back there, but passed away before the exact location was specified. There were many, many holes dug on the property, but the can was never found. Regardless of whether or not there actually was a can, there was a lot of effort wasted.
Don’t let that happen to your own family.
Q5: Political fliers as kindling
Just wanted to share this fun tidbit. I got tons and tons and tons of political fliers the last few months. I just saved them all and now I’m using them for kindling to get my fireplace started. I’ve got enough to last for a month or so! Good use for such garbage, isn’t it?
This seems like perfectly good use of political flyers to me. In fact, I consider it good use of any junkmail.
I often save the papers that I shred to help start campfires. I’ll just save big wads of them, mix them with some paraffin to make them into a big ball, and then use them to start fires.
I consider all of that stuff junk, so it feels good to get a use out of it.
Depends on how many clothes you’re shipping, but it’s probably cheaper to use UPS. I’ve shipped many boxes that would be equivalent in size to two weeks of clothes for about $17.
Another advantage is that it means no checked luggage. If you ship your clothes, you don’t have to check a bag at the airport, which makes things much easier upon arrival.
The problem with UPS shipping is you have to plan ahead for it. It means that a big chunk of your wardrobe is now missing because it’s sitting at your destination.
Q7: Bookshelf limitations
I am a compulsive cookbook collector. The way my husband handled it is that before I buy a new cookbook, I have to get rid of old cookbooks of equivalent volume. This means I have to identify those that I will send to the second hand bookstore for resale or the next annual library book sale first or give them away as gifts. It has worked very well.
This seems like a great idea.
Like you, I collect cookbooks, but I don’t have a wall full of them. All we have is a cabinet above our stove full of them as well as a single shelf (and that’s not even full).
However, this tactic works well for almost any collection of significant size. If you’re adding one, take one away. That way, it doesn’t end up taking over your home.
Q8: Buying it for life?
My father always made a big deal out of the idea that you were far better off buying something that would last you for life than to buy something much cheaper that you’d have to replace again and again. He bought cast iron and stainless steel stuff for his kitchen, incredibly sturdy clothes, and so on, but he paid a lot for those items and virtually everything he owned is still usable. Is that the right approach to maximize the value of a dollar?
If you can afford the up-front cost, this is usually a good route to take when purchasing things. If you buy something very sturdy, it’s going to last for a very long time, which means you’re not going to have replacement costs for a long while.
The key is making sure you can afford the up-front cost. Items that last that long can cost a lot up front. Sturdy kitchen equipment adds up very quickly.
My solution is to just buy the cheapest option and then, when I can afford it, replace worn-out cheap stuff with the long-term stuff. I hope to have everything in our kitchen be of high enough quality to pass down to our children someday (or at least have significant value if they don’t want the items).
Q9: Recipe archives
My son set up a great system for me for all my old cooking magazines. When a new issue comes in, I take the old one and tear out every recipe I think I might ever use. Then I run it through a computer scanner that he set up for me. I just push a button and it scans. A program pops up with the scan of that page on it and it makes me put in a title for that page. Then it is saved. I can search through all of the recipes whenever I want.
This is a strong idea if you can get a system set up.
I have heard mixed reviews on these systems out of the box, though. I have had good experience using this Fujitsu scanning system, but it’s very pricy. It’s what I prefer, though.
On the other hand, I’ve heard of people essentially finding document scanning systems to be nearly useless. Shop around and get the right system.
(I asked this reader for more details on her system, but I haven’t heard back yet.)
I turn on my seven year old’s light on my way downstairs for breakfast. Half-an-hour later I come back upstairs on my way to the shower and wake her up. I find having the light on for a while before I wake a child up means the child wakes up easier and in a better mood. After my shower I carry the toddler and preschooler downstairs and put them on easy chairs in the family room while everyone else carries on with their (noisy) activities. They wake up when they’re ready.
The nine year old and up can wake up to an alarm. They each have one, but aren’t yet very good at remembering to set them. They are supposed to be up when I go upstairs, if they aren’t I start an alarm going off and leave the room. I give them one more month and then there will be penalties for not turning on the alarm. Already, I tend to wake them up about 15 minutes after they’re supposed to have their alarm set, but they still have to be ready at the same time – not as a punishment but just because that’s when it’s convenient for me to check on them.
I do make sure that no one sleeps in on weekend more than 1 hour past their weekday wake up time. It took about 9 months to see the difference in my night owl, but then he started sleeping earlier at night with less insomnia.
These are all good tactics for helping kids get used to an alarm.
One tactic I learned from a neighbor is what he called the “alarm check.” He’d wait until the kids were asleep, then he’d sneak into bedrooms and make sure that their alarms were set. If they weren’t, he would actually wake up the child and have them set their alarm correctly.
According to him, they picked up on it quite quickly because they didn’t like having their sleep interrupted, which makes complete sense.
Our seven year old (our oldest) wakes up naturally at an appropriate time for school, except for occasionally on Mondays after a busy weekend. We haven’t had to integrate an alarm yet.
Got any questions? The best way to ask is to email me – trent at thesimpledollar dot com. 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.