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. Entrepreneurship versus raises
2. Harassment at work about finances
3. Pulling plug on internet service
4. Travel guides worthwhile?
5. Motivating yourself for better habits
6. Irrevocable or revocable trust?
7. First steps before potential divorce
8. Gifting unwanted hobby stuff
9. Thoughtful gifts for kids
10. Discarding documents from parents’ estate
11. Staying at home better financially?
12. Thoughtful summer reading list?
One of the best parts of being a parent is seeing your kids starting to make independent decisions and that they’re making good ones. They’re choosing, on their own, to be responsible and courteous and kind to others.
For me, seeing my kids showing some really strong signs of walking toward being responsible and mature independent people has been insanely heartwarming. There is literally nothing I want more in this world than to see my kids controlling their own destiny and being good citizens of the world. I want to have a great relationship with them when they are adults, but I want it to be as independent adults, not with their dependence on me. I want to be the kind of parents that they don’t rely on, but that they do want to see sometimes and are still involved in their lives, and I hope that they are the kind of people I’m thrilled to spend my time with.
There are times in which I do miss their infancy and toddler years and early childhood, don’t get me wrong, but I absolutely love seeing them grow up and mature and develop into good people and good members of the community. I had some sense that this would be the most fulfilling part of parenting for me when they were younger, and I was right. I am absolutely, thoroughly enjoying watching them slowly emerge into adulthood, having great conversations with them about it, trying to be the best role model of adulthood that I can be, trying to build and reinforce some strong internal guiding principles for them, and so on.
Over the next several years, all three of my children are going to gradually push away as they become more and more independent, as they should. There will be times when it is not easy. However, I am incredibly happy with the first steps they are taking in that direction.
Now, let’s dig into some questions.
I’m trying to decide if it is better to use my spare time to improve my earnings potential in my current career or to dive into a side gig.
It seems to me that entrepreneurship has a very high upside which is a big runaway success but a very low downside which is a big failure that probably ends up costing me money and a lot of time. On the other hand, the masters degree I am considering has kind of a fixed cost and a relatively easy to estimate reward. In all likelihood I will make money by doing the masters degree, but I won’t make a ton of money with it.
Am I reading this right? Or is there something I’m missing.
I think you’re spot on with your general analysis. Many, many side gigs and entrepreneurial ventures fail. That’s simply the nature of the game. Ones that you’ve invested in will devour much of that investment, too, if they fail. But, yes, some will succeed and turn into the kind of runaway success that you’re never going to get in your career path.
Entrepreneurship is a much riskier option than getting a masters degree. It has far more upside, but the downside is far worse.
I do want to add something worth noting about entrepreneurship. It’s been my experience that many people fail several times with the first ventures they try and it’s the ones that keep plugging away and learning from the failures that succeed, for the most part. I tried many different side gigs and online writing ventures before The Simple Dollar. Most of them utterly failed to build any sort of following or traction and I would only describe one or two of the things I tried could even be called a moderate success. I failed at things more than a dozen times before The Simple Dollar succeeded, and that’s just the ones I can remember.
Ask yourself this: are you willing to put a lot of your sweat equity into something that might utterly fail but might also wildly succeed? If that sounds like an exciting adventure, then entrepreneurship is probably right for you. If that sounds like a terrible idea, then a masters degree is going to be the best investment of your time and energy.
Several people at work yesterday were discussing their 401(k) plans. A lot of people were contributing nothing. Some people were contributing a few percent. One guy was really proud of his 6% contribution. I didn’t say much but then two or three people wanted to know what I contributed. I told them the truth – 20%. They absolutely did not believe me and said I was full of [it]. So I logged onto the site and showed them. Then a bunch of people started criticizing saving that much and told me that I must have no life, etc. I just stopped participating at that point, but it kept up all day with various people telling me that I had no life. It was uncomfortable. Encourage your readers to not share info at work if they’re saving way more than most people.
First of all, I believe it’s generally a poor idea to discuss financial topics at work. It’s one of those issues that’s best reserved for a selected group of friends, not the random collection of people you’re thrown into an office with. If the group is small and you know everyone well, then it’s probably okay depending on the situation, but I would not talk about my finances with any specificity to a large group of coworkers if the situation could at all be avoided.
In your situation, I’d keep in mind that many of the people criticizing you aren’t so much criticizing your choice, but being defensive about their own choices. Someone who is actually saving a lot for retirement in a situation very much like their own demonstrates that some of the internal arguments that they’ve made about why they’re not saving might not be valid arguments. “I don’t make enough!” falls flat when someone else making roughly as much as you is socking away 20%.
I think the best way to respond is to point out the things that they have that you do not. Point out that you’re able to save 20% because you spend a lot of time watching your finances carefully and are careful with a lot of your buying decisions, and that takes additional time and effort that other people may find that they want to use in other ways, and that’s cool.
For me, personal finance isn’t about judging others. It’s about finding a route to the life that you want, and it’s completely okay that others have lives that they want that are different than that. I have many friends who have completely different life goals and ambitions than my own, and they use different techniques in their day-to-day life to achieve those goals. I am very close friends with a couple who do a lot of traveling, lining up all of their vacation time for a huge, expensive trip every few months. I have another friend who is essentially buying up country land to be his outdoor playground. I know other people who choose very much to live in the moment. That’s their life choice, and if they’re happy with it, then I’m happy with it. I can only choose to live my own life.
Don’t let their criticism grind you down, in other words.
When is it time to switch internet service providers? I use [a well known provider] and their speed seems to drop through the floor at random times. I pay for 100 Mbps and most of the time I get that but sometimes at really weird times it drops really low like down to 0.1 Mbps. Whenever I call them, they send someone over fairly quickly within a day or two and they do speed tests and it’s always fast. Getting tired of trying to work on something during hours when it shouldn’t be busy at all (like 4AM or something) and having the internet be slower than molasses.
There are a lot of potential culprits for what’s going on and many of them are out of the hands of the technicians you’re talking to. Slow speeds, particularly in the middle of the night, often occur due to things like routers receiving updates or equipment upgrades, where your internet connection is being routed somewhere else for a while during some equipment fixes.
I sometimes have big drops in my internet speed, too, but I usually have a person here quickly if it’s a lasting problem. That’s far better than other providers I’ve had in the past, where I would have semi-frequent outages and they wouldn’t send a repairperson for a week and then still charge me for the “service.”
Spend some time and make sure that it’s not just an occasional frustration. Many people use their home internet 99.9% of the time without hassle but really remember that 0.1% of the time when it was slow or out of service. Also, read your agreement and make sure you understand the speeds and uptime guaranteed in the contract. Talk to your friends and neighbors in the area and see what they use and what challenges they have.
My guess is that the slow times are within your agreement and that you won’t see much improvement (if any) with other providers and will probably face worse customer service. Unless there’s a real problem here, I wouldn’t seriously consider switching.
What are your feelings on travel guides? Are they worthwhile purchases? My husband and I are planning on traveling in the coming years and we want to start making plans now but I wonder if the information in travel guides isn’t duplicated online.
Most of the content in a typical travel guide is duplicated online, but it’s rarely duplicated all in one consistent place like that. The material in a typical travel guide is spread across a bunch of sites like TripAdvisor, Yelp, Hotels.com, the website for that city or region or country, Wikipedia, and so on. Travel guides also have the advantage of never needing a data signal or a charged battery to be able to access them.
In other words, I’m actually a fan of travel guides. I think they’re a good one-stop-shop of information and are usually had at a reasonable price.
However, before you run out to the bookstore and buy a bunch of them, I’d recommend only buying one or two when you’re sure as to where you’re going to travel. If you’re in the process of figuring out where you’d like to go, turn to your local library instead. Check out travel guides on a ton of different areas and study them. Figure out which travel guides you like best and then, when you do settle on a destination, buy your own copy of a travel guide for that area so you can feel free to mark it or highlight it as you see fit.
How do you motivate yourself to “lock in” a good habit? For example let’s say you want to start getting up earlier but you find it really hard to start getting out of bed earlier. Other than the lame “JUST DOOOO IT!!!” response how exactly do you motivate yourself to make those kinds of changes that are hard at first but really beneficial if you stick with it?
I don’t think there is a single magic answer to motivation. Different things work well for different people. My wife is often best motivated by other people, for example – gentle encouragement and positive attitudes from people she loves seems to really click with her. If she wants to establish a new habit, she tells some of the core people in her life and we help gently motivate her. That seems to work well for her.
For me, that type of motivation doesn’t really help. I am deeply internally motivated, but it takes me reaching a point where I am deeply unhappy with some aspect of my life before I can change. My wife doesn’t need to reach those depths of unhappiness to get started, because her motivation comes from her love of others. Mine comes from disappointment in myself.
For some people, external motivation works well, and for others, internal motivations are the key. For some people, positive motivation works well – rewarding yourself for good behavior – and for others, negative motivation works well – “punishing” yourself for not sticking with a habit.
My advice to you, honestly, is to experiment. Try different things and see what clicks for you. Try using different external motivators, both positive – a reward for success – and negative – a punishment for failure. Try tapping your key relationships and seeing if they’ll help you get there. Try internalizing your struggles through techniques like journaling and meditation (that’s what works best for me). Different things click for different people.
We have a developmentally disabled child that is reaching adulthood. We intend to care for her for the rest of our lives but after that she will need to live in an environment with some degree of care. We have decided to set up a trust for her but the amount of options are very confusing. We intend to meet with a lawyer to handle all of this but we want some idea of what we’re talking about before we go. Our big question is about the difference between a revocable and an irrevocable trust and which one is better?
The big difference between a revocable and an irrevocable trust is whether or not you, as the creator (often called the grantor) of the trust, have the right to alter the terms of the trust once it is created. The only person that can make decisions on behalf of the trust in an irrevocable trust is the trustee, and when you transfer funds to the irrevocable trust, they’re essentially out of your control.
Why would you ever want an irrevocable trust, then? The reason is that the IRS treats it very differently than a revocable trust. Income earned by assets in an irrevocable trust (like stock dividends, for example) are treated as income to that trust, not to you, whereas with a revocable trust, the income is treated as your personal income. This can result in some significant tax savings over time, but you run some risks of things not turning out according to plan.
Honestly, I’d talk to a family lawyer who can dig into your specific situation and help you figure out what’s right for you or direct you to a specialized lawyer who can.
Our marriage has been a disaster over the last six months and we can barely stand to be in the same room together. One of us is usually sleeping on the guest bed or at someone else’s place every night and we go days without talking. I am thinking that separation or divorce is going to happen in the near future. What should I be doing to financially prepare myself?
There are a number of smart actions you can do in this situation. The first and biggest one is to start making an inventory of all of your assets – the ones that are clearly yours, the ones that are clearly his, and the shared assets. For example, I don’t think Sarah would dispute my board game collection, nor would I dispute her jewelry, but we have many shared assets. Make a thorough inventory of everything of significance.
Gather up all of your financial records and make digital copies of them, just to make sure you have them. I’d also snag a copy of my credit report and start monitoring it for unexpected changes.
If I were you, I’d also start living a more frugal lifestyle. Divorce is expensive and you’re probably also going to see a big drop in household income.
However, before you commit to divorce, please try to seek counseling and have some serious conversations about things. Marriages often fail because people don’t communicate, and that’s exactly what I’m seeing here. If you at least try to communicate regularly, you may begin to see things in a more eye-to-eye fashion than before.
I have a bunch of stuff sitting in a storage locker from abandoned hobbies. I have a couple of electric guitars and an amp in there and some golf clubs that are in good shape and a whole bunch of archery gear. I could sell this stuff and make a little money as you suggest on Craigslist or something but what I would rather do is find someone in the community with an interest in this hobby and give them this stuff, preferably someone without a lot of money. I wouldn’t make too much from it anyway and I’d feel better seeing it in the hands of someone who is excited about using it. Suggestions on how to go about this?
Honestly, my suggestion would be to go to a local high school and talk to the guidance counselor about it. The guidance counselor may be able to facilitate such a gift and help you find a teenager who might be in a somewhat difficult situation with at least some interest or passion for the stuff you have. That’s where I would start.
If you don’t have hang-ups about religion, I’d stop by a local church of a denomination that you have positive feelings toward and talk to the pastor. Pastors often know the family stories of many of their congregants and may know someone in need who could really take advantage of that gear.
I just want to say that this is the coolest thing you can do with old unwanted hobby equipment – giving it in a targeted way to someone who could really use it but can’t afford it.
What are some thoughtful but inexpensive gifts for kids? Always feel like I am buying nieces and nephews junk for their birthday.
The possibilities are endless. Here are just a few I came up with.
Give them a small box with a slot in the top. Inside, include a note that says that the box is for them to store the ticket stubs from events they participate in so that this becomes a box of memories of great events as they grow up. Include tickets for them and some appropriate adult to something local, like a zoo or a baseball game.
Give them a nice notebook and a few pens. Include a note that encourages them to write down their thoughts when they’re frustrated or confused or troubled and see if a good solution doesn’t come to mind while they’re writing. Encourage them to hide it somewhere safe.
Listen to the things they find meaningful in the world, and make a charitable donation to that cause. Give them detailed information about the gift and who and what it helps.
Give them an empty small photo album and a couple of disposable cameras, along with a note telling them to take a picture of all of the things they love the most in the world and then put the prints in that little album.
Those kinds of gifts will really mean something to many kids.
My parents passed away in an accident about six years ago. As their only child, I received the entire estate with a family friend as executor who basically just handed me everything once I was out of a grieving mindset. I am unsure how long I need to hold onto things like their tax returns. Do you have any guidance?
I would recommend keeping all of their documents for at least seven years. That’s the general statute of limitations on many such financial claims.
At that time – so, sometime next year – I would contact a family lawyer and ask how long you should hold onto such documents, as that person will give you specific guidance as to the laws in your state.
I wouldn’t discard everything, however. Hold onto things like their birth certificate and marriage certificate and things like that, as any descendants you may have may wish to see those things. You may even wish to have them at a later date.
Is it actually possible for it to be better financially for a family for one parent to stay home? Husband makes $51K/year, I make $24K/year working at a zoo. I am due in October. I have been running the numbers to figure out what things will look like after the baby is born and leaning hard on the advice of others regarding life changes and it just looks to me like it will cost more for me to work than it would for me to just stay home. The least expensive childcare that isn’t scary in our area is about $285/week and we already rely on takeout a lot because of our crazy work schedules and there’s no way that gets better if we add a baby to the mix. If I stop working and make all meals at home we don’t spend that $285/week and we probably save $100-150/week in food costs. Figure $400 a week just right there, which adds up to about $20K/year which is around what I bring home. We can also stop driving the car I take to work and maybe even sell it and the gas savings alone puts us over the top. Work is always looking for trained people so I am pretty sure I can return to work when the baby goes to school. Am I doing this right?
You’re doing it right. In many situations, particularly when one partner in a marriage is making much less than the other and doesn’t make much above minimum wage in terms of hourly pay, it is actually better financially for the family as a whole for one partner to stay home. The cost savings from much less car usage (saving then on fuel and insurance and registration) and cheaper food from home cooked meals can add up fast and you also aren’t adding the cost of child care.
Yes, your budget will be tighter, but it won’t be as tight as you might expect. For most of a year, Sarah did the stay-at-home gig without pay and strongly considered leaving work because we realized that we could survive financially (she loved her career, which is why she went back) because we realized that the costs weren’t as intense as we expected.
The thing is, if you do this, don’t expect to sit at home all day cuddling with the baby and watching Netflix. To make this really work, you should spend a lot of time on home economy – prepping meals and so on – and possibly even on a side gig of some kind.
Got any suggestions for some thoughtful summer reads? I like reading things that make me reflect on my life and am looking for something new to check out from the library. We’re traveling this summer and will be spending more than 20 hours on plane rides, so a few books would hit the spot!
To answer this question, I went through the list of books I’ve read that were published in the last two calendar years and picked out ones that I thought were particularly thought-provoking. Here are my top three picks in that regard.
The Complacent Class: The Self-Defeating Quest for the American Dream by Tyler Cowen makes the case that America is in a state of decline – or at least not in a state of advancement – because many in America have become complacent with their lives. They avoid exposure to new ideas and experiences and take very few risks, unlike previous generations, and this has led America to stop growing and innovating at anywhere near the rate that we once did.
Becoming Wise: An Inquiry Into the Mystery and Art of Living by Krista Tippett focuses on how we interact with each other and the universe and with ourselves in the modern world. It’s focused on what wisdom is, where it comes from, and how to cultivate it. It’s tremendously thoughtful, and it’s honestly the one of these three I’m most likely to read again.
Hillbilly Elegy: A Memoir of a Family and Culture in Crisis by J.D. Vance is a wonderful book about the side of America that rarely gets talked about with any seriousness or depth: the culture of towns and cities left behind by the exit of manufacturing from America in the age of globalism. It’s handled with great care and thoughtfulness and without judgment, and you end up with an appreciation for the mistakes of America’s approach to globalism over the last thirty years.
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.
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