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. Staying put, but worried
2. Replacing bottles and boiling water
3. Frugal alternative to laundry softener
4. Son has many credit cards
5. Studying effectively at home
6. Husband won’t shop at Aldi
7. Harvesting losses?
8. Thoughts on homeschooling
9. Net worth calculations
10. Toilet paper hoarding
11. Long term good, isn’t it?
12. Good fantasy book series
I want to talk a bit, right off the bat, about coronavirus.
The Simple Dollar is a personal finance site, focusing on straightforward steps people can take to improve their own financial state. Neither I, nor any of the other people writing for this site, are experts in virology or human medicine.
Simply put, if you want information on how to handle coronavirus and personal and societal changes that are happening, my best advice is to follow reasonable neutral news sources, and pay particular attention to scientists who have spent their lives studying viruses and human medicine. They will give you the best information there is on those subjects, and I sincerely hope that those making policy decisions listen to them carefully.
As for The Simple Dollar in the coming weeks, I will be writing articles more or less as normal — unless health or other issues prevent that. I will be intentionally choosing topics, at least some of the time, that I hope will help people with financial and professional challenges in the current climate, but there may be twists and turns that I can’t possibly predict. Some articles may seem completely unrelated to what you’re dealing with. If that’s the case, just put that article aside for now and come back later.
My only advice to you is this: don’t make panicked or rash decisions. Focus on your health, and that of your family and community, above all else. If you’re not sure what to do when it relates to financial issues, sit tight for now. Get plenty of rest, wash your hands, drink plenty of water, eat healthy foods, practice social distancing, get proper medical care if you need it and wait for things to die down. Soon (hopefully), this will all be a memory.
On with the questions.
Q1: Staying put, but worried
The stock market drop has me freaked out. My retirement has lost about $ 100K in the last two weeks. Makes me sick to my stomach. Please just tell me I’m doing the right thing.
– Andrew
You’re doing the right thing. The current stock market panic isn’t the end of American capitalism. It’s large scale stock investors adjusting to the financial realities of this bump in the road. After we clear the bump, it will start climbing again. It’s like every other bump throughout history.
Well, what if we don’t clear the bump? That’s the little voice in the back of our heads that nudges us to panic. To put it simply, if we don’t clear that bump, then you are going to have much bigger problems than your 401(k) balance. Even in this case, pulling out of investments right now doesn’t really help anything.
Stay put. Ride it out.
Q2: Replacing bottles and boiling water
I have consumed a ton of bottled water over the last few years. Here’s what I have been doing this year to move away from it. I fill up a large pot with a gallon of water from the tap, boil it to get rid of chlorine taste, then put it in some reusable bottles in the fridge. Then I run the reusable bottles through the dishwasher. Doesn’t take as much time as you think and a heck of a lot cheaper.
– Andrea
I do the same thing, especially in the summer, but rather than boiling the water, we just have a filter on our faucet that we turn on when we want drinking water. We replace the filter once every several months and the filter costs about $ 7 when you buy them in bulk.
That way I can just fill up a glass of pretty cool water whenever I want without much chlorine taste. (I think bottled water tastes a bit of chlorine, too, about the same as our tap water after the filter.) Or, I can fill up a water bottle, pop it in the fridge and it’s super cold in a couple of hours. I’ll sometimes add some lemon juice or a lemon wedge to it, too.
It’s just way cheaper than buying bottled water or any other canned or bottled beverage.
Q3: Frugal alternative to laundry softener
Any suggestions for cheap laundry softener or something else I can use? Like soft clothes out of the dryer.
– Emily
We simply don’t soften our clothes here. None of us have any problems with clothes that come out of the dryer without softener, and in fact I’ve found that towels seem a lot more absorbent if you don’t use fabric softener.
As I’ve mentioned before, we use dryer balls, but I’m not entirely convinced they’re “worth it” — I picked them up as an experiment to try for The Simple Dollar. I think they do make clothes slightly softer and make loads go slightly faster, but it’s not a huge change. I use them solely because I think it does allow for slightly shorter drying times and I think less dryer lint is produced (which means the clothes should last for longer).
The best cheap alternative I’ve ever used is putting a teaspoon of white vinegar right in the washer along with the laundry load. I think this makes clothes notably softer, but I honestly don’t bother with it because it’s not something that’s a big deal to me.
My recommendation is to take some white vinegar out of your pantry and put a teaspoon of it in a load of laundry instead of your preferred fabric softener or dryer sheet and see how that turns out. If it’s soft enough for you, it’s definitely cheaper than dryer sheets or fabric softener.
Q4: Son has many credit cards
Lately I have noticed that my son is spending a lot of money. He has an Apple Watch and a bunch of clothes. He took me out to lunch on Friday and he had a whole bunch of credit cards in his wallet. I am worried about him overspending and getting into debt but I don’t really talk to him about money. We usually talk about family and DIY projects and basketball. I have enjoyed your site for years and I hope you have ideas on how to approach this.
– Diane
I’m honestly not sure that I would directly approach the issue with him. From your story, it sounds like he’s an independent adult now, and unless your relationship makes such conversations easy, it’s probably not a subject you should broach.
If I were in your shoes, I’d simply ask him if he’s doing okay in terms of money. “Are things going okay, money wise?” He can simply offer a “yep,” and then you should just let it go, but it may be a window for him to unload some worries that are on his mind.
I wouldn’t persistently ask that question. Rather, I’d simply hold onto it and just ask it when the moment seems right. If he says everything is fine, take him at his word and don’t bring up the subject again for a long while (meaning months).
What you’re doing is giving him an open door — he has to walk through it himself.
Q5: Studying effectively at home
Looks like I’m going to be taking classes from home for a while with a 7 year old around. Any suggestions on studying and concentrating at home with a kid around?
– Zach
The first thing I would do is identify what things your 7 year old can do independently with minimal supervision for an hour or two. My own kids could definitely read for that long by themselves, watch television that long by themselves and play video games by themselves at that age.
I would then sit down and explain the situation with them carefully. Explain that you need some time to really focus on this, and that they need to focus on one of those things that they can do independently and only ask you for help if it’s urgent.
Before you start, get them set up and make sure anything they might ask for is handled. Get a snack for them and put it out on the table. Get them a water bottle. Make sure they’re ready to go with a few different independent activities. Make sure they know you’re going off to handle classwork and need to focus, and that they can come and get you if they really need you — but not for small things. I also found it useful to promise to do something together at a certain time on the clock if they are good on their own.
“When the little hand is pointing at the two and the long hand is pointing at the twelve, I’ll stop working and we can play a game together!”
Then, simply go to a different area and get to work.
I used that exact strategy with my own children when they were around age seven, and it worked many times. Many, many articles for The Simple Dollar have been written with almost that exact setup.
Q6: Husband won’t shop at Aldi
I’ve been trying to shop for cheaper groceries but my husband refuses to set foot in Aldi. He just refuses to go. We share the grocery shopping. Seems ridiculous to go somewhere else and pay more for the same stuff you could get at Aldi for cheaper. How can I convince him?
– Jenny
Other than demanding that he goes or having him do it “for you,” you probably can’t.
I’ve noticed over the years that some people get the idea in their head that some things, like shopping at discount grocers, using coupons or buying store brands are things that “poor people” do, and thus they won’t do them out of some sense of pride.
Here’s the thing: people who are really struggling with their finances are often good ones to pay attention to in terms of how to maximize your spending dollars. You shouldn’t mimic all of their financial choices, of course, but if you’re looking for places to get inexpensive groceries or how to put together several days of meals for cheap, people on a low income often have it down to a fine art.
For example, my parents didn’t bring in a lot of money when I was a kid, so they did a lot of clever things to keep food on the table. One of them was shopping at discount grocers, including Aldi. It wasn’t because they were poor, but rather because Aldi gave them tremendous bang for the buck in terms of their grocery dollars.
Q7: Harvesting losses?
What do you think about harvesting losses right now?
– Blake
So, what does harvesting losses mean? It’s basically a clever way to take advantage of an investment that you’ve lost money on … like, say, stocks. However, there are a few requirements.
- The investment has to be taxable. This doesn’t matter for money in an IRA or a 401(k) or a 529 or other such tax-advantaged account. You’re already getting tax advantages there.
- You can only harvest losses to counteract other investment gains or up to $ 3,000 of your normal income per year. You can, however, carry that loss forward to future years, $ 3,000 at a time.
- You can’t just take that money from a sale and immediately buy the same investment or something identical to it. You can reinvest it, but it has to be in something similar.
So, why would you do this? You might sell an investment for a loss right now, move it into something similar and then use that as a $ 3,000 tax deduction per year until you’ve accounted for all of the losses. If you do that during your highest earning years, and then hold that new investment and only sell it during a lower earning year, you’ll almost definitely end up paying fewer taxes over the long term. That’s the big reason to do this.
If you have something that could be sold at a loss right now, you’re going to earn a lot this year and you have something similar to reinvest the money in, it’s not a bad idea.
Q8: Thoughts on homeschooling
Several years ago I wrote to you about deciding whether to be a stay at home mom. You encouraged us to try it if we could make it work financially and gave some good advice. We went with it and everything worked out better than we could have imagined!
We now have a 5 year old and 2 year old. We are considering the idea of homeschooling. What are your thoughts on homeschooling? Pros and cons?
– Mollie
I don’t have any objection to homeschooling if it occurs in a situation where the parents are financially stable and the home life has enough structure and patience to provide education. There are some definite advantages to homeschooling if obstacles are removed. At the same time, I’m not opposed to public schooling either, particularly in states and areas with school districts that are well supported by local taxes.
My biggest advice for you would be to make absolutely sure that you are financially stable before trying this (it seems that you are) and that you have the patience and home structure to support homeschooling. I would also strongly encourage you to start looking at the local homeschooling community, as having a network of support and an ability to share resources and even share teaching responsibilities in some areas is invaluable.
Also, if you feel that it’s not working, don’t consider it or yourself a failure. I have friends who homeschool and I know very well that it can be challenging and it pushes you in unexpected directions. If it doesn’t work, it’s okay to step back and look at other options.
Q9: Net worth calculations
I started using net worth to track financial progress several years ago as per your suggestion. I calculate it every month and compare it to last month and last year. Been trying hard to keep a long positive streak alive, where net worth grows month over month and year over year for a long time. How do I handle a big drop like this?
– Andy
Well, it will probably kill those streaks, unfortunately.
However, if you want to recast things a little bit, you can look at other metrics.
For example, you might want to track the number of shares you have in your retirement or other investment accounts. Those numbers shouldn’t change or may even go up.
You might want to look at your declining debt total — or revel in the fact that it’s staying at zero.
You could also “pro-rate” your current balance by calculating the drop from the peak into your numbers from a month ago and a year ago. What if your investments were worth 25% less a year ago, or a month ago? Would you still have positive progress?
Net worth is useful, but what really matters is having a number or two that you can track your general progress. What really matters is your effort, and the current dip has little to do with your effort.
Q10: Toilet paper hoarding
What do you think of the stories and videos of people buying tons of toilet paper and hand sanitizer and emptying out shelves?
– Andrew
I think it’s silly for an individual to buy more of those items than they’ll reasonably use in a few months, and if it keeps others from having access to those items, it’s selfish, too.
One thing worth mentioning here is that you can make your own hand sanitizer by buying isopropyl alcohol (rubbing alcohol) and aloe vera and mixing two parts alcohol to one part aloe vera in a squirt bottle.
Another suggestion for paper towels is to consider getting a bidet that hooks onto your toilet like this one. It basically divorces you from the need for toilet paper by using water to clean up down there. You just wait for a minute or two and it drips and dries on its own, or you can use a paper towel or a cloth to dry off (it’s clean at that point). We have one on one of our toilets and it works well. It seemed weird at first, but you get used to it quickly and it divorces you from needing toilet paper at home.
Q11: Long term good, isn’t it?
I’m 32, been putting money into my 403(b) since day 1 into target retirement fund that’s almost all stocks. It’s been crazy watching it drop in value but this is a long term good thing if you have 20+ years to go? Right?
– Dennis
Yes, and here’s why. Let’s say you’re contributing $ 500 a month to your 403(b). At the start of the month, the shares of your Target Retirement Fund cost $ 50 apiece, so your contribution buys 10 of them. The stock market drops 20%, so at the end of the month, those shares cost $ 40 apiece and your contribution buys 12.5 of them.
Going forward, the 12.5 shares you bought this month will be worth 25% more than the 10 shares you bought last month, simply because you have more shares.
It’s not a bad idea to actually bump up your retirement contributions right now if you can easily afford to do so. You’re getting the same shares you would have bought a few weeks ago at a 20% lower price.
Q12: Good fantasy book series
Thinking of starting a fantasy series to keep me entertained the next few weeks. Any recs?
– Tony
I’m only going to suggest complete series, because there are few things more frustrating than starting a series and realizing that it’s not finished yet so you’re stuck with a massive cliffhanger for months/years/forever.
My favorite one of all time is The Malazan Book of the Fallen, a ten book series by Steven Erikson. The first one is Gardens of the Moon. It has so many memorable sequences and characters and a really immersive world. However, be aware that Erikson just dumps you in the middle of ongoing situations and expects you, the reader, to figure out what’s happening and, to an extent, decide for yourself who is “good” and who is “bad.”
My wife, Sarah, would point to the Realm of the Elderlings series by Robin Hobb, composed of 16 books (it’s actually a series of four trilogies and a trilogy-plus-one). It starts with Assassin’s Apprentice. I enjoyed how the different trilogies focused on different things going on in the world and highlighted how things going on in one area impacted things going on elsewhere, gradually tying everything together.
For a third option, I feel like I practically have to point at the Broken Earth trilogy by N.K. Jemisin, starting with The Fifth Season. It’s fantastic from beginning to end. I think it’s right on the fine line between fantasy and science fiction, but I recommend it all the time.
I’m pretty sure at least one of these three will be new to you, and that at least one of them will scratch your itch.
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.
