Questions About 401(k) Investing, Savings Certificates, Interviews, Podcasts, 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. Tracking down a savings certificate
2. I don’t trust my pension
3. Conservative in my 401(k)
4. Identifying store brands
5. Consequences of closing credit cards
6. Bad at interviewing
7. Just to stay sane?
8. Intermittent fasting
9. Found quantity of cash
10. 457 versus 403(b) versus 401(k)
11. Retirement won’t solve your problems
12. Favorite podcasts

There are mornings when I wake up full of energy, ready to tackle the day and knock dozens of things off my to-do list.

There are other mornings when I roll over and close my eyes again and wish I could go back to sleep.

One of the great mysteries for me is what the difference between the two is. I can increase the likelihood of having a good morning by setting things up just right the night before, but it is still never a guarantee. On the other hand, I can do everything wrong the night before and still sometimes wake up feeling like a champ.

The one factor that seems to really make a difference is exercise. If I got a lot of exercise the day before, I am almost always more likely (but not guaranteed) to wake up feeling good the next morning.

Guess that means I need to exercise more!

Q1: Tracking down a savings certificate

I have a savings certificate. The last deposit was March 1997. My father which is deceased opened it. My mother found it 3 years ago in the bottom of her safe deposit box. I have been trying to find the money. No one knows where it went. Any ideas?
– Michael

I’m guessing that the financial institution identified on the savings certificate no longer exists, meaning that it was taken out of a bank that’s no longer in business. (Otherwise, just go to the financial institution listed on the certificate.)

If that’s the case, the only way you’re going to be able to recover that money is to track down what happened to that financial institution. In theory, the money originally deposited for that certificate should still be in an account at whatever financial institution took over the assets of the one that failed or went out of business. This will take some homework.

If you’re in the US, the first place to start is to look at the FDIC’s list of failed banks and see what bank took over the failed financial institution on your certificate. If you’re outside the US, hopefully your country has a similar service. If you don’t see your financial institution listed there, try contacting the FDIC directly.

Q2: I don’t trust my pension

I have worked for [a company] for 37 years and am about to retire. They have had a pension program here since day one rather than a 401(k) or anything like that. As I think about retiring though i don’t think I trust the pension program. What is to stop the company from just killing it off one day or taking all of the money out of it? The company has supposedly put aside money for each employee each year to fund our pensions into a separate fund from which our pension checks come. What keeps them from just looting that fund if they need money?
– Darren

The first thing I would do is make sure that your pension plan is insured by the Pension Benefits Guaranty Corporation, which guarantees some level of pension for you if your pension plan fails for some reason. I would read over the PBGC’s summary of how pension plans end, for starters.

When a company ends a pension plan, typically what happens is that the money in that plan is distributed to employees as a lump sum, or else employees are given an annuity purchased for them by their remaining pension money. An annuity is an investment that pays out a certain amount each year as long as you live, but has no value upon your death – in many ways, it functions like a pension.

If your pension is insured by PBGC, you’ll probably be okay and have at least some significant value in your pension. If it’s not, I would be very wary.

Q3: Conservative in my 401(k)

I am 24 years old and thinking of signing up for my workplace 401(k) but the thought of losing money in that account makes me feel sick to my stomach and I know the second I see losses I’m going to go try and pull my money out. I know I should not worry about it but I also know that I will worry about it and overreact. So my plan is to invest conservatively. What can I invest in that has the best returns with almost no chance of losses?
– Allie

If you’re absolutely insistent on not seeing any losses at all, your best bet is to put everything in a money market fund. That will basically never lose money unless the economy goes in a “the federal government is collapsing” kind of direction, in which case you have bigger issues than the state of your 401(k).

The catch there is that the returns are extremely low. The ten year average return on most money markets I can find is below 1%, though many have a return of about 1.5% over the last year (the economy is changing right now in a lot of ways compared to the run of the last 8 years or so). That’s below inflation, which means that the buying power of your money will actually decline in such an account.

Slightly more risky is a highly diversified bond index fund. The problem there is that the bond market has been really weak as of late and some bond funds have even lost a little bit (1% or so) in the last year or so, which is pretty unusual. Again, if you’re so risk averse as to avoid even losing 1%, you’re probably not going to want to go here.

Another option to consider is to buy something where you can’t easily track the day-to-day price, like buying real estate outside of your 401(k) plan. Save up, buy a house to rent to other people, hire a management company to manage it for you, roll the income from that into an account to eventually buy another one, and so on. You may lose money sometimes on the value of that house, but you won’t really be able to see it because there’s no real way to see the accurate day-to-day value of the property.

Q4: Identifying store brands

How do you tell what the store brand is? I go to the store and I recognize some brands but a lot of them I don’t recognize. How can I tell which one’s the store brand?
– Calvin

A store brand is usually a consistent brand label that’s used across a lot of different goods in a single store but isn’t available in other store chains. Typically, the items are among the lowest priced versions of a particular type of good – for example, the store brand laundry detergent is usually one of the cheapest laundry detergents. So, you can start by doing a price comparison and considering the cheapest ones.

If you’re still not sure, you can always use Google. Just type in “store brand at” followed by the name of the store you’re interested in.

Be aware that small independent grocers often don’t have a store brand. However, they do often stock some sort of generic brand, usually with an extremely plain label.

Q5: Consequences of closing credit cards

Is there any reason not to close an old credit card you don’t use any more?
– Vince

It can have a temporary minor negative effect on your credit score. That’s about the only drawback.

One reason cancelling an unused card can hurt your credit score is that one of the factors considered with your credit score is the length of your credit history (with longer being better) and if the card you’re cancelling is the one you’ve had for the longest, this can have a minor negative impact for a while. This is a non-factor if you’re not cancelling your oldest card or if you’ve had your second oldest card for a few years.

Another reason cancelling an unused card can hurt your credit score is that another factor considered in your score is your debt-to-credit ratio, which is basically a comparison of the total balances of all of your cards to the total credit limit of all of your cards. If you cancel a card, you reduce the total credit limit without affecting the total balance. This is a non-factor if you keep a low balance on your other cards.

Q6: Bad at interviewing

My old company went out of business in February due to the owner just wanting to retire and liquidate rather than sell the business. I figure it would be easy to get a new job because I’ve got a list of certifications as long as my arm and a glowing recommendation from my old boss. I’ve had eight interviews in the last six months and haven’t received a single offer. I must be bad at interviewing but I don’t know what I need to do to fix it.
– Andrew

You’re probably not bad at interviewing, but your confidence is taking a hit because of the run of bad luck. At least some of those positions may have had an anointed candidate and you were just there to demonstrate an “open” hiring process. At other ones, there may have simply been a more qualified candidate. I wouldn’t get yourself worried about being bad at interviews.

If you’re looking for some good pointers on job interviews, this is probably the single best internet post I’ve seen on job interviews.

If you’re nervous about how you’re presenting yourself personally, you may want to look at something like How to Win Friends and Influence People by Dale Carnegie, which I’ve found very helpful.

Q7: Just to stay sane?

I am 32/F/single and want to retire early. Having difficulty saving more than 10% of pay. Have a great paying job but it is super stressful and I have to travel regularly just to stay sane. Rent is high here too. Seems like a pipe dream unless you’re a weirdo.
– Anna

There are at least two red flags from your email of things that you could change if you wanted to in order to retire early if that were really a top priority for you.

First of all, you say you “have” to travel regularly to stay “sane.” Right there, you’re adding a huge expensive requirement to your annual budget, one that’s probably going to by itself wreck any reasonable plans of retiring early. If an expensive trip done regularly is an absolute requirement, then you’ve likely squeezed out early retirement from your life.

Second, you’re referring to most frugal strategies as being in the realm of being a “weirdo.” I don’t really know how to interpret that statement otherwise. If you’ve already decided that making frugal lifestyle choices makes you a “weirdo,” you’re very unlikely to commit to the lifestyle changes needed to make early retirement work.

If you actually want early retirement to happen, you need to sit down and really think about what’s a “need” and what’s a “want” in your life. You seem to have already declared some very expensive things in your life to be in the “need” category, and you seem to be looking with disdain at cuts to the “want” category. Those perspectives are going to have to change or early retirement isn’t happening for you unless you hit the income jackpot and then choose not to inflate your lifestyle at all at that point.

Q8: Intermittent fasting

Started doing IF and it saved us about $250 in food budget over the month of September. Also lost six pounds and feel great. You should talk about IF on the site!
– Angel

I’ll be honest – I had to spend a few moments to verify what IF was, because I wasn’t sure what she was referring to, but I’m pretty confident she’s referring to intermittent fasting, a strategy I’ve used myself at various times (including now).

Basically, intermittent fasting means that you fast very regularly for a certain relatively short period of time. For many people, it means eating one meal a day in the evening and not snacking; another strategy is to only eat within a six hour window each day. It’s believed to be a good weight management strategy and can be good for one’s blood sugar levels.

It’s also, as Angel mentioned, a potentially good way to save money. If you eat only one meal a day and plan ahead for it to make sure it’s nutritionally balanced, you can save quite a bit of money doing intermittent fasting. I have two friends who do this regularly and they both have settled on an “early supper” as their one meal of the day and they plan ahead for it, often doing a lot of the prep work the night before. Outside of that, they don’t eat food and only drink water. It seems to work well for both their health and their finances.

Q9: Found quantity of cash

We bought a house at an estate auction as-is that wasn’t thoroughly cleaned out as there were a lot of things still left in the back of high cupboards and such. We found a plastic Folgers container that had quite a bit of cash in it about $500 in $10s and $20s. Not sure what we should do with it. Isn’t it technically part of the estate?
– James

In most states, property left in cupboards is considered abandoned and to have been sold along with the property, provided it wasn’t hidden in any way (like behind a wall panel or something).

If you want to be sure, read the contract you signed to buy the house. A standard house buying contract usually outlines that you purchased the house and all contents as of a particular date. This would definitely be part of the “contents” of the house.

I honestly can’t imagine a realistic situation in which this money isn’t yours, free and clear. You should report it as income to the IRS, however.

Q10: 457 versus 403(b) versus 401(k)

What is a 457 plan and how does it compare to 401(k) or 403(b)?
– Olivia

A 457 plan is similar to a 401(k) or 403(b) plan, with just a few minor differences. All of them are retirement plans managed through your workplace in which you contribute money (before taxes) to be put aside for retirement.

The biggest pros of a 457 plan versus the others is that a 457 plan is really nice for “catching up” if you start late. You’re allowed to make double contributions once you’re over the age of 50 – your annual limit for contributions is doubled! That’s great if you’re dumping in money late in your career for retirement.

Another feature of note is that you can’t start withdrawing money from a 457 until you’re 70 1/2 years old if you’re still working for that organization. If you leave that organization, however, you can start withdrawing the money at any age.

Q11: Retirement won’t solve your problems

I am 77 years old and enjoy reading your newsletters daily. I wanted to share a bit of experience with your readers. Retirement won’t fix your problems. If you are unhappy with your life before retiring you will be unhappy when you retire. If you are happy before retiring you will be happy when you retire unless maybe it was your work that made you happy in which case you can always find new work. Happiness comes from within. Try to find what makes you happy now and don’t believe that retirement will make you happy.
– Jim

Great advice that I 100% agree with.

If you’re not happy with your life, no degree of financial success will change that in any real way (unless you’re in complete poverty now, in which case it will help up to a certain point). You’re either happy with your life or you aren’t, and if you’re not, you should be working to figure out why you’re unhappy and fixing it.

There are lots of reasons why you might feel generally unhappy, and many of them are easily fixable. Just try doing something different, because just doing the same thing will give you the same old results that you’re unhappy with.

Q12: Favorite podcasts

I really like podcasts. I really think its a good tool to learn while doing everyday tasks. I would like to ask: what are your favourite personal finance or personal development podcasts?
– Jennifer

I rotate through podcasts pretty frequently. I’ll find a new podcast, download a bunch of episodes of it, and “binge listen,” then I jump to a new one. I’m usually listening to a podcast whenever I’m driving anywhere alone or doing household chores, as well as on some walks. There are very few that I actively subscribe to.

My favorite financial podcast, and the one I listen to consistently, is Planet Money. It tends to cover a wide range of financial issues, both personal and otherwise, but there’s usually some sort of useful personal center to many of their stories.

For “personal development” podcasts, I have two that I consistently subscribe to. The Voluntary Life is a podcast about financial independence and personal freedom that often gets pretty philosophical. I tend to disagree with the host fairly often, but he makes his points in a friendly and thoughtful way that keeps me coming back. I also get a ton of value from listening to Hidden Brain, which focuses on how your brain works and little things you can do to think more clearly and effectively. I also enjoy Cortex, which touches on similar themes with a technology and personal productivity focus, though that’s starting to get pretty far from “personal development.”

Like I said, most of my podcast listening is in the form of binging. I’ll just find a podcast that’s interesting, download the last 20-30 episodes of it, and listen to it nonstop for a while. After the end of that, I’m usually done with it for a while.

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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