Questions About Credit Scores, Account Security, Philosophy Books, TIPS, 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. Divorce mediation difficulties
2. Importance of credit score?
3. Fearing money stolen from accounts?
4. Move to city or not?
5. GnuCash
6. “Bang for the buck” coat
7. Paid off student loans, then…?
8. Inflation linked treasury notes
9. Free guided meditations
10. Slow cookers and long workdays
11. Philosophical recommendations
12. Frugal if you were single?

There are few things more heart wrenching than seeing a friend go through something incredibly difficult and you can’t really help other than be an ear for listening or a shoulder to cry on. I would so often gladly take on that pain for them, but I can’t take it away.

It’s fun and easy to be a friend in the good times. It’s much more powerful and meaningful to be a friend in the bad times.

On with the questions.

Q1: Divorce mediation difficulties

In May, my soon to be ex wife and I decided to divorce after 7.5 years of marriage and she moved out in early June. I think it is just a “seven year itch” thing. We don’t have children and our assets are relatively straightforward.

We decided to use a mediator to save money. During the mediation process I have felt like my ex wife has been playing hardball and trying to get an unequal portion of the assets and has basically been ignoring the suggestions of the mediator. Over the weekend she texted me and referred to me “buying off the mediator,” which is farcical since we went with the mediator that her best friend suggested.

I want this mediation to work because the alternative is lawyers which is going to eat up more money than what we’re fighting over anyway. But she seems unwilling to agree to equal splits on anything or demands absurdly high valuations for things I’m keeping. I don’t know what to do so I’m looking everywhere for suggestions. I have read The Simple Dollar off and on for the last eight years at least and I am hoping you will have some ideas.
– Darren

It is very easy for a situation like this, once the emotional healing has happened, to turn into a mere business arrangement where you’re trying to get the best deal possible for yourself. It sounds like that’s the state your wife is in. She’s playing hardball and figures that you’ll give into it rather than hiring a lawyer.

So, you have a choice. Would you rather the disputed amounts go to her or go to lawyers? Honestly, that’s the choice that’s probably before you right now.

If I were in your shoes, I’d suggest a liquidation of all disputed assets and a 50/50 split of the proceeds, which seems completely fair. Everything that is in dispute gets liquidated and you split the cash. The more you get out of those items, the more cash each of you receives. That should be completely reasonable with an equal split of assets. If there are personal items you both want, auction them using the cash that comes from liquidating the other assets, and then you split the winning bid. So, if you agree to bid for a particular item and your wife bids $1,000 for it and you don’t want to pay more, she pays you $500 and keeps the other $500 (splitting the liquid value of the item). My guess is your mediator has already suggested something like this.

If that isn’t agreeable, then she doesn’t want a 50/50 split, and you have to decide whether an uneven split is okay with you or whether you’d rather have some of the assets handed over to lawyers. That’s a personal call.

Q2: Importance of credit score?

How important is your credit score if you own your own home and aren’t planning on changing jobs or insurance soon? I am considering cancelling my two oldest credit cards because I don’t use them any more. I have heard that cancelling old cards can have a negative impact on your credit score for a while but I also don’t want these cards hanging around. Does it matter for me?
– Dana

The impact of cancelling your oldest credit cards, if you are maintaining others that are at least a couple of years old and you don’t max out your cards, is pretty small and temporary. I really wouldn’t worry about it.

If you do max out your card regularly or if you’ve only had your current card for a year or less, I’d only cancel one of the old cards (the newer of the two) and then wait a year and reassess.

In any case, unless your lifestyle changes, this should have almost on impact on you whatsoever.

Q3: Fearing money stolen from accounts?

Almost every day I am really afraid that money is being stolen out of my retirement account and checking account. I log in and check them and everything’s fine. I have heard stories about people who have had their money just stolen from their accounts due to bogus transfers and now I am just overly worried. Are there safeguards that I can put in place to help?
– Anna

You can inquire with your financial institutions about getting an ACH debit block or ACH debit filter in place. What these things do is prevent all transfers in and out of an account (block) or allow you to only allow transfers in and out from certain accounts or institutions (filter).

Different banks and financial institutions have different levels of willingness in terms of putting such things in place, particularly on personal accounts. Such offerings are pretty common for business accounts, but not personal ones.

In your shoes, I’d simply ask my bank and other financial institutions about such services.

Q4: Move to city or not?

I’m 32, my wife is 31, we are childless. We currently live in a rural area in the Great Plains. I have a technical job here that pays fairly well but basically offers no room for moving on to new challenges plus there is no professional community to speak of. My wife is a teacher and thus can teach anywhere. We have no plans to have children – I don’t want any and my wife gets her “child fix” teaching elementary school.

I enjoy the life where we live now. We have a big old farmhouse that we bought for cheap and fixed up. There aren’t any neighbors nearby but we can go into town for community events and we both volunteer for some things.

We like our day to day life here but I also see us not taking on any challenges and growing old and alone here without having done anything else in our lives. Like I said, I will probably have a job for life here but I won’t ever advance into anything really new and it’s not exactly an area where there’s vibrant and changing culture. What are your thoughts?
– Lawrence

I think you’re at a crossroads and you and your wife need to have some long conversations about what you want your life to be in the future.

My suggestion is this: each of you spend a week or so thinking about how you envision your life together being in twenty years if everything went pretty well for you guys. What would that look like for you? Think about that on your own. Have your wife do the same. What would you be doing with your days?

Then, sit down together and go through those visions. Look for the things in common and don’t worry so much about the things that are different.

The things you have in common will likely tell you which of those two paths you should be following.

This isn’t really a financial question. This is much more of a “what do you want out of life” question.

Q5: GnuCash

In response to Alternatives to offline Quicken: I recommend GnuCash. I’ve been using it to track my personal finances for years once Microsoft Money stopped being an option to me.
– Timothy

GnuCash is a feature-rich piece of software, but there are two reasons I don’t give it a full-throated endorsement for everyone.

One, it often feels like small business accounting software rather than a personal finance tool. There are times where it feels like you’re buried in features and most of those features are oriented toward small businesses.

Two, it’s not incredibly user friendly and takes some time to learn. Most of the mobile solutions these days are far more user friendly than GnuCash. Part of this is that “features” are clearly of higher priority than “ease of use” in the design, which is fine.

Once you get past those two things, this program will do everything you want it to do, but expect a learning curve.

Q6: “Bang for the buck” coat

First winter north of Texas and I’m in Madison Wisconsin. It is freezing here. Needs a suggestion for a great winter coat that doesn’t cost $200-300 as all of the local recommends have been that expensive.
– Arielle

“Cheap” and “coat that will keep you warm on a cold winter day in the upper Midwest when the temperature won’t get above 0 F and it’s windy” don’t go in the same breath. If you’re going to live here for more than a year or two, having a very thick winter coat is a worthwhile investment and if you get a sturdy one it will last for a very long time.

So, if you’re only going to be in Wisconsin for a year or two during the winter, I would get an off-the-rack inexpensive winter coat somewhere and then layer on a lot of clothing under that coat. Wear a t-shirt and a long sleeved t-shirt and a sweatshirt and then your coat over that. Keep some extra clothes in your car (do this anyway).

If you’re going to stay for several years, I’d invest in a good winter coat, something like a North Face Women’s Arctic Parka. I have a friend who has this and loves it dearly. My wife has a North Face coat but it’s an old model that’s no longer sold.

I’m in rural Iowa and I’m a guy, so my go-to winter coat is a no-longer-made Carhartt Arctic coat that I’ve worn for almost 15 years. It’s definitely beat up, but it’s also incredibly warm in the winter. I have actually been sweaty in that thing while outside in below-zero Fahrenheit temperatures while doing a lot of active work.

Q7: Paid off student loans, then…?

On Tuesday I made my final payment on my student loans. I have been paying approximately $500 a month for loans for the last seven years and it feels great to have the monkey off my back.

I currently have no outstanding debts. I live in an apartment and don’t intend to buy a house any time soon because I move frequently due to my career. I am single and don’t intend to marry for a very long time. I have a fully paid off car. I contribute 8% to my 401(k).

What do you think I should do with the $500 a month? I don’t want to just keep it because I am pretty sure I would squander it on dumb stuff.
– Jeff

If I were you, I’d sign up for a Roth IRA somewhere and start contributing $500 a month to that. The annual contribution limit to a Roth IRA is $5,500 for most people, so you’ll have a single month where you have $500 left over – make that month December and use that money for any holiday gifts and travel expenses you might incur.

It’s sweet and simple, but that’s exactly what I would do with that money. It puts it away for your future and probably puts you on a path to retire early or make some radical career changes when you hit middle age and you feel your life goals changing.

If you’re over the gross income limit for a Roth IRA – currently $120,000 – then I would put the money in a Traditional IRA instead.

Q8: Inflation linked treasury notes

Do you have any thoughts on inflation linked treasury notes as a long term low risk investing strategy?
– Max

I assume you’re referring to treasury inflation protected securities, or TIPS. These are investments offered by the federal government that increase and decrease in value based on the Consumer Price Index (the government’s official measure of inflation).

Let’s say you buy one of those TIPS for $1,000 and it offers a 1% interest rate. At the end of the year, if the Consumer Price Index went up by 3%, the value of that TIPS would be adjusted up by 3% to $1,030, and then the 1% interest would be paid out, $10.30. You would then owe taxes on the $40.30 you earned – $30 for the increase in value of the TIPS and $10.30 in interest. If you’re in the 25% tax bracket, you’d have $10.08 added to your tax bill for the year.

Basically, if you want your money to keep pace with inflation and nothing more, it’s a good place to put it. In general, if you’re getting a 1% interest (often called coupon) rate, that return will pay for the taxes incurred and more unless inflation is going up much faster than it has recently.

Q9: Free guided meditations

A while back, you pointed to some free guided mindful meditations that you liked but I can’t find the resource. Could you send them to me again?
– Breanna

Honestly, I remember sharing some of these, but I couldn’t find them, either.

The best free tool for mindfulness meditation I’ve found is the Insight Timer for iOS and Android. This is kind of a giant buffet of guided meditations – try a bunch and find one that clicks with you.

On Youtube… there’s a mixed bag of guided meditations. I like The Honest Guys and The Mindful Movement, for starters, but the best ones on Youtube in my opinion are led by Tara Brach: opening and calming and sleep and relaxation are both great.

Honestly, most of the time, I do it while listening to nothing at all or to ambient white noise. I found that guidance was helpful for the first, oh, 50 times I was doing it, but now the guidance pulls me out of the moment.

Q10: Slow cookers and long workdays

I have been trying to use a slow cooker for meals but my workdays are just too long. I leave the house at 7 AM each morning and then I get home at about 6 and even if I leave stuff in there on low it’s just mush when I get home.
– Adam

There are two solutions that immediately pop to mind.

The first is to get a programmable slow cooker (that’s a link to one I’d probably recommend – though I haven’t used that exact model, I’ve used similar ones) and program it to start cooking based on the recipe. So, if you have a recipe that needs to cook 6-8 hours on low and you’re getting home at six, count back 7 hours from your arrival time and program the slow cooker to start automatically at that time (11 AM, in that case). It’ll just start cooking in the middle of the day, no problem.

The second is to get an outlet timer, which is probably the better choice if you have a non-electronic slow cooker that you can set to a particular mode with a dial. You set the outlet timer in much the same way as you would a programmable slow cooker – you’d set the outlet timer to be on from, say, 11 AM to 9 PM, and then it’d start up automatically at 11 AM because it would start receiving power. You’d just set the dial on “low” on your slow cooker, put in all the ingredients, and plug it into the timer.

Both solutions will handle the problem you discuss quite easily. For me, I work from home, so I usually start our slow cooker manually when needed, or if that doesn’t work, I choose a recipe that matches the needed window of time.

Q11: Philosophical recommendations

I have really enjoyed your articles where you looked at some part of philosophy and connected it to personal finance and modern life. Do you have any recommendations for books that do a good job of introducing lots of philosophical topics and connecting them to real life?
– James

This is actually much harder to pull off than you think. I don’t know of a single book that does this really well, but I do have a few recommendations that get close.

What Does It All Mean? by Thomas Nagel is a brief overview of nine of the main questions that philosophy seeks to answer and some of the best answers to those questions, pointing readers to good follow-up reading. This one is very brief, though, and each topic is addressed in just ten to twelve pages, not particularly deep. This is definitely a starting point.

A book that covers similar ground with more depth is Think by Simon Blackburn, which does more or less the same thing but gives a lot more breathing room to how different philosophers and schools of philosophical thought answer those questions. My only complaint with this one is that in a few places, Blackburn gets a little wordy (something that I’m guilty of myself, sometimes).

The one book that probably hits what you want the closest is Philosophy as a Way of Life by Pierre Hadot. However, it’s the most challenging read of the three, as it can feel at times like it’s throwing a dozen interesting ideas at you on each page. It took me quite a while to get through this one because I kept wanting to close the cover and think about what was being said. However, the book really does focus on applications of philosophy to everyday modern life.

Q12: Frugal if you were single?

Would you still be as frugal and careful with your money if you were single again?
– Jenna

Honestly, I think I would be more careful, simply because I would have more freedom to experiment with my life.

Right now, I have four people whose lives depend on me, three of which are children. I need to be as stable as possible in many of my life choices so that they have a firm foundation. My children need a reliable father. My wife needs a reliable husband.

If I were single again, I’d probably sell off 99% of my possessions and live largely out of a bag. I’d spend some time vagabonding but keep a small apartment or home somewhere. When I was in college and single and knew I wasn’t living in any one place for more than several months, I had life motivation to be minimalist, whereas now I really don’t. If I were single, many of those life motivations to be minimalist would return in a hurry.

I’m not saying that I spend money because of my family, but that my interests and passions are, to a degree, selected by my family. Some of them are filtered away simply because they’re exceedingly difficult or impossible due to current life responsibilities and past life choices.

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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