Questions About Flying, Subscription Boxes, Credit Unions, Mass Transit, 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. International flight questions
2. The New Global Student?
3. More retirement contributions
4. Investing in cannabis
5. Asset allocation question
6. Career regrets
7. Banks versus credit unions
8. Subscription boxes
9. The Tyranny of Convenience
10. Financially strong employees
11. Is mass transit really cheaper?
12. Vegetarian help

Due to some personal changes, I’ve found it much more efficient to switch around my sleeping schedule a bit, going to bed closer to 9 PM each night and getting up closer to 4:30 AM each morning, whereas before this I stayed up until about 11 PM each night and got up at about 6:30 AM each morning.

The biggest reason for this shift is that I found I was often struggling during weeks when children were home sick from school. That simple change would basically wipe out a day of work for me, which as someone whose income is based on consistent production rather than hours worked, was a real problem. I don’t simply write fewer posts when I lose a day. This shift enables me to have a couple hours of work pretty much every day, with the cost of not staying up as late in the evenings, which is time that I used to just largely spend on hobbies.

I’m very much a “morning person” when it comes to writing. After I’ve been awake about 9-10 hours, my ability to write declines rapidly. I start making bad word choices and so on.

Before the change, I’d fall off that cliff at about 2 PM or so on an average day. Now, I fall off that cliff at noon.

I’m effectively now working from about 4:30 AM to about 12:30 PM each day rather than from about 6:30 AM to about 2:30 PM each day, which is what I used to do. So, for me, that leaves most early afternoons free as a blank of time. I find that I’m filling them with essential household chores and with some hobbies. Basically, I’m shifting my old 9 PM to 11 PM block to 12:30 PM to 2:30 PM or so, and shifting my old 12:30 PM to 2:30 PM block to 4:30 AM to 6:30 AM, and shifting that old block to 9 PM to 11 PM.

I’ve been joking with Sarah about how this is kind of like what it is like for people who switch shifts. They have to get used to having their free hours at a completely different time than before.

Q1: International flight questions

What are your thoughts on international flights? Is it worth it to pay more for a non-stop? Do the amenities and reliability of a traditional airline (ex. American Airlines) outweigh the value and hassles of a budget airline (ex. Wow Air)?
– Andrew

It really depends on what you need to get out of the flight.

If you have a very strict timeline for your trip, then the most reliable and direct flights are probably worth the premium. For example, if you’re going to a location and have to leave at X time and arrive by Y time or else the whole trip is a waste of time, a direct flight with a highly reliable airline is probably worth the premium.

On the other hand, if you’re flying for personal pleasure and a delayed flight isn’t going to bring you to crisis mode, then you’re better off hunting through the bargains for the cheapest way to get there.

I tend to think the direct flights with a reliable airline are probably worth the premium for professional travel unless you have a TON of breathing room on your schedule, or for an extremely short personal trip when you just need to be there for one specific event at a very specific time. If you’re going for a relatively lengthy (more than a day or two) personal trip without any major events to be present for or you have breathing room on both sides of the trip, then I’d bargain hunt.

Q2: The New Global Student?

I have children about the same age as yours and remember back to a book review you did years ago for “The New Global Student”. Have your thoughts on this book changed as your kids age?
– Gina

Here’s my review of The New Global Student, a 2008 book by Maya Frost that, in my own words from that review, argues that “the ‘traditional hypercompetitive SAT/AP/GPA path’ can be easily dumped and a new path to educational success can be found.”

I still agree with that core premise. As I said back then, “time and time again, throughout my college career, the people that seemed to have the best grasp of what they needed to do to succeed and the value they could get out of college were people who came in from outside that treadmill.” The people who came in for just a year or two to finish up a degree and already knew what they were doing and where they were headed on the back of life experience, community college classes, international experiences and classes, and so on tended to be very efficient at their studies and were usually set up for great jobs after graduation, too.

While I think that the book offers a great recipe for that kind of approach, it is just one recipe, and the book is ten years old at this point. The specifics of what she describes in the book have definitely changed, so you’ll want to supplement the details of the program with some effective internet searching.

My wife and I are still talking about what we want our children’s lives to be like in the years that lead up to college. We’re not sure yet, but we’re in agreement that we want to shield off a lot of the pressure of the SAT/ACT/college entrance pathway for them. I don’t think it’s a net benefit in the life of a teenager who hasn’t figured out their direction yet. I’m definitely not 100% sold on the idea that they should immediately go to college after high school. I know I wasn’t ready for it then – I would have received much more value from college if I had spent at least a year having other life experiences.

Q3: More retirement contributions

With the new federal tax laws I noticed my most recent pay check had less federal withholding taken out. I know that this tax law change also bumped me down from the 25% tax bracket to the 22% bracket. I have no debts other then my mortgage and student loans which are low interest. I already have a nice emergency fund. I have been contributing 18% to my 401k. When trying to determine how to best allocate this tax money my thought was since I am in a lower bracket now this is a good opportunity to take advantage of the Roth 401k that my company offers. What I am not sure about is will splitting my contribution to 9% 401k and 9% Roth 401k actually change my take home pay or should I be increasing my contribution as well. What do you think?
– Alex

Without additional numbers, I can’t comment as to whether your take home pay will change with this contribution shift, but my rough suspicion is that you will see a very slight decrease in take-home pay, on the order of less than 1%, as compared to your pay prior to the changes in federal withholding (and not including raises).

I also suspect that the splitting you’re doing here would be roughly the same as raising your 401(k) contribution to 19% or 20% or so. The Roth 401(k) contributions will obviously be better in terms of taxation in retirement.

In other words, no matter which of those two options you choose, I suspect that your take-home pay will end up being about the same and you’ll have a little bit more income from your retirement accounts when you retire (or retire just a bit earlier).

Q4: Investing in cannabis

I’m a 40 year old schoolteacher, planning for my retirement. I have an annuity that I save for retirement in, as well as a pension that my district will provide. My question is, do you think it’s a good idea to have some of my annuity invested in the cannabis industry? It is taking off obviously.
– Sara

Unless you are a full time investor or have some detailed knowledge of a specific industry, I think it’s a poor idea to ever invest in specific stocks or commodities. The reason is that as a “regular person” outside of the industry and without enough investment resources to deeply study things, it’s really hard to assess what the future looks like. It’s really hard even for people within that specific industry.

My consistent advice for everyone when it comes for investing for retirement is that unless you have very deep knowledge of a particular sector, all of your investing should be done in a very, very broad and diversified way, and the easiest way to do that is through a broad based index fund like the Vanguard Total Stock Market Index, or whatever the equivalent offered by your retirement plan is.

Investing in everything minimizes your risk by reducing the impact on you from changes in any specific sector. If you invest in a specific sector, you’re betting your retirement on the idea that nothing bad will happen in that sector or that other sectors won’t do substantially better, which is almost never a sound bet unless you have a ton of knowledge backing it up.

Q5: Asset allocation question

Have you written on allocations recently? I am averaging cash into my retirement portfolios and using this as an opportunity to think harder about allocation. After all, financial research consistently demonstrates that allocation is the most significant determinant of portfolio performance. So, what are your thoughts on allocation in the current market/long term?
– Margaret

I think that asset allocation, at least for long term goals, is pretty well spelled out by the asset allocations you can find in target retirement funds. Figure out the date of your goal, then either just use such a fund or match that allocation. If you want a little more aggressiveness, choose to match a fund with a date a few years further down the road. If you want to be a little more safe, choose to match a fund a few years closer to today. I don’t think an individual can do much better, honestly.

It wasn’t too many years ago when target retirement funds were a really novel thing and I wasn’t sure how their asset allocations matched up, but over time I feel like many have really proven themselves.

If you want one to match with your own asset allocations, I’d use the ones from Vanguard, like Vanguard Target Retirement 2040.

Q6: Career regrets

I’m 34, single, earned a master’s degree in social work more than a decade ago. Never earned more than $36K in a year and that number was reached during years where I had a second job in addition to my full time one. I did have my student loans forgiven. I regret this path, though. Almost every decision is a hard one and I will never have even a small nice house unless I move to another part of the country. Not worth it.
– Jenna

Although I don’t know where you live, it does seem to be in a fairly high cost of living area. My guess is that if you did similar work in a low cost of living area, your income would drop down to something approaching minimum wage.

That’s a challenge, no matter who you are. Unfortunately, social work is widely known to be both incredibly stressful and poorly financially rewarded. It’s a tough career path that people typically choose for purely non-financial reasons. It is a disastrous financial choice to follow almost all career paths within the social work field. You simply won’t make as much money as many other fields. That doesn’t mean that it’s right, but that’s the nature of the situation.

The question you should be asking yourself is whether it’s time for some kind of career change. I can’t answer that question for you, other than to say most paths of advancement in the social work field won’t lead to wealth.

Q7: Banks versus credit unions

What is the difference between banks and credit unions? They seem like the same thing.
– Cleve

The services they offer are similar, but how they’re organized is different. A bank is a for-profit business, intended to earn a profit for the individuals who own the bank. A credit union is a member-owned financial cooperative, usually intended to help build the credit of its members and provide financial services. They usually end up offering the same services with similar rates.

So, which one should a person use? It really depends on what you’re looking for and what you need the most. In general, credit unions tend to be way more forgiving of low balances and people who are struggling financially. Banks tend to provide better services if you’re the type of person who always has a healthy balance in their checking account and savings account and doesn’t have much of a problem with credit.

My advice to most people is to simply look at what each can offer to you as a customer. Treat them all as financial entities where you might take your banking business and compare what they can give to you. If they end up being about the same, I’d take a credit union over a bank for the simple reason that they’re more interested in helping people with past financial struggles and marginal credit and not a lot of money to start building or rebuilding their financial lives.

Q8: Subscription boxes

What are your thoughts on subscription boxes? Good idea?
– Anna

I think that subscription boxes are a really clever idea that treats “surprise” as a big value addition and thus enables the people behind such boxes to sell something at a markup because the buyer doesn’t know for sure what they’re buying.

So, from the company’s perspective, a subscription box is a way to sell something at a customer at a markup by not telling them exactly what it is, and from the customer’s perspective, a subscription box is an overpriced item where some of the value is in the surprise and packaging.

In general, I’m not a fan of subscription boxes. If I have $50 in my pocket, I’d rather buy $50 worth of stuff of my own choosing than $50 in subscription boxes because I know I’m much more likely to end up with stuff I actually want. On the flip side, receiving one as a gift if it targets an interest, like a craft beer of the month club or something like that, is fine. I would give one in the right situation, but I’d be more likely to just research an interest for that person and find something that really clicks for them.

Q9: The Tyranny of Convenience

Thoughts on this article?

The Tyranny of Convenience
– Tara

I think this nails what convenience is. Convenience means that you’re saving time or effort in some fashion, but likely paying for it in some other way, usually with money. For example, a washing machine saves time and effort, but it costs money – you could wash your clothes in the sink by hand and never have to own a washer, but it would take a lot of time and money.

Convenience has some drawbacks, though. It almost always means that you eliminate some of your own knowledge from the process; instead, you just remember how to use the convenience rather than to actually do the task you want. A rice cooker is a convenience, but it doesn’t take long for you to know how to use your rice cooker but not really remember how to cook rice without it. Convenience foods are the same way – your cooking skills atrophy if you rely on convenience foods too much.

There’s also the fact that many hobbies are about intentionally not choosing the convenient path and instead enjoying the process of doing something and making something. You might read a challenging book instead of a summary of it, or you might make a wooden table by hand, or you might cook really elaborate meals.

I think there’s a balance to be found, as there is with almost everything, and I think that there are sometimes errors on both sides of that balance.

Good article!

Q10: Financially strong employees

At work my boss said off the cuff that he didn’t trust employees who were doing well financially because they were likely to “cut and run” and would just run off with any training he invested in them. He’d rather give a job to “someone who needed it.” This seemed wrong to me but as usual I didn’t know how to discuss it at the moment so I said nothing. Is it an employment risk to be in good financial shape?
– Andrew

A person who is in poor financial shape likely needs the job more than the person who is in good financial shape, that’s true. At the same time, that means that the person in poor financial shape is more likely to suffer through some awful job situations in order to keep the pay flowing in. A person who is in good financial shape can afford to start looking elsewhere much more easily.

Your boss, honestly, gives off a vibe to me that he will treat employees pretty terribly at least some of the time. If there’s a crunch, he will put the pinch on employees and expects them to accept it. Likely, at some point, he had employees that were in good financial shape and they simply refused to take it. He wants a lower risk of that.

I don’t buy into the idea that people who have enough self-discipline or other skills to be in decent financial shape are going to make for bad employees. It takes some willpower to achieve financial health, and that’s a sign that an employee has character (not that people who aren’t in good financial shape don’t have character, but that getting in good financial shape and staying there is often a sign of self-discipline).

If I were hiring someone and I saw that someone in good financial shape wanted the job, I’d consider that a bonus in their favor. This would mean that a person with at least some self-discipline was coming my way.

Q11: Is mass transit really cheaper?

When I used to live out in Crystal Lake I took mass transit to work each day. I took a train into the city then a subway and I wound up about 1/4 mile from my office. It worked well and it was definitely cheaper than driving in and out each day and less hassle too.

When I moved to the Houston area for a career shift my new employer was about six miles away from my house and had their own parking lot. I didn’t really think about it because I was about 1/2 mile from the train station and the other train station was about 1/3 mile from my office and the train’s just $1.25.

I started thinking about it though and I’m spending $1.25 to go each way to work and it’s about 6 miles. I still own a car and it’s paid for and I’m going to be paying for registration and insurance no matter what. Isn’t it more sensible just to drive to work?
– Matt

In this situation, where you’re only six miles from your workplace, they have free parking, and you’re going to own a car anyway, it’s almost definitely worthwhile to just drive to work, and it’s probably cheaper, too, unless your car is massively inefficient in terms of fuel.

On the train, you’re spending $2.50 for a day’s ride, which is about 12 miles. If your car gets more than about 15-16 miles per gallon, the gas is cheaper, and if it’s more efficient than that, the maintenance plus gas is likely cheaper, too. Plus, it’s just way more convenient to have your car there, which allows you to leave from home and leave from work when you want and do needed errands along the way.

I’d absolutely switch to driving in your current situation.

Q12: Vegetarian help

I know that you and some of your family are vegetarians and I wanted some help with a few things. My wife and I decided to switch to a mostly plant diet and we eat meat maybe once a week.

It seems like vegetarian meals are a lot more work. Most of the meat I cook mostly involved just sticking it on the grill, maybe with some sauce. Thoughts?

It is definitely cheaper than eating meat, though. I don’t know where the idea that it is more expensive comes from.

Also one thing we have found is that we sometimes feel bloated after eating vegetarian foods. Does that go away after a while?
– Jim

For us, there are some vegetarian meals that are super simple and others that are more complex, just like meals that use meat. A lot of our meals are prepared in the slow cooker, which often amounts to just adding some ingredients, hitting start, and then eating eight hours later. There does tend to be some chopping, but it’s really not any more work than, say, cubing a chicken breast. I think that your comparison is between a simple meat preparation – just putting a steak on the grill – and a complex vegetable preparation – cutting up a bunch of different things and so on. Try grilling a mushroom cap or a baked potato or a sweet potato, for instance, or try making rice in a rice cooker (add dry rice, add water, hit button, rice in 45 minutes).

I find that vegetarian eating is way cheaper than meat. If you go to the store and compare the prices of things like produce and dry beans and dry rice to the cost of various meats, it doesn’t even compare. I have no clue where the idea that being vegetarian or eating a healthy diet is super-expensive comes from.

As for the bloating, it will go away. It’s due to the increased amount of fiber in your diet, which your guts are trying to figure out. When that happens, you won’t notice the bloating much any more. I do suggest that if you’re eating a lot of beans and you’re starting with dry ones, let them soak overnight and then drain off the water and rinse them, as that will really help.

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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