Questions About Practical Gifts, Low Cost of Living Cities, Custmer Rewards, Debt Collection, 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. Car loan versus retirement savings?
2. Moving to cheaper city?
3. “Customer rewards” and work
4. Cheap pocket notebooks
5. Uses for food scraps
6. Debt collection question
7. Struggling with focus
8. Student loan forgiveness
9. Saving for retirement too slow
10. Thoughtful practical Mother’s Day gift
11. Standing desk and joint pain
12. Best recent books

One of the most interesting parts of being a parent of adolescent children is that you get to see flashes of both the young child they once were and flashes of the adult they are becoming, often in quick succession.

For us, this past weekend was full of these kinds of back to back moments.

I would see our children reveling in joy at an Easter egg hunt, then just a moment later be engaged in a sophisticated, calm, and mature conversation with a relative.

Our children sat quietly and peacefully during a full lengthy Easter morning church service, then quickly dove into boisterous play just a few moments after the service was complete.

My oldest child exhibited extreme patience and kindness and supervision with his toddler nephew for a very long time, and then got in trouble just fifteen minutes later for getting his nice clothes dirty after throwing dirt clods back and forth with his sister.

I heard deep theological questions followed by bodily humor.

It’s an interesting age that these children find themselves at, with one side of them still firmly in childhood and another side of them growing straight toward adulthood.

On with the questions.

Q1: Car loan versus retirement savings?

I have about $12K in savings to which I add $100 a week automatically. It’s an emergency fund but may be used for other things sometimes when it gets really fat. I have about $4K left on my car loan which is at 5.5% interest which I intend to drive until it fails. When it is paid off I intend to raise my 401(k) contribution rate at work. Should I dip into the $12K and pay it off early? 28, single, make $58K a year at a pretty stable job, no plans to marry or move any time soon.
– Barry

In your shoes, with that salary and that relative stability, I’d pay off the car and bump up the retirement contributions today.

If you pay off that car loan, that leaves you with about $8K in your emergency fund, which is going up $100 a week. It’s pretty clear that your monthly living expenses are $3K a month or less (you’re making $58K and are able to sock $400 a month into your emergency fund and are also contributing to retirement, so your expenses aren’t that high), which means that your emergency fund would cover at least two months of living expenses, almost definitely three months, and probably more than that.

As a single person, three months of living expenses in your emergency fund when you have a relatively stable job, a decent resume, and reasonably low expenses is a good situation to be in. You’re probably making the right choice amping up retirement savings now and getting that car paid off.

Q2: Moving to cheaper city?

I currently live in the Boston area and make about $85K. It is surprisingly hard to make ends meet because everything is so expensive here compared to where I grew up (UP Michigan). The solution that so many suggest including yourself is to move to a lower cost of living city, but I don’t see how that helps when your salary drops, too. How am I better off making $60K in Des Moines even if the cost of living is way less?
– David

Well, if you do a side-by-side comparison of Des Moines and Boston, the cost of living is about 40% less, according to several different cost of living calculators that I checked (here’s one, for example). All costs are lower, but housing is somewhere around 60-65% lower, entertainment is about 30% lower, healthcare is around 25-30% lower. Even things like transportation and food costs are 10% to 15% lower. The calculator linked above estimates that making $85K in Boston equates to the same standard of living as making $50K in Des Moines.

Most of the time, the calculators aren’t even looking at taxes. If you make $50K in Des Moines, you’re in a much lower tax bracket than if you were making $85K in Boston, which means that your tax bill is much lower for an equivalent standard of living in Des Moines. So, yes, $60K will go much further in Des Moines than $85K will in Boston because things like housing and taxes are gulping up a much smaller portion of your salary.

I’m not arguing whether one city has certain perks that the other does not, but I will say that there are enormous differences in the cost of living in different metro areas in the United States and they will make up for drastic differences in salary. You simply need a lot more salary to have an equivalent standard of living (2 bedroom apartment, decent diet, a car) in Boston or San Francisco than in Des Moines.

Q3: “Customer rewards” and work

What do you think about the ethics of keeping customer rewards perks when you spend money for work? So at my work we have a weekly working lunch for our team paid for by the company. We used to take care of ordering the food on a rotating basis but then I discovered that I could order from some restaurants and scrape up lots of customer rewards points by ordering from some places usually adding up to a free meal or two. Is this ethical to keep them? If so, I think it’s a good strategy to try to volunteer to do this more often.
– Kelly

Is it ethical? It depends on your company policy. Most companies, unless they have an account of some kind with a retailer, don’t seem to care if the individual employee doing the ordering keeps the customer rewards benefits for themselves as a perk for doing the rather … dull job of ordering meals and such. This is particularly true when it’s done in the form of reimbursements. Most companies see this as fine because you are effectively extending a small amount of credit to your employer out of your own pocket, since you’re paying for the meal out of pocket and then requesting reimbursement later. You’re basically acting as a credit card for your company out of your own pocket.

To be sure, you should talk to someone in human resources. 99% of the time, it is really not worth the effort to the company to scoop up a small number of rewards points at a restaurant for something like this. They’re just not going to care. So, you’re almost always going to get an “it’s fine” response, but it’s worth stopping in and talking to someone just so you can say you did your due diligence.

So, what I’d do in your case is stop in to talk to HR about it. I’d address it in a general sense by asking about things in addition to the restaurant purchasing, like travel rewards if you’re going on a work related trip that you book yourself, which would fall under the same category. What you’re really wanting to know is whether the company has a general policy for these kinds of rewards if the employee handles things themselves and then asks for reimbursement. As I said, it’s extremely unlikely that your company will care. If they don’t care, then you probably can score some free meals for yourself by volunteering to take over all of the meal ordering (assuming your company is very reliable in reimbursing those meals).

Q4: Cheap pocket notebooks

What do you use for cheap pocket notebooks? I like Field Notes but they’re $10 for a three pack and I can go through a notebook a week and that adds up. Do you know of any cheaper options?
– Darren

First point of advice: don’t use spiral-bound pocket notebooks if you’re going to actually carry them in a pants pocket, unless you want to get stabbed by a loose metal end on a regular basis. I started off using cheap spiral-bound pocket notebooks and quickly moved away from them after about the second stabbing. I generally only use staple-bound pocket notebooks at this point.

My usual source for pocket notebooks is buying them in stores (online and off) when I see them on sale. There are a lot of brands of pocket notebooks, like Field Notes and Scout Books and Doane and so on, and they tend to pop up on sale frequently. If I can find them below the $1.25 per notebook threshold, I’ll buy a bunch of them; if I’m low, I’ll even stock up at the $1.50 or even $2 per notebook level.

I did try making my own, but I quickly discovered that the covers I used for my own notebooks did not stand up to pocket wear. You need some good material to stand up to a few weeks of normal pocket wear and finding good enough material wasn’t something I was easily able to do and I didn’t want to deal with a cover for them.

So, my advice is to just look for sales on pocket notebooks regularly. Watch Amazon, for starters; I also sometimes find sales on the notebooks at pen retailers like Goulet Pens and from Field Notes themselves.

Q5: Uses for food scraps

Recently heard a story about how Americans waste a pound of food per person each day so we’re trying to watch our food waste. I noticed that I do throw a lot of scraps away, things like coffee grounds and banana peels and apple cores. Is there anything useful that can be done with that stuff?
– Anna

The easy answer is to compost that stuff. Take any vegetable and fruit scraps and coffee grounds and save them in a bucket until they turn into rich brown or black matter, at which point it makes amazing fertilizer for your garden. However, this isn’t something a lot of people are willing to do or are interested in doing.

Vegetable scraps can be used to make really good vegetable stock, which can be used to make soups and many casseroles and other dishes quiet flavorful. Just save the scraps in a big Ziploc bag or other container in the freezer, and then when it’s full, put all of it in a big pot or slow cooker, add some peppercorns, cover the vegetables with water (and add a couple of extra inches) and let it simmer all day long. Strain it and save the liquid.

A lot of fruit scraps have at least some other use. For example, banana peels make for a surprisingly good meat tenderizer. When you go to roast, say, a chicken breast in a skillet, put a banana peel in first, then put the meat on top of that. It keeps the meat from drying out.

Q6: Debt collection question

I have been hounded by a debt collector for the last several months. I didn’t pay for several items bought on credit at a store when my old business was struggling and when it went out of business I didn’t do anything about it and now they’re hounding me. I can afford to pay off the debt now and I would actually like to clear my name but [I don’t want to deal with the debt collector]. Should I contact a lawyer?
– Daniel

The first thing I would do is contact the business that you originally owed money to and find out if they wrote off the debt. If they still have it on the books, work it out directly with them. If they don’t have it on the books, that means they wrote off the debt and sold the debt to a debt collector.

It’s worth noting the the longer you’ve had this debt, the more likely it is that it’s been written off and sold for pennies on the dollar to a debt collector. If you haven’t had it for too long, they may be using a collections agency, which is a business that the company you were originally indebted to pays to get back money that the business was owed. If you’re in a “collections agency” situation, then contacting the business will work out; if it’s already been sold, then you’re out of luck. Your best approach in that latter situation is to negotiate, because if the business bought your debt at a steep discount, they’re likely willing to negotiate with you and get the easy smaller win rather than fighting tooth and nail for the possibility of a bigger one.

If you had a properly-formed business – not just a sole proprietorship – then it may actually be the business that’s liable here and you should contact a lawyer.

Q7: Struggling with focus

I graduated last May and got a great job where I basically spend 5-6 hours a day writing code. There are minimal meetings and it’s not very stressful at all most of the time. The problem is that I’m having a very hard time focusing. My job only has really long term deadlines and deliverables so if there isn’t something due in the next 2-3 weeks I find it really hard to do anything. There have been three big projects that when it got down to the 3 week mark I just buckled down and worked 90-100 hour weeks and got it done, but during the gaps in between those sessions I can barely get anything done. How can I focus better when there aren’t any deadlines?
– Martin

If you have a good track record of producing the work when it’s needed, you might want to talk to your boss about having a more milestone-based approach to your job. Rather than having these huge projects that are due every six months, set up some milestones that are due every week or two and have a review of those milestones when they come up.

If you’ve done good work up to this point and you tell your boss honestly that this will work better for you and not kill you close to the project deadline, it’s likely that your boss will work with you to move to this kind of milestone-based system.

My current work is very milestone-based (an article a day, basically) and I am concerned that I, too, would be fairly distracted if it were not.

Q8: Student loan forgiveness

How likely do you think it is that the current political climate will lead to a student loan forgiveness plan of some kind in the next few years, and if so, should people plan financially for that?
– Jenna

I assume that you’re talking about plans being proposed by Senator Elizabeth Warren and Senator Bernie Sanders on the campaign trail for president, where they have both proposed different forms of student loan restructuring or forgiveness for most or all student loan holders.

While I think there is definitely a major problem with the cost of college right now, I don’t think that anyone should ever make financial plans based on people promising things on the campaign trail. I would not change a thing about my financial plans based upon their policy proposals, or the policy proposals of any candidate for that matter.

Your best approach with student loans is to seek out refinancing and forgiveness options to lower your debt and interest rates, then wrap them in a big debt repayment plan and pay them off as fast as possible.

Q9: Saving for retirement too slow

I am 26/F. I have worked at two different jobs since graduating, accumulating about four years of 401(k) savings. At my first job I contributed 6% of my salary and got a 6% match, earning $40K to $52K over those two and a half years. At this job I am contributing 8% with a 4% match, earning $55K at start and now $58K. My sum total of retirement savings is only $28K and my retirement calculator estimates I will be able to withdraw a whopping $78 a month. That’s in 35 years when inflation will have risen so much that I’ll be able to afford a loaf of bread with that “savings.” What’s the point?
– Caroline

First of all, what you’re not looking at is that the $28K you already have is going to go up in value somewhere around 8% a year (depending on the estimate) for the next 35 years, even if you contribute nothing more. That’s going to be $414,000 in retirement savings. That’s $1,150 a month you’ll be able to withdraw, not $78. Even if you include 2% annual inflation, that’s $575 a month.

Second, you’re not thinking about the additional amounts you’re going to contribute going forward. Your contributions are going to raise that amount significantly – if you continue to sock away 12% of your income, my back of the envelope math says that you’ll at least triple those numbers over the next 35 years.

At the same time, that money is there to supplement what you’ll get from Social Security. It’s likely that you will be receiving at least some benefits from Social Security in retirement, so that adds to your $1,150 a month.

On top of all of that, you’re also going to have many of your major life expenses paid off by that time. If you own your own home by that point, there’s almost no housing expense for you. If you have a reliable car that you no longer have to commute with that’s fully owned, there’s another big expense you don’t have to worry about.

Your picture is a lot brighter than it seems.

Q10: Thoughtful practical Mother’s Day gift

My mother is the most practical and amazing woman I’ve ever met. She managed to raise five kids on a single salary (our father died when I was 5 and she was pregnant with our youngest brother) and always managed to keep food on the table and clothes on our backs.

My siblings and I are all either college aged or early in our careers so we don’t have a ton of money but we all chipped in $50 or $100 to buy her a great Mother’s Day gift. We have $350 to spend. What is a really great practical gift in that price range?
– Amy

The first thing I would do if I were you is to just spend some time with her in the next week or two and see what she actually uses a lot and really needs. What items does she seem to use repeatedly? Out of those, which ones seem most in need of replacing with a high quality reliable version?

You might notice her blender or her knives or her coffee maker. You might notice holes in her bedsheets or in her socks. Just look for the things she uses all the time that are well worn or breaking down, and then start doing the homework.

While the gift will be really useful for her, what will really matter to her is that you noticed this issue. You took the time to see what she really needed and then took action based on that. That will matter far more to her than the specific item that you get, though it’s a great move to do that homework and get a great version of what she needs.

Q11: Standing desk and joint pain

I’m wondering how your standing desk is working out for you. A few people at work tried switching to one and they found themselves with a ton of joint pain. Any big difficulties?
– Susan

I’ve been amazed at the amount of interest in my use of a standing desk. Since I first discussed switching to one earlier this year, I haven’t had a week go by without someone asking for an update.

I have been using this standing desk for more than a month now and I haven’t noticed any joint pain related to the desk. (I had a minor knee tweak for other reasons, but it seems to have mostly healed up; it wasn’t caused by the desk and the desk didn’t seem to interfere in healing..)

I will say that I went into this knowing a few things about standing desks. One, it’s not a good idea to just stand in the same position all day long, so I intentionally move around a lot. Whenever I don’t have the next sentence in mind, I walk away from the desk and walk around a bit. I also shift frequently when standing, sometimes standing on one foot. Two, it’s a good idea to alternate periods of sitting and standing. I’ll often go upstairs and find a place to sit down when reading a book or an article; I don’t just stand in place all day. I also made sure that the desk was set up perfectly for me, with a height so that my arms are bent at a normal 90 degrees all the time, my wrists aren’t bent at odd angles when I write, and the monitor is at roughly eye level. I also stand on a soft pad that I intend to replace when it wears out.

Basically, I’ve done all I can to minimize the downsides of a standing desk so that it’s all upside, and the upside is that it’s vastly better for my cardiovascular health than sitting all day. I’ve found that standing means that I move around a ton more during the day, as I constantly walk around the room, move from foot to foot, and so on. I’ve also found that I’m more alert when I’m working at the standing desk and noticeably more productive. I think it’s a big win for me, but I’m also doing everything I can to make the standing desk’s drawbacks be as small as possible.

Q12: Best recent books

Have any suggestions for recent books on personal finance or productivity? Love your book reviews and I’m looking for some new stuff to listen to when I travel. I usually flip on an audiobook whenever I’m commuting or traveling for work.
– Andrew

In terms of books published in those categories in the last few months that I’ve read (or at least browsed and have on my to-read pile), two really stand out.

The first is Digital Minimalism: Choosing a Focused Life in a Busy World by Cal Newport, which focuses on the value of reducing the time spent using electronics of any kind. He largely advocates using digital tools solely as an assistant to things you’re doing offline and that virtually all things you do online that aren’t directly tied to a clear offline purpose are a distraction that results in worse attention spans and lower moods. He offers a wide variety of ideas and solutions to move in a better direction with regards to digital tools.

The other is Playing with FIRE (Financial Independence Retire Early): How Far Would You Go for Financial Freedom? by Scott Rieckens, which is a very readable overview of the idea of adopting a very high savings rate in order to retire before the typical retirement age or at least reach a level of financial independence where salary is no longer any factor in your career choices.

I’ve read Digital Minimalism and plan to give it a slower re-read soon, and I’ve read part of Playing with FIRE, and I can honestly recommend both of them.

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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