Questions About Banks, 401(k)s, Old Microwaves, Audiobooks, 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. Budgeting for “discretionary money”
2. Bank recommendation
3. Advantages or drawbacks to marriage
4. Buying a beginner bike
5. Finding a good campground
6. Spending less on food
7. Cosigning advantages on car loan
8. 401(k) contribution question
9. Risk of old microwave?
10. Do tiny houses make sense?
11. Checks and security
12. Library audiobooks

On Saturday, one of my favorite writers, Rachel Held Evans, passed away suddenly and unexpectedly due to an extreme reaction to an antibiotic. She was 37.

I could write several paragraphs here about how her books and essays had a big impact on me, and every word would be true. All four of her books had a real impact and they’re on my re-read list right now.

Perhaps more directly on topic for The Simple Dollar, however, was that she was a writer who died an unexpected and untimely death at an age very close to my own. It’s rather hard not to immediately transpose that sudden death into my own life.

What would it mean for my family and those who care about me if I took an antibiotic tomorrow, had a massive reaction to it, and suddenly died? What if I were driving home last night and a drunk driver plowed into my car and I suddenly died?

It is uncomfortable to think about such things, but they can happen. It is a reminder that we only get one life, and we shouldn’t leave unsaid words and unhealed wounds and moments of anger and frustration and damaged relationships hanging. Life is too short to be angry. Life is too short to let a hurt fester.

Life is also too fragile to leave your loved ones dangling without some kind of plan in place for them.

On with the questions.

Q1: Budgeting for “discretionary money”

The idea of budgeting for “discretionary money” or “hobby money” really clicked with me and it made budgeting make a lot more sense. My question is how do you figure out how much to budget for “discretionary money” each month? I feel like I’m just guessing.
– Jeremy

The first step you should take is to add up your discretionary spending from each of the last several months to get an idea of what you’re spending on those unnecessary things. Take an average of those months to see what you’re actually spending in an average month.

Then, chop off a small portion of that average, say 10%, and use that as your discretionary money budget. If you chop off a huge amount, say 50%, it’ll be quite hard to maintain it and your budget will likely fall apart.

So, let’s say you figured out that, of the money you’re counting as discretionary spending, you spent $300, $280, $330, $290, and $250 the last five months. That averages out to $290 a month. 10% of that is $29 and thus chopping off 10% leaves you with $261. That would be your discretionary spending budget for the month.

Q2: Bank recommendation

We currently use Chase for our savings and checking and they have no free accounts unless you have a Chase mortgage or maintain a daily balance of at least $15k. I’m looking for a free savings and checking account for my husband and I. We’d prefer a bank that has easy to use web UI, an app, and a decent domestic ATM network (at least in the Midwest).
– Carrie

I’d take a look at Capital One 360. They offer both free checking and savings and a pretty good web UI and app. I can’t judge whether they have any ATMs close to you, but they have a lot of them. You can use their ATM search to see if there are any surcharge-free ones near you.

Another option you may want to consider is your local credit union. They often offer most of the same features (at least, I know that two local ones near me offer those features) and by using a credit union, you can be pretty sure that at least some of the proceeds from your checking and savings money (which they can utilize to back up mortgages and so on) stays local.

So, I’d probably point you toward a local credit union, but if they don’t have everything you need, I’d look at Capital One 360.

Q3: Advantages or drawbacks to marriage

Assuming that there is zero intent to ever have children, are there enough financial advantages to overcome the drawbacks of getting married? Drawbacks that worry me include unbalanced and messy divorces, higher taxes (we make similar salaries), and money stress as most marriages seem to have a lot of money arguments from what we have been reading. If we don’t want to have kids, why get married?
– Adam

It’s true that a long term cohabitation offers many of the same financial benefits as marriage. It allows the partners to split many of the costs of day to day living – rent, bills, carpooling, and so on.

There are some financial advantages, though. One big one is that if one of you decides to go back to school or is unemployed for very long, being married and filing jointly will be a nice tax savings and you’ll be able to piggyback off of the other’s benefits. You’ll also be able to continue to contribute to a Roth IRA if you’re unemployed and your spouse isn’t. If one of you dies, the law looks favorably upon marriages in terms of who inherits your stuff; if you aren’t married, it can get really messy and will involve some court time.

My general belief is that the benefits of marriage without kids shines best when one partner is not employed, as there is a significant tax savings and benefits extend to the unemployed partner. Married couples find it a lot easier for one person involved to bounce to a new career because of it.

Q4: Buying a beginner bike

I live about 3.5 miles from my job. There is actually a biking/walking trail that covers most of that distance between home and work and I finally decided to start taking advantage of it. I walked to work almost every day for the last few weeks and decided to invest in a bicycle. I went to a bike shop this Saturday and the guy there just kept recommending bikes that cost more than $1000 which seems like overkill for a commute. Do you have any suggestions or guides for buying a first inexpensive bike (well, since junior high) for riding to work?
– Ed

I don’t even know what that person was recommending to you for more than $1,000. That seems drastically out of line for a first time commuter bike.

Honestly, if I were you, I’d look for a used bike for your first bicycle. Go to some used sporting goods stores in the area and to some bike shops and see if they have any used bikes for sale; you can also check local marketplace sites like Craigslist and Facebook Marketplace. You’re better off getting a used bike for $40 that will work for your commute for a year or two than investing hundreds in a bike at first.

The reasons are numerous. First, you don’t have any idea if you’ll stick to this plan, so investing hundreds in a bike is silly. Second, you don’t have any real idea of what you like and dislike in a bicycle, so investing hundreds in a model that you’re unsure about is also silly. Third, because this is all new to you, you have at least some likelihood of doing some extra wear and tear and minor damage to your first bike, so having an inexpensive one is good.

Get a cheap used bike. Ride it every day. Figure out what you like and don’t like. Get good at riding a bike again. Then, if you’re really into it, upgrade from there. If not, you’ve only sunk $40 (or whatever) into this.

Q5: Finding a good campground

How do you find places to camp that aren’t loud and overcrowded? We seem to be on a really bad run of camping, so bad that my wife does not want to camp this summer.
– Jerry

Honestly, my recommendation is to look at camping sites in a National Park or National Forest, if you can find one. In my years of camping experience, I’ve found that rangers in national parks do not put up with noise, and most people there get it anyway and don’t get noisy. They’re almost always really quiet. This is largely true of state and county parks as well, though I did have a pretty noisy experience once at a state park where the park ranger appeared to be partying with the other campers.

Private campgrounds are a really mixed bag. Many are quiet, but you’ll find some that seem to be hosting family reunions or something and they’re incredibly noisy with intoxicated partiers all night long. In general, I’ve found a lot more success on private campgrounds on weekdays rather than weekends – Friday night, Saturday during the day, and Saturday night seem to bring out the really loud and intoxicated people.

So, my advice is to try to camp in a National Forest or a National Park and if you can’t find a spot there, avoid private campgrounds on weekends unless you find a lot of online reviews making it clear that they’re very quiet.

Q6: Spending less on food

I saw your recent post that said an average family of four spends $650 a month on food. How is that possible? My husband and I struggle to keep our food spending under $1000 a month for just the two of us! Do you people eat garbage?
– Anna

If you take a look at the USDA food plan, the cost for a family of four with one child between 6-8 and another between 9-11 is $649.60 a month. That’s where the data comes from.

This is roughly in line with our own family’s food spending. We are a family of five with children in those ranges and another child a little older. We spend a little more than that, but less than $1,000 a month, on food.

We don’t eat “garbage.” Probably 2/3rds of what’s in our shopping cart at the grocery store is stuff from the produce section, as most of our meals are vegetable based. We buy lots of tomatoes, squash, lettuce, carrots, apples, bananas, and so on. We eat out maybe once or twice a month. Sarah and I usually eat leftovers from our dinner the night before (or two nights before) for lunch the next day.

There are three big differences that I notice when comparing our family’s food routines to the handful of other families that I know well enough to see how they regularly eat.

One, we don’t eat many convenience foods or prepackaged foods. We usually make our meals at home from several ingredients rather than popping a frozen meal in the oven or microwave.

Two, we rarely eat out. It’s just not something we do very often, and when we do, it’s usually for a special occasion or achievement or milestone.

Three, our meals at home aren’t elaborate. For example, tonight we’re eating a simple grilled meal of kebabs (pieces of chicken and vegetables through a skewer) and asparagus from our garden. Tomorrow night, we’re having a “spring chili” that’s basically a spring vegetable soup seasoned as though it were chili, along with some from-scratch cornbread. The night after that, our meal plan says we’re having pasta tossed with olive oil and vegetables (meaning we cook the vegetables in a pan until they’re just a bit blackened, then toss them right in with the pasta). Our meals at home are almost entirely plant-based.

Many of the families I know who have much higher food budgets than we do eat a lot of prepackaged meals, eat out or get delivery a lot, and when they do cook their own meal at home, it’s usually involving a giant steak or something. All three of those things are expensive.

Your food spending comes down to consistent choices above all else. If you consistently choose a $10-15 option for a meal rather than a $2-5 option, even if you do that just once a day, your food budget is going to be huge.

Q7: Cosigning advantages on car loan

I am 22/f and about to graduate. I went shopping for my first car and intended to buy a late model used as you have recommended before. I decided on a 2014 Toyota Corolla. I don’t have the money to buy it right away but I have a job starting on June 1 and I intended to finance it, pay it off, and then keep driving it until it needed to be replaced so I can buy my next car with cash, again as you recommended. The dealership said they would offer me a loan but that they could offer me a better rate if I had a cosigner. The guy was really friendly and patient with me and said they would hold the car for seven days which is something I’ve never heard of anyone doing. What are the benefits or drawbacks to a cosigner? I read several sites but they never seem to get a straight answer.
– Julie

For you, there’s basically no disadvantage to having a co-signer. For the co-signer, there’s a risk.

When someone co-signs on your loan, they’re basically saying that if you don’t keep making the payments, they’ll step in and make them, and that they’re liable in any situations where you don’t make payments. It puts their credit at risk and potentially means they may end up paying for that car even though they’re not using it.

If someone co-signs with you, they’re taking a financial risk in doing so. The dealer seemingly thinks that your credit and financial situation is marginal (probably because you have a limited credit history and want to borrow significant money) and just barely what they would be willing to lend money to, but the loan officer would vastly prefer to have someone else on the loan, probably someone with better credit, just in case. The willingness to hold the car for you is a nice touch, but not unheard of – they likely believe that you’ll be back to buy the car one way or another.

If you have a parent or someone else that’s willing to co-sign on this loan, even with the potential risk to them, you’re going to wind up with lower car payments, and that’s good for you. It just adds up to a financial risk with little benefit for the co-signers.

Q8: 401(k) contribution question

How much should I put into 401(k) each check? 29 male unmarried don’t plan to be.
– Dario

The simple answer is “as much as possible.” The more you put away now, the less you have to put away later and (potentially) the earlier you can retire and live off the money in your 401(k).

At the very least, if your employer matches your contributions, you really should be contributing enough to get every dollar of that match. If you’re not, you’re leaving money on the table.

I can’t really give you a more specific answer than that without having a full picture of your financial state. All I can say is that if you’re able to contribute to a 401(k), you’re not going wrong by contributing as much as you possibly can. There may be more optimal routes to retirement, but they start involving situational choices.

Q9: Risk of old microwave?

Are there any health risks with using an old microwave? My parents have had the same microwave since at least 1982 and I think since ’79 or ’80. It’s a huge box and kind of loud when it runs. Are there any health risks associated with it?
– Adah

First of all, microwaves are perfectly safe. All they’re doing is directing a beam of energy at food that causes the water molecules in it to rotate. It’s not creating radiation and there aren’t any long term health effects from anything that would leak out of a functional microwave. While I wouldn’t want to put some items into a microwave, I wouldn’t want to put some items into a fireplace, either.

Honestly, unless there’s some damage to the door or the seal around the door and the microwave works, I wouldn’t worry about it.

If you’re really worried about it, go down to an electrical store and see if they have a microwave leakage tester. This is a good one. It’ll tell you pretty quickly if there are any problematic leaks, but it’s pretty unlikely given that it’s really inexpensive and easy for microwaves to block microwave leakage. The risks involved are low enough that I wouldn’t worry about it – there are way bigger risks in day to day life than this.

If you’re thinking of buying a used microwave, the big thing you want to make sure of is that the seal around the door is intact and there isn’t any damage to the pattern on the glass on the front of the microwave.

Q10: Do tiny houses make sense?

I’m really fascinated by people building these tiny houses 100 to 200 square feet and living in them. They seem to be custom built trailers. What are your thoughts on them? Do they make sense?
– Anna

I think they do in certain situations. If you’re willing to be quite minimal about your possessions, then they’re a nice option. They’re not very expensive and very customizable, which is an advantage for some. They’re also easy to move – I’ve seen many that are basically built on a trailer that can easily be towed from place to place, which means that they would work well for a family that moved about frequently. They seem to be fairly popular among professional baseball players for that reason.

I would probably be hesitant to live in one if I lived in Tornado Alley. I’d also be hesitant to live in one if I had more than two adults and a child in one. We had an apartment that wasn’t much different than a tiny home when we were first married and we managed to make it work for one child, but we would not have done well with two or more children in that situation.

I think a very well built tiny home with a fairly typical layout is be a solid investment. If it’s a DIY project for a first time builder or if you’re using a strange layout, it might be hard to recoup your investment.

Q11: Checks and security

Are checks secure? My mom still pays all of her bills via check and I am wary about her sending out so many in the mail. They seem ripe for identity theft.
– Alicia

Checks are relatively insecure compared to many other payment options out there. The fact that it’s a paper document that includes your full name, your bank’s routing number, and your bank account number on it is enough to make it a fairly insecure way to share money. Even if you use permanent inks, the check still has information about you on it. Checks solved a particular problem in human history before the information age, but the flaws in checks are clearer than ever.

Obviously, online banking is a much more secure option. Your bank is giving you a platform for secure online transactions. We pay all of our bills online using online banking tools, mostly because of the security factor.

It’s not a bad idea to have a paper checkbook somewhere in your home for unusual situations, but if you have the ability to move to online banking, I highly recommend it for identity theft and personal security reasons. Checks are low hanging fruit for identity thieves.

Q12: Library audiobooks

Looked into getting some audiobooks from the library for a long trip but they’re all on CD and I don’t have a CD player in my car.
– Sam

There really isn’t an easy way to make this work if you have CDs and your car doesn’t have a CD player in it. Some newer cars no longer have CD players in them by default and the solutions for making it work are wonky and kind of expensive (requiring some sort of CD player and requiring your car to have an auxiliary port, or else a CD player with Bluetooth or a Bluetooth dongle).

Another option is to use software on your computer to “rip” the audiobooks, then transfer them to your phone or other device so you can listen to them in the car. This can be a bit of a hassle, but it’s free at least.

A final suggestion: see whether your library allows you to check out digital audiobooks via Overdrive. This way, you can check out audiobooks straight to your phone, then have your phone play them back either through headphones or through the audio system in your car.

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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