What?s inside? Here are the questions answered in today?s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Heading toward self-sustaining finances
2. Overwhelmed by home buying
3. Board games with story
4. Keeping cash on hand
5. Personal GPS?
6. Infinite Summer
7. CFL dangers?
8. Bank envelope with cash
9. Using TSP for down payment
10. How to say thank you
A few days ago, I found an old scratched-up CD copy of the album Traveling Wilburys while cleaning out a closet. There was a period in my life where I listened to that album over and over and over.
I don?t think I?ve listened to it for most of a decade, yet when I played it again, I could sing along to almost every song (even the rather long and complicated lyrics for ?Tweeter and the Monkey Man?).
Do I still get the strong vibe I once got from the music? Not really. It was still a wonderful shot of nostalgia, though.
Q1: Heading toward self-sustaining finances
You have mentioned a future goal of living off of the interest your savings accrues. Are you investing in Treasury Bonds, Mutual funds, or what is your portfolio like? Just curious because I would like to get there also.
- Shane
As of right now, I?m just investing in cash. My long-term goal is to invest in treasury notes, but the return on those is so low right now that it would be a very poor decision to lock in interest rates at this point.
My plan is to wait until interest rates rebound and I can get a 5-6% annual return on such long-term investments, then I?ll lock down a long-term treasury note with my savings.
If I invest in stocks, it will be in specific companies with a long history of paying a healthy, stable dividend. After all, the purpose is income generation, not earning a great return.
Q2: Overwhelmed by home buying
I?m in the market for my first home. I have enough saved for my down payment, and I have my hard cap of what price I want in the home. There are multiple options for me to purchase, I was wondering what you reccomend for narrowing down the search? Do I use Craigslist/Zillow/real estate agent/facebook/{insert any of the billion other options here}? All the information is a bit over-whelming. I want to get the best deal, I have patience, should I look into short-sales or foreclosures? Just wondering where the best place to start would be.
- Joe
I would start by reading more. All of the options you name have advantages and disadvantages.
My usual recommendation for a book for first time home buyers is Home Buying for Dummies by Eric Tyson. Hit your local library and pick up a copy.
It does a good job of going through all of the options you mention above, comparing and contrasting them, and helping you figure out which tools are right for you.
Q3: Board games with story
When I was younger, my older brother and I used to play this really great board game. As you played it, it told a horror story, one that was different each time you played. I really loved playing this game, but my brother had leukemia and passed away and my parents got rid of all of his stuff. My mind has wandered back to this game for many years and it?s something I?d love to have again. I think my friends now would enjoy it as we all love reading science fiction and fantasy and horror novels. Do you have any idea what game this is or if you know of anything like it?
- Chloe
I?m not sure how long ago your experience with your brother was, but I have a couple guesses as to the game.
Arkham Horror is actually one of my favorite games. It?s based on the horror stories of H.P. Lovecraft and takes place in Arkham, Massachusetts in the 1920s. You move around the board to different locations in Arkham, accumulating weapons and other items, and often fighting monsters in the city streets. Usually, the game ends with a big battle against a particularly nasty monster. One to eight players can play, and it?s cooperative, so you?re working together to win as a group.
Betrayal at House on the Hill is a game for three to six players where you explore a haunted mansion. There?s a traitor in the midst, however, and the other players win by discovering and defeating the traitor.
Both of these were available several years ago and both are wonderful games. I admit to having a very soft spot for Arkham Horror, though.
Q4: Keeping cash on hand
Do you think it?s a good idea to keep some cash on hand somewhere in your home? I?m often afraid that my bank will fail and that I?ll have no access to my savings or checking.
- Geoff
I don?t think there?s anything wrong with having some cash on hand for emergency purposes. However, having cash on hand presents a completely different kind of security risk.
If you?re holding cash yourself, it?s at risk of your forgetfulness, home robbery, and a disaster that destroys your home. There?s no recovery from these situations ? the cash is gone (unless you forgot where you placed it and serendipitously find it again).
I wouldn?t keep more than a few hundred dollars in cash in my home. I would not feel safe doing so. I feel my cash is much more safe in a FDIC insured savings account.
Q5: Personal GPS?
I?m a Canadian, but I enjoy travelling to American cities for vacations. Several times while I?ve been walking around city streets, I?ve wished I had a personal GPS which would tell me which way to walk or take public transit to get to my destination, just like Google directions. The older I get, the more difficult paper maps are to read. I?m happy with my basic pay-as-you-go cell phone so I don?t want to change to a smarter one in order to get internet access which I would only use while travelling. I also don?t want to walk around with my heavy laptop. I?ve thought of getting an ereader or an ipod to use just for their internet access because I don?t need them for their main purposes. Do you have any ideas?
- Linda
A good portable GPS device does these things quite well.
For example, a Garmin Nuvi 350 can give you great walking directions whenever you?re at in the United States. It will vocally tell you when to turn and aid you in finding interesting things near you. They also have built-in metro maps for almost every city.
A lot of higher-end smartphones have great downloadable GPS programs that do these things as well, but a high-end phone is a big expense in its own right. If you just have this specific need, I?d get a unit like the one linked to above.
Q6: Infinite Summer
I know you?re a voracious reader. Ever participated in Infinite Summer?
- Julie
I have read Infinite Jest, but I?ve never done it in a summer reading session/book club like this one.
I really enjoyed Infinite Jest. It was a very long read and, in places, a challenging read, but I thought it was a really fascinating look at addiction.
I?ve considered reading it again along with a group doing Infinite Summer, but this isn?t perhaps the best summer to be doing that.
Q7: CFL dangers?
Pretty much all personal finance experts say to use CFL light bulbs, but I have yet to see any that inform anyone of their dangers. Now I don?t know if the attached newsletter is true or if this can really happen, but I figure it would be better to be safe than sorry. I figured you would know more about it than me given the research you?ve done. If this actually can happen, I feel all the readers should be aware of it.
[Attached was a PDF with these photos. Don't click unless you're fine with seeing a horrible personal injury.]
- Edward
The PDF that Edward sent me was a hoax, which you can read about at this link (again, warning about graphic personal injury photos). The injury show in the pictures does not match what?s even possible with a CFL.
CFLs actually account for less mercury emission into the environment than normal incandescent bulbs. When a CFL burns out, you should just take it in to be recycled.
If one breaks, you don?t have to do anything too different than if a normal light bulb breaks. The only thing you should do differently is let the room air out for a while before you clean it up. Take the pieces and put them in a sealed container, then take the pieces to be recycled just like you would a normal incandescent.
I?m not really worried about CFLs for home use, though I will certainly switch to LED bulbs as soon as they have light quality good enough for home use.
Q8: Bank envelope with cash
Yesterday, I found a bank envelope with $600 cash in it. There was also a receipt in the envelope, but the receipt indicated that $1,000 had been withdrawn, so someone took $400 out of it before losing the envelope. I can?t identify an account number on the receipt, but I can clearly tell what bank it comes from. What should I do?
- Jerry
The honest thing to do would be to try to return the money to the owner. You could do this by posting a few signs near where you found the cash. Simply state that you found something of value in this area and you?ll return it to the rightful owner upon proper identification. A few details about the situation (I changed the exact specifics in the question above) should make it clear if someone contacting you is legitimate.
Another option is to return the envelope to that bank. However, since you don?t have any way to actually identify the owner of the cash, it?s up to the bank to actually return the money to the owner.
If I were in your shoes, I would probably follow the first route, give it a few months, and then follow up with the second. I wouldn?t think a person was horrible, though, if they didn?t return the money to the bank.
Q9: Using TSP for down payment
As you know, the TSP (Thrift Savings Plan), is the Federal Government?s retirement 401k mechanism. The TSP offers a residential loan that allows you to take up to $50,000 of your personal contribution, at an interest rate of the G-Fund (1.625%) and a flat $75 fee. The interest paid on this loan is actually repaid into the TSP account, therefore the only ?loss? on the loan is the opportunity cost of the loan value at the G-Fund rate instead of the effective rate. Also important to note, is that contributions to the TSP are pre-tax.
To the question: Should I max out my annual TSP contribution until I get to $50,000 with the intention of loaning it to myself for a down payment on a house? More specifically, is this a viable way to save for (part of) my down payment tax-free?
- Brian
The only risk here ? and it?s a sizeable one ? is that if you leave the federal government, your loan becomes due in full immediately.
Federal employment is generally pretty secure. However, if you?re putting yourself in a situation where you would have no way to easily repay this loan, I would be at least a little hesitant about jumping on board.
Make sure that if you do this, you?re not buying a house for anything higher than market value, because if you were to lose your federal job and then couldn?t sell it and recoup enough to pay off your loan, you could be in a world of financial hurt.
Q10: How to say thank you
Last year I was looking to buy a house with my long-term boyfriend when it all fell apart between us. It was devastating. I moved into my parents house while I was looking for a place on my own. Then, just before I moved out of my parents, I was diagnosed with a life-threatening illness. I should say at this point that I?m in my 20?s so that was a deep, dark shock.
Needless to say, I didn?t move out. My parents were there for me at every step. Every day, every crisis, every time I cried, every time I despaired. They looked after me when I was sick. They came to each and every hospital appointment and helped with every difficult decision.
Now that I?m finally moving into my house, I want to say thank you but I don?t know how because nothing I do or say could vaguely match up to everything that they have done.
Do you have any suggestions?
- Ronny
The best gift you can give them is time. If you live near them, be a very regular part of their life.
Invite them over for dinner regularly. Go to their house for dinner. Talk to them often. Ask them about what challenges they?re having in their life. Listen when they need someone to vent their frustrations at. Participate in activities with them that they enjoy doing, even if they aren?t your favorite things.
They?ll know by your actions that you truly appreciate what they?ve done. Actions speak far louder than words or gifts.
Got any questions? Email them to me or leave them in the comments and 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 hundreds of questions per week, so I may not necessarily be able to answer yours.
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