Questions About CSAs, Tires, 401(k)s, Allowances, and More!

v
SUBTITLE – Reader Mailbag

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. What to unplug while traveling
2. CSA plan worth it?
3. Struggling in expensive metro
4. Moving emergency fund into stocks
5. Should I touch my 401(k)?
6. Allowance update
7. Tire buying strategy
8. What blender should I buy?
9. Beans and illness
10. Transitioning to self employment
11. Heat pump question
12. Frugal sailing?

In the last few years, we’ve been sending our children to different weeklong summer camps. We’ve let them be involved in choosing which camps they attend and have sought out ones that cater well to their interests.

The first year, only our oldest child went to camp. His fun was somewhat soured by homesickness and I think he found the camp experience overwhelming.

The second year, both he and his sister went to camp. They chose to go to the same camp and my oldest sibling spent a lot of time talking to his younger sister about his experience, in both conversations overheard and unheard by the parents. That year was a smashing success – our oldest thoroughly enjoyed himself, while our middle child experienced a small amount of homesickness that she got over due to a couple of quick visits with her brother.

This year, they were both so excited to go to camp that it felt like we were looking at brochures for months. Their youngest sibling was also swept up in the summer camp idea, so he’s attending a smaller partial week camp – he’s younger than his siblings were when they first went.

As I write this, the two older ones are both away at camp, leaving us at home with just Sarah and our youngest child and I. The house is quiet. I sometimes view these moments, when some or all of our children are away, as a preview of what our house will sound like when they grow older. I will miss their sounds.

On with the questions.

Q1: What to unplug while traveling

We are going on an eleven day family vacation. What devices should we unplug before leaving to save energy?
– Andrew

The main electrical draws that you might actually consider unplugging are your electronic devices that often stay in a “standby” mode, like your cable box or your television or your desktop computer. You should, at the very least, consider turning those off.

The big appliances generally need to keep running while you’re gone (refrigerator, freezer) or else use so little power when on standby mode as to not be worth the effort (washer, dryer). Obviously, all light should be turned off unless you have some sort of light cycling pattern to prevent theft.

The big thing you should consider is your heating and cooling. I would turn it off entirely during the vacation. If you have a programmable thermostat that allows it, turn it back on several hours before returning home if you want to come home to a cool house, or have a neighbor turn it on for you.

Q2: CSA plan worth it?

Are CSA plans usually a good return on investment? My husband and I joined one in our area and the first few bundles have been underwhelming to say the least. I am pretty sure this won’t be cost effective by the end of the year.
– Karen

In most CSAs, if you add up the total value of what you get over the course of the year in terms of supermarket price, are a good deal. However, some are much better deals than others, and you really have to listen to word of mouth to determine whether one is worthwhile.

The quality of a CSA is almost entirely dependent on the farmer you’re dealing with. Some farmers put a tremendous amount of value in those CSA shares, while others only put moderate value in them. Sometimes the value is shaped by the quality and quantity of the harvest; at other times, farmers will only put in a certain amount of vegetables no matter how good the crop is.

The CSA I used had a significant patch of ground that was for the CSA program, period. They had another smaller patch for other sales. Each week, they’d simply harvest everything harvestable out of the CSA side and put an equal amount in each CSA share. This seems to be a fairly standard, though not guaranteed, practice.

My point? It really depends on the CSA. My guess is that you’re getting positive value from it by the end of the year.

Q3: Struggling in expensive metro

My husband and I both have law school loans (total about $190k). We pay about $1700 per month for the loans. We are federal govt workers and don’t make a big salary. We also have a son in day care (in the DC area, so they are all ridiculously priced – $1500 a month). Our mortgage is $2500/month, and we put money into our TSP (retirement acct) religiously and have a 3% match from the employer. It seems as though we are scraping by, which is embarrassing for two attorneys. My husband especially gets burnt out from his attorney position and needs a vacation desperately, but we can’t afford to go any where. Is there any way to save money here? Do we just have to wait until our son is out of daycare and in public school to finally take a vacation? Are there things I am not seeing?
– Jana

I think this comes back to a bigger question about priorities. Right now, you both have relatively solid and secure federal jobs. The wages aren’t amazing, but the job is secure. However, part of that federal job choice is that you are also choosing to live in one of the most expensive areas in the nation.

The reality is that because of that high cost of living, you’re actually living an equivalent lifestyle to someone earning far less in another part of the country. For example, if you were in Iowa, you’d have a far lower child care cost, probably substantially more than the difference in salary, plus your housing cost would be much lower along with many other costs.

You seem to be unhappy with the high cost of living where you’re at, so you have a decision to make. Should you relocate to a lower cost of living area or not? Is it possible to transfer your job to a lower cost of living area while still keeping a somewhat comparable salary? Should you quit your job and simply get something different? Or should you just wait it out?

I can’t answer those questions for you, but they are all options on the table.

Q4: Moving emergency fund into stocks

I have a system of automatic investments, where every paycheck money is transferred into retirement accounts, my emergency fund, medium term savings, and a taxable investment portfolio (I use Wealthfront for this). However I think my emergency fund has gotten larger than it needs to be, so I’m considering moving some money (probably between 10-15k) into my taxable investment account. My question is: should I do this right now, or wait for a market drop? In general I don’t believe in market timing, but it feels somewhat unwise to push a bunch of money into a stock market that feels ripe for a correction.
– Jerry

Don’t worry about market timing. Instead, ask yourself what your goal is for having that money in a taxable investment account. Why are you putting it there? What’s the goal?

If you don’t have any sort of goal or any sort of timeline for that money, why not use that money to fully fund a Roth IRA? Or, if you’re already doing that, fully funding a 529 if you have kids?

Putting money into a risky investment like the stock market without some sort of goal in mind is usually a decision that will backfire on you. Figure out why you’re going to invest that money and then, from there, figure out what your timeline is for that goal and how much risk you can tolerate. If your timeline is long (10+ years) and your risk tolerance is high, put it in the stock market. If your timeline is short or your risk tolerance is low (or both), look for something else like bonds or money markets.

Understanding your goal is far more important than any twists and turns of the stock market.

Q5: Should I touch my 401(k)?

After I split from my ex-fiance in 2011 I found myself with $80,000 in debt (credit cards, student loans, and a car loan). In 2012 I got serious about paying off my debt and in 4 years I managed to bring that debt down to $50K. I am now married (to a new man) with a baby. My husband is wonderful and has accepted my debt as his. He listens to Dave Ramsey on the radio quite frequently. Recently Dave spoke to a gentleman who used his 401(k) to pay off his debt. My husband suggested it as something we should do but wants me to think about it. I was under the impression that you should NEVER Touch your 401k until you retire but Dave seemed to be OK with it. What are your thoughts?
– Alice

I think you may have misheard the story. Dave Ramsey is pretty adamant about not cashing out a 401(k) to pay off debt (see here), and I wholeheartedly agree with that stance.

The amount of extra taxes and tax penalties that would come from cashing out your 401(k), plus the drastic reduction in retirement savings, makes this a choice that’s very much in the “not worth it” camp.

Do not cash in your 401(k), ever, unless things are truly apocalyptic. You can cut your contributions for a while to help get things in a better place (though I don’t think that’s ideal, either), but please don’t tap that 401(k). Just leave it alone to do its thing.

Q6: Allowance update

I’m preparing to start an allowance with my oldest later this year (when she turns 4). Do you have an update on your allowance scheme since you last talked about it last October?
– Adrian

Right now, we give our children a small weekly allowance with which they can do what they wish with no conditions attached. It’s a very small amount – $2 a week. It takes a long time to save more than that.

They also have some chores around the house that they’re expected to do each week. Again, that’s not tied to the allowance – that’s simply an expectation of being part of the family. Discipline in this regard doesn’t involve allowance; it involves removal of some privileges, while good performance without any trouble over a period of time usually gets a small perk, like a trip to the local ice cream shop. Those small perks are utterly unplanned and spontaneous, in response to seeing a long period of good behavior and handling of their responsibilities.

On top of those things, we also have a job board that lists some extra tasks they can take on to earn a few dollars. These are tasks like doing deeper cleaning in the living room or kitchen or a bathroom, taking care of a small yard work project, or something along those lines. Sarah or I add these to the job board and if a kid wants to take on that job, they initial it and have a few hours to get it done. If they come back and it’s done, it disappears from the job board and they’re paid for it.

On top of that, we contribute to a 529 plan for each of them and remind them regularly of our contributions to that plan. This contribution is automatic; I usually make a point to remind them of that contribution when it’s made, and I’ve found that they consciously know that it’s happening and that it will help make college (or trade school or whatever) an easier option for them.

That’s our current allowance system, which is what has worked out best for us over a period of many years of trial and error.

Q7: Tire buying strategy

What’s your strategy for buying tires? Safety is important, but I’m skeptical that new (NOT used) ‘store brand’ tires are as dangerous and low quality as online comments make them out to be.
– Lester

Honestly, I trust Consumer Reports when it comes to buying tires. I check their most recent tire reviews when it’s time to replace tires, then check around town to see who has the “best buy” tires and what their cost is. (I find that I usually end up going to one of two places in the area for my new tires over and over again.)

I agree with you that I’m skeptical of cheap tires. However, I am not a tire technician and I don’t have the capacity to test tires in any way, nor would I really know how to do so. Thus, I trust an unbiased expert – Consumer Reports – who has been accurate in the past on almost everything I’ve asked of them.

I’d encourage you to do the same thing. Hit your local library and check out the latest Consumer Reports tire comparison. Check out some of the best buys on tires and see what shops carry them locally and what their cost is. This strategy has done very well for me over the years.

Q8: What blender should I buy?

Ever since my blender broke, I’ve been wanting to replace it. (The one I had was used, brand unknown, from a friend who owns a smoothie shop and was upgrading to new models. Since I didn’t have a blender at the time, I gladly accepted it.) I’m trying to decide whether to get a new one or a used one, and whether it makes sense to get a $300+ one if new (like the ones I see at Costco) or cheaper ones that are less than $100. I imagine I would use it about 5-10 times a month on average. What would you recommend? I’ve been told that for kitchen appliances that are motorized, it’s worth it to get a higher-end one, but I can’t get myself to fork up that much for an appliance that I wouldn’t be using on the daily.
– Kevin

If you are going the cheap blender route, I’d just go to Goodwill and grab one of the blenders you’ll find there. They usually have a few that are practically new, bought by people who thought they had lots of use for a blender and then it sat around and gathered dust and was eventually shipped out. You’ll spend like $10 on a blender and it’ll work just as well as any of the sub-$100 ones you’ll find at Target.

We have a pretty good blender (a Blendtec) that we’ve had for many years and it is an absolute workhorse for everything we throw at it. We make smoothies in it. We make guacamole in it. We’ve done scrambled eggs with it. We’ve done pancake batter in it. I’ve made nut butter in it. I’ve made hummus in it. You get the idea. It’s handled all of those things with zero problems.

With your use case, the question is whether you should go the $10 route with a blender that will probably do a mediocre but passable job at blending and struggle with some harder things, or go the $300 route and get an industrial strength blender. If I were you, I’d get the cheap blender and then see if it does all of the things you ask of it without problems. If it does, then you made the right choice. If there are a lot of notable problems with the cheap blender that would be resolved by having a more powerful blender with better blades, then upgrade.

Q9: Beans and illness

I’ve read that uncooked/undercooked beans can cause health problems (nausea from some beans, death from others if consumed in large quantities), but that boiling beans for some time breaks down the toxins. Does your slow cooker boil the beans when it’s on low?
– Keith

When I load up my slow cooker, it will eventually boil if it’s on the low setting, but it can take a few hours to get up to boiling. The low setting will usually maintain a very low simmer, while the high setting will maintain a somewhat faster simmer and reach that level quicker.

I think this depends a lot on the individual slow cooker model, however. Some slow cookers might do better with a pot full of beans on the high setting, which should bring things to a low boil on almost any model.

I have cooked beans on the low setting before in the slow cooker and had no real problems either with the seeming done-ness of the beans or with any gas or other issues.

Q10: Transitioning to self employment

I’m currently setting up my side gig, with a view to turning it into a full time business in three years (which is when my car will be paid off, the kids will both be in school so no more childcare, and I’ll be eligible for long service leave from work, which I can have paid out when I leave). I’m a single mum, so no partner’s income to fall back on, although we’re fortunate to have a decent welfare safety net here in Australia. So my question is, what in your opinion should I have in place before I make the leap? Is there anything you would have done differently when you moved to working full time on Google-X if you had your time again?
– Jane

Emergency fund, emergency fund, emergency fund. No matter how big you think is plenty, keep going. Things will happen when you least expect them. There will be things you haven’t accounted for.

I would also have a plan for returning to your previous career path and keep up with that plan. Maintain relationships with coworkers and employers and try to keep up with your field.

In other words, protect yourself against the unknown as much as you possibly can. That’s always the best thing you can do as an entrepreneur – protect yourself against obvious risks.

Q11: Heat pump question

Here in the south it is common to have an all electric house with a heat pump instead of a gas furnace. In the winter I have always turned the thermostat down at night to save money (with a programmable thermostat). However, when my parents got a new heat pump installed they were told it is more energy efficient with a heat pump to keep the temperature steady 24 hrs a day than to drop it at night and crank it back up in the morning. Is that true?
– Kelly

It honestly depends on a lot of factors. How well insulated is the home? What is the insulation made of? What’s the typical humidity level? How extreme are the temperatures?

Without knowing those factors, I really can’t recommend one way as being the best in your situation.

If I were you I would talk to a local heating and cooling technician. Their advice is far more likely to be accurate than mine.

Q12: Frugal sailing?

Since spending some time in Cape Cod, I really want to do some sailing. It seems like a rich person’s hobby, though, and I’m not talking about buying a boat or anything like that. Is there a frugal way to get some experience sailing?
– John

The cheapest approach – and probably the best way to do it cheaply – is to go to your local marina and see if someone there needs a crew member. Make it clear what the situation is – you’re new and want to learn.

If you do that regularly and decide it’s really for you, put the word out that you’re looking for an older one person boat. If you have a good reputation at the marina, you’d be surprised ehat people have stowed away in sheds and will sell cheap to the right person – a passionate newer sailor with a small pocketbook, for example.

That’s the path I’d follow and the same general path works for any expensive hobby.

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.