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. Credit and unpaid medical bill
2. Buying mattress through the mail
3. Cheap startup camping?
4. Getting rid of parents’ papers
5. Value of financial advisor?
6. Stock market basic question
7. Afraid of retirement
8. Explaining financial goals to wife
9. Moving away from a bank
10. Index funds with ethics?
11. Inexpensive smoothies
12. What will I remember?
Today is the day of the long-awaited solar eclipse over a swath of the United States. I’m planning on taking my children southward to the eclipse, which is about a three-hour drive from our house. We’re going to pack a picnic lunch and find a quiet rural spot to watch the eclipse.
This has become something of an “end of the summer” celebration for us. We’ve been learning about the eclipse for weeks, doing things like building a simple model of it using a flashlight and two balls (shine a flashlight onto a tennis ball and let that shadow fall onto a basketball, then tell the kids to imagine standing in that little shadow circle).
When we return from our eclipse day, the school year starts in the next couple of days, which means a return to the routine of the school year. While I love all of the time I get to spend with my kids during the summer, I also find that I let a lot of other areas in my life “slip” during the summer, things I’m able to take care of during the much more regimented and organized time of the school year.
It feels like a changing of the season. I feel that change at the end of the school year (spring turns into summer), the start of the school year (summer turns into fall), Thanksgiving break (fall turns into winter), and spring break (winter turns into spring).
Anyway, on with this week’s questions.
I have been trying to switch my primary care provider to someone who is more conveniently located. After what I was told was a “meet and greet” with a new potential doctor, they billed my health insurance and have now billed me for the remaining $300. I have complained to the billing company and the practice directly, but they don’t seem to want to resolve this. I can afford to pay the bill, but I would prefer not to pay it on principle. I’ve read a bit about the process, and it sounds like when the bill goes into collections, I may get quite a few phone calls. But can you tell me what will happen to my credit score if I don’t pay this?
If you’re late on an unpaid medical bill for any reason, the company you owe can report you to the credit bureaus for being delinquent on a bill, which will have some negative impact on your credit score.
The largest part of a person’s credit score is their payment history, and no matter the reason behind it, a report of an unpaid bill can affect that portion in a negative way. The exact amount is hard to assess without looking at your full credit history, but it’s likely to be significant but still relatively minor in the broad scheme of things.
What can you do to prevent this negative charge? One, you can simply pay the bill. Two, the doctor may choose not to report the bill, especially if it is under dispute, so you want to make sure you’re doing what you can to dispute the bill. Three, you may be able to pursue legal action.
I have seen a lot of ads lately for companies like Casper and Purple that allow you to buy a mattress through the mail at a pretty good price. It seems very difficult to get unbiased mattress reviews and mattress stores are shady. Is it okay to buy a mattress through the mail?
Just yesterday, I was joking with an old friend about how companies are trying to “disrupt” the market industry in various ways, more as a way to somewhat poke fun at the trend in the business world to try to “disrupt” all industries.
Having said that, the mattress industry is actually one that’s pretty prime for disruption, as it seems very opaque to the buyer. It’s hard to really tell what you’re buying, because so many different mattresses are sold under so many different brand and model names that it’s really hard to tell what exactly it is.
I have a hard time recommending either of the brands you mention outright due to the fact that different people have different weights and bone structures and favored sleeping positions. I have had a comfortable night sleeping on a Purple mattress; I found it to be a little… squishy and maybe a little bouncy, but it was fairly firm when you laid down as you somewhat sunk down into the top layer. I slept well, though. I have no experience with a Casper mattress.
My girlfriend and I want to get into camping. We like to go on hikes and had a great time camping with another couple for a few days this summer in a large tent. With the end of summer coming we thought it might be a good time to pick up camping items cheaply for next summer. What is a minimal kit for camping?
I’m going to make the assumption here that you’re talking about trunk camping, meaning that you drive to a campground with the supplies for camping in the trunk of your car, set up a base camp there, and mostly go on day hikes from that central campsite. I’m basing this on your minimal mention of backpacking, which would point you in a different direction.
In your shoes, I would assume that it is just the two of you camping in largely nice weather. In that situation, all you really need is a tent and inexpensive sleeping bags (and even those aren’t 100% necessary). You will probably want a cooler for food storage, though that isn’t necessarily a requirement, either.
It isn’t necessarily a guarantee that you’ll find inexpensive tents or sleeping bags this time of the year. Your best place to look, if you’re shopping right now, is at general department stores who may be rotating out summer sporting good stock and may have sales. Later on, Black Friday sales can be useful, especially at stores that have a strong focus on the outdoors like Cabela’s or Bass Pro Shop (REI, a popular competitor, traditionally does not have a Black Friday sale).
My suggestion? Assess what meets your needs for a tent and sleeping bag right now, figure out what the prices look like on those models, and then start patiently bargain hunting for deep discounts on those exact things. You have many months to do this, so there’s no need to jump on the first 5% discount you see.
My father died in 2013 and my mother died in 2014. When we cleaned out their house I took all of their papers and put them in several cardboard boxes and I intended to organize them but we just put them in the basement and they’re still down there. I don’t think there’s anything of value in there. How long should I keep them?
The smart move is to hold onto those papers for seven years, as the statute of limitations on most personal financial affairs runs out in that timeframe. Thus, it makes sense to hold onto them until 2021, through the time in which their estate was cleared up of any outstanding debts.
In the meantime, you might want to go through the boxes on a lazy weekend just to see if there’s anything in there that you overlooked that might be of personal value to you or to anyone else in your family.
That way, when 2021 comes around, you can dispose of the boxes without any concern whatsoever.
What value does a financial advisor add to investing other than either just telling you what to do if you have no idea or maybe providing a second set of eyes on your plan? I have a Roth IRA at Vanguard and am investing the rest in rapid debt repayment and eventually into buying rental properties. Why do I need a financial advisor?
Simply put, you don’t. You have a plan. You’ve researched it. You’re confident in what you’re doing. It’s very likely that an advisor would just say your plan is good and perhaps just suggest alternate options for your investments, and you’d probably prefer to have your own choices. Unless you have a specific question on a specific area, in which case a fee-based advisor would make sense, you have no reason to have a financial advisor.
Financial advisors exist to give advice. You go to them when you need advice in a particular area. If you don’t need financial advice, you have no reason to go to a financial advisor.
Financial advisors exist because many people do not feel confident making major financial decisions on their own. They might not have any idea of what to do, or have a plan but lack confidence in that plan. If that describes you, financial advisors can be great. If not, then there’s no need for one.
In other words, you’re fine. Keep doing your thing.
I don’t understand how the value of stocks can keep going up and up and up. I understand how limited things like gold can keep going up as there is only so much gold in the world, but there are effectively unlimited stocks. How do they build value?
There are a lot of reasons for this, actually.
One is population growth. As long as the population of the world keeps growing, then companies can keep growing as they have more customers to serve.
Another is innovation. As long as a company can keep developing new products and new ideas that people want at a consistent rate, then companies can keep growing. Or, if companies can keep coming up with more efficient ways to make products, then companies can keep growing.
A third factor is worker productivity. If an average employee produces more work in an hour compared to what they used to produce, then companies can keep growing because they can either produce more with the same workforce or produce the same with fewer workers. Both increase profit margins. (Remember, productivity increases don’t necessarily mean that the workers are working harder, but that they’re able to use more efficient tools and more efficient techniques to produce more with their time and energy.)
For all practical purposes, these three factors are essentially unlimited. The long time trend line of all of these things is almost purely pointing upward and there’s no reason for that to stop (though there may be some slower growth at times).
I am 58 years old and due to retire in 1.5 years with a full state pension and supplemental that will almost match my current salary after SS kicks in a few years later. I am fine financially.
I love reading your site and your “human” approach to finance and I could really use your help. I am afraid to retire and I don’t know what to do about it. It’s not that I love my job so much that my life is incomplete without it, but that I am going to have this huge swath of hours to fill with something and I don’t know what.
I am single but I don’t really want to date. I have two adult children who I see regularly – enough for all of us, I think! I have some hobbies but it almost seems weird to fill all of my time with them. I feel like I’m just going to sit at home and get old and I don’t want to do that. What advice do you have for me?
Spend the next two years thinking about this one thing: What can I create in retirement? What can I bring into the world that wouldn’t exist without me putting in that effort?
It really can be anything. Maybe it’ll be artistic work. Maybe it’ll be charitable work. Who knows?
The key is to make something. You have the time. What can you make? What can you bring into this world that others might value and that you would enjoy making without breaking your finances?
I’ve found with the people that retired in my own life that those who had an answer to this question did fine, and those that didn’t really had an answer really struggled with this.
You have a “runway” to think about that question. Use it. Spend the next year or so really turning that over in your head, then spend the last six months putting the foundation of your answer into place so that you’re ready to go on day one.
Spend as little time as you can just consuming – watching television or web surfing and so on. Spend a lot of time creating – volunteering or making stuff and so on.
I am 34 and have been married for twelve years. My wife and I have been fairly big spenders for our entire marriage. We have $360K in mortgage on a home worth $460K and about $22K in credit card debt along with a car loan and some other odds and ends. We go on nice vacations each year etc.
Lately, I have felt like we are going down the wrong path which is why I found your site. We both have real job worries at times and our lifestyle would just collapse if one of us lost a job and couldn’t become employed again. We have nothing saved for retirement. Basically we are going to be walking this path the rest of our lives and it’s like walking on a high mountain path with no rails.
I want to start making changes but I don’t know how to say this to my wife without starting a big fight. I know she is not going to want to make changes. She still loves all of the traveling and the new cars and won’t want to give them up at all. She’ll say you only live once.
How do I even have this conversation?
This is not an easy conversation to have. Clearly, you’re undergoing a change in values, and when that happens, you can end up finding yourself at odds with people you were once very much in sync with – and yes that includes your wife.
There is no easy way to have this talk, but you need to have it. What you’re really trying to discover is whether your values are really diverging or whether you’ve both just been spending out of some kind of lifestyle inertia.
I think the best approach is to simply tell her exactly how you feel. Point out the elements of life that fill you with stress and how that stress is adding up to more than the value of the other parts of your life. You don’t want to walk the job tightrope forever – after all, you only live once.
You may be surprised as to the feedback from your wife. However, if you do find that you’re on a different page about such things, take it slowly. Don’t let it fall apart into a crisis or fighting. You clearly love your wife – let that love lead you into finding ways to make this work. Seek compromises if you’re not both on board with making big changes, but work on it together, as openly as you can.
Communication is always the right way to go. Good luck.
I have been a customer at [a bank] for many years. Lately they have been constantly calling and pestering me to switch to a new type of checking account that I don’t want and they push low interest CDs very hard every time I am there. They get to hold my money and make money off of that and still they push!
I want to switch banks. I have tried to Google how to do this but I can’t find anything. How do you switch banks?
The first thing you should do is look for where you’re going to move to. Do you have a new bank in mind already? Have you considered credit unions?
Check out some of the other bank and credit union offerings in your area. Do they have accounts that match what you want? Do any of your friends use those credit unions or banks? Ask them about whether those institutions try to sell financial products to customers.
When you’re ready to move, open a new account at a new bank and change your deposits so that they go into the new account. Don’t close your old account immediately. Leave it open and watch it to make sure there aren’t any transactions you’ve forgotten about. It’s a good idea to leave some money in your old checking account for a while just in case.
In general, there isn’t a “button” you can push to just switch everything to a new financial institution. Banks want to retain customers, so they’re not going to make it that easy. You have to identify a new bank or credit union you want to use, open an account, and migrate over yourself.
How does a person use indexing as an investment strategy and keep from giving money to abhorrent companies? Indexes just sweep in companies with certain criteria, which means I am giving some of my money to companies I disagree with. There do not seem to be many (if any) ethical index funds.
There are actually a number of socially responsible index funds that achieve the moniker of “socially responsible” in different ways. Most of them simply take public lists of companies that behave responsibly in some way or another and use that as the basis for investing.
Take the Vanguard FTSE Social Index Fund, for example. It’s designed to mirror the FTSE4Good stock market index, which is itself a stock market index intended to track ethical companies that score well on a variety of ethical metrics.
For each such fund, you have to dig a little to find out how exactly they are achieving “ethical” investing, but ethical index funds do exist. They just “borrow” some public ethical standard of companies and use their list of companies that meet that standard. Other index funds of this type are the TIAA-CREF Social Equity Index and the SPDR SSDA Gender Diversity Index.
They do exist, in other words.
One of my daily routines is making a smoothie for myself before and after work. The one before work is kind of an all-day-energy thing, the one after work is more of a get-a-little-more-out-of-the-day thing.
The thing is my recipe makes the smoothies cost about $4 a pop. That adds up to about $300 a month, which seems unjustifiable.
What is a good balance here? One a day?
If I were you, I’d probably make one of them inexpensive and leave the other one alone. Listen to your body and ask yourself which one is really giving you the most value, then either cut out the other one or make it very inexpensive.
I’m guessing because of the cost that you must be adding vitamins or protein powder to one or both of the mixes. Most of the smoothies we make are just some milk and a handful of frozen fruits and maybe a bit of something like peanut butter (I love peanut butter and banana ones), and they cost less than a dollar a pop.
So, make one the way you usually do and convert the other one to using no extra powders or vitamins – just basic ingredients like, well, peanut butter and banana, and see how that works for you. If you don’t notice a change in terms of how you feel or your energy, make the other one more basic, too.
The one thing that works better than anything else for me keeping control over my spending is the simple question of “what will I remember when I am old?” I ask myself that every time I spend money. Will I remember this when I’m old? It is very effective at keeping me from wasteful everyday purchases. No, I won’t remember that Starbucks cup when I’m old. No, I won’t remember owning that Bluray when I’m old. What I will remember is experiences and friends and accomplishments. Those things feel good in the moment and I will remember them when I’m old, too. So I try to fill my life with those things and less with spending money on forgettable stuff.
Shane sent me a long email with a lot of thoughts about his life and life in general and the things he’s learned from Google-X and other things. Much of it was as thoughtful as this little bit was, but it went off into very personal areas and other directions.
I wanted to share this little part of his message with you, though, because it perfectly encapsulates a sentiment that comes very close to explaining my feelings on finances – and most of my life – these days.
What will I remember about this when I’m old? When I think back on today, what things did I spend my time and money and energy on that I will actually remember? If I won’t remember it or it won’t directly lead to something really fruitful that I will remember (like doing a good job at work on an ordinary day), then why shouldn’t I spend the minimum amount of time and money and energy on it?
Try spending your day on things that you’ll remember when you’re old. Spend your time and money and energy that way.
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.