海角大神

What鈥檚 inside? Here are the questions answered in today鈥檚 reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
Sharing too much information online
How do ARMs work?
World Series prediction
First time apartment hunting
Saving for a wedding
Workbook for missions/goals
In-person insurance agent?
Moving up at difficult workplace
Trying board games
Roth IRA as emergency fund

In our neighborhood, trick-or-treat night is a pretty significant event. We receive approximately 300 trick-or-treaters to our door each year, which means that we have almost a nonstop stream for about two and a half hours. Add onto that the presence of friends of our own children who tend to stick around for a bit and you have a busy evening.

Our technique for handing out treats is to hit a warehouse store beforehand, buying them in bulk. Fruit Roll-Ups tend to be a pretty big hit, actually, and they鈥檙e better than a chunk o鈥� chocolate.

Q1: Sharing too much information online
(How) would you tell an acquaintance or distant relative that they (or even worse yet, their children) are giving away too much information about themselves openly in the Internet (and especially in Facebook)?

I鈥檝e got a tendency of sounding like Miss Know-it-all and smacking the facts on peoples faces, and being afraid of looking like a stalker or scaremonger I鈥檝e not yet said anything to friends-of-a-friend in Facebook about how they are compromising their own or their immediate family鈥檚 privacy. I鈥檝e not asked why do they allow their children to be on Facebook (sometimes the kids are under 13, which is under TOS of FB!) nor why their profiles are so unprotected. I鈥檝e considered different ways of asking, but every time I end up thinking I sound like outside meddler that noses other people鈥檚 business, while I like to think of myself only meaning good. Should I continue my silence and if not, what would seem to you as the best way of conveying my genuine concern?
- Mia

I agree with you that privacy is a real concern with sites like Facebook. There is quite clearly a greatly exaggerated sense of privacy on the site, causing people to say and post things that are not exactly the types of things that they want future employers or polite acquaintances to know about them.

The best approach, I think, is to simply show them some of the tools and techniques people use to see other people鈥檚 鈥減rivate鈥� information. Like , for example. Your information on Facebook is only as secure as the most gullible of your friends, in other words.

Yes, such approaches have dodgy ethics, but isn鈥檛 it the people with dodgy ethics that we don鈥檛 want seeing our private information?

Q2: How do ARMs work?
How do ARMs work? The reason I ask is that they seem to have very low interest rates, for a limited time, i.e., 5 or 7 years. If you were planning on paying off your house in 5 or 7 years, and paid extra each month (or sat the extra aside for a lump sum payment before the balloon)鈥�would that work? On ING鈥檚 website I couldn鈥檛 figure out what penalty (if any) there is for doing this. Is the APR calculated differently than a fixed mortgage?
- Melissa

An ARM is an adjustable rate mortgage. As you state, such mortgages offer great rates for the first few years of the mortgage, then the rate adjusts upwards according to the specific guidelines set forth in the mortgage agreement.

For example, an 5/1 ARM might offer a 1.99% interest rate for the first five years, then adjust upwards annually by 1% a year until it reaches a specified cap, such as the prime lending rate plus 4% (currently, that rate is 3.25%, so that would put a cap at 7.25% right now). So, assuming the prime lending rate doesn鈥檛 change, you鈥檇 pay 1.99% the first five years, 2.99% the sixth year, 3.99% the seventh year, and so on.

The reason people take out mortgages like this is that they believe they will sell the home before the rate begins to adjust.

As for early payment, it entirely depends on the specific mortgage as well as the state you鈥檙e in. Some states and companies allow penalty-free prepayment; others have other rules for early payment. Get this specified before you sign anything.

I generally think ARMs are very risky and not worth taking out. You might have the best intentions of paying off the ARM early, but you鈥檙e banking on your future self to pull off a major financial accomplishment. If you get sick, you鈥檙e in deep trouble.

Q3: World Series prediction
I know you鈥檙e a fantasy baseball player. What鈥檚 your pick for the World Series?
- Kevin

Rangers in 7.

If you had asked me without having watched any of the American League Championship Series, I would have picked the Giants. However, the Rangers spent that series dismantling the Yankees in stunning fashion. I just don鈥檛 think they will be denied.

I wouldn鈥檛 be biased by the fact that I have family in the Dallas/Fort Worth area and I鈥檝e been to the Rangers鈥� ballpark last year, of course.

Q4: First time apartment hunting
A new job prospect could possibly have me moving out of my family鈥檚 house for the first time. I鈥檒l almost certainly be getting an apartment, preferably one I can live in alone.

None of my family has lived in apartments for many, many years, and can鈥檛 offer much in the way of helpful advice. It鈥檚 not really the financial end I鈥檓 concerned with here 鈥� I really have no idea how to read a lease, check to make sure the apartment is actually a good apartment or just any general things I should look out for, be it shady landlords or renting practices and so on. I feel really clueless and overwhelmed by the whole process.

Most information I鈥檝e got off the internet seems more anecdotal than useful, and I was hoping you could offer a few tips, a checklist or point me to a website to put me in the right direction.

If it鈥檚 relevant in any way, I live in Alabama.
- Pete

Listing such advice here would be pretty redundant, so I went around the internet and looked for good checklists of such advice. is the best one I鈥檝e found.

My experience has been that the quality of the landlord is the most important factor in apartment rental. A good landlord will be there when you need them and help you with resolving the inevitable problems that will crop up. A bad landlord? If something bad happens, you鈥檙e pretty much on your own. That makes a huge difference in my book.

I would suggest, if at all possible, asking around your more extended social network for suggestions for landlords and people to avoid. The best advice you鈥檙e going to get is from people in your area who are actually renting.

Q5: Saving for a wedding
I have a son that is nearly two, and I have been putting $50/month in a 529 account since he was born. I would like to do something similar for my daughter (who is arriving in the next week or so!). However, in the case that she may not want to pursue college 鈥� taking the family route and becoming a stay-at-home mom instead (as my wife and mother have done), I would like to have the money that I saved for her to be available for something else, particularly a wedding. Is there a savings vehicle that is similar to the 529 that would serve as a multi-purpose investing option? Ideally, it would be age-based (similar to the 529, with risk going down as she gets older) and yield dividends similar to the 529. Obviously, I would be missing out on the tax benefits, but that would be the price to pay for flexibility. Please understand that I am not trying to make these big decisions (college, marriage, etc.) for my daughter, I just want to plan ahead and put her in the best place no matter what she chooses to do. Any advice would be much appreciated!
- Drew

It sounds like you鈥檙e just looking for a simple brokerage account where you can invest and withdraw money as you please and owe taxes only on the dividends earned and the amount gained when you sell.

I use Vanguard for this purpose. Right now, I鈥檓 using it to save for our next home, as we would eventually like to pay cash for a piece of land in the country and eventually build on it. Since this is a long way off and it鈥檚 not relying on having a certain balance at any certain point, the money is heavily invested in stocks.

Given you want such flexibility with the money, this is probably where I would go with it. Almost every other option has some sort of drawback that takes away from what you鈥檙e trying to do.

Q6: Workbook for missions/goals
Throughout school and in my professional development, I鈥檝e been required to write a personal mission statement, vision statement, set goals, etc. many times. I don鈥檛 feel like I got a lot out of these activities because of the place I was at in my life. Now I鈥檓 really ready to work on this and set some personal and professional goals for myself. Can you recommend a workbook (in print or ebook) that someone like me could use as a guide? I鈥檝e read a lot about personal development lately, but I鈥檓 looking for something very interactive and activity-driven.
- Alex

I agree 鈥� activities like this are useless if you鈥檙e not open to them. I really don鈥檛 understand why such activities are pushed on people when the vast majority of them are going to get nothing out of such activities.

That being said, David Kinard has for coming up with your personal mission statement and developing goals for yourself.

I think once you get the ball rolling on a process like this, it鈥檚 much easier to lead yourself than to follow a workbook. That workbook, though, should provide all the start that you need.

Q7: In-person insurance agent?
Do I really need an actual person with a name and a face as my insurance (car & home) agent? I鈥檝e been very happy with GEICO for 15+ years, though I have never had any major claims. Maybe it is because I鈥檓 an introvert, but I rather enjoy the convenience of calling at 2am to talk to a faceless voice or doing everything online. I鈥檓 under the assumption that a real face to face meeting in someone鈥檚 office is where I will get swindled into coverage I don鈥檛 need. I recently started meeting with a financial planner and she hooked me up with an independent agent for car & home. Over the phone, the agent gabbed on and on about a personal relationship. I wanted to gag over all that cheesy 鈥渞elationship鈥� talk. Are claims with the big faceless national companies really all that horrid?
- Lisa

I think it鈥檚 just a different approach for different people. Some people value that kind of personal relationship with their agent 鈥� others can easily do without it.

I鈥檓 basically in the 鈥渨ithout鈥� camp like you are. I actually prefer to just call a national number and get quickly through any business with the agent on the other end. I don鈥檛 want to spend time being 鈥渂uddies鈥� with a person I view largely as being a mix of salesperson and service person.

Having said that, I do understand why some people want someone that they feel comfortable calling with their own situation, someone that they have an established relationship with.

I think it has more to do with the customer than anything else. Some customers just want different things.

Q8: Moving up at difficult workplace
My husband hates his job, and I really just don鈥檛 know how to help him. We moved here to LA and he got an entry level job at a entertainment company in 2007, a typical way to break into the industry for an aspiring writer or producer. The problem is that the firm he works for is run by a bunch of old has-beens on the verge of retirement who sit back and count their money and don鈥檛 care about the people under them. Now, three years in, he really hates his job, and the people he works for, and I鈥檓 scared he鈥檚 either going to quit, or get so pissed off that he鈥檒l say something to get him fired (and this town is NOT about burning bridges鈥�). My salary combined with his is enough for us to live well enough, but we鈥檙e just finally starting to climb out of debt and build an emergency fund. We don鈥檛 have enough for one of us to be jobless, but I feel so much compassion for his frustration. Still, the job market is still tough, and I鈥檓 running out of ways to encourage him to stick in there. I want to help him but I really just don鈥檛 know how. I鈥檓 really sick of his complaining as well as the fact that his talent as a writer is being squandered by spending his days making dry cleaning deliveries. Do you have any advice for me/him/us?
- Michelle

I know exactly where he鈥檚 at because I was in more or less the same place once upon a time.

He has to make two changes in his mindset. First, the day job is just a day job. It鈥檚 a way to make cash, nothing else. Pick up your deliveries, drop them off, and spend your brain cells thinking about the writing, not about the grunt work. Yes, sometimes you鈥檒l have to think, but when you鈥檙e driving around dropping off clothes, think instead about your writing.

Hand in hand with that is the fact that he鈥檚 going to have to spend his spare time writing and sharing that writing. He has to write, of course, because without actually doing it, one can鈥檛 be a writer and one can鈥檛 have content to sell. Once you have the content, you have to sell it in some way 鈥� a blog, selling short stories, and so on. He has to get it out there in front of people.

Spending your time being angry about your situation only ensures that you鈥檙e going to be in that same situation tomorrow. Channel that passion into something else.

Q9: Trying board games
You鈥檝e mentioned many times that one of your favorite social events is an evening playing board games with a circle of your friends. I鈥檓 interested in giving this a try with my friends but I don鈥檛 have any idea what games are good or bad or whether any of them would be enjoyed by my friends. Any ideas?
- Kellie

My suggestion is to just visit any game shops in your area and ask if they have demos or 鈥渄emo days鈥� to help you find a game that might fit what you鈥檙e looking for.

Many game shops have a selection of opened copies of their most popular games and will often have times where they will happily demonstrate those games to customers, often playing the games with interested customers. One local shop in my area will pretty much try out any game with you at any time, provided they have a store copy of it.

Such demos will make it clear pretty quickly which games will click with your group. I would suggest starting on the simpler end of the spectrum 鈥� if they try to teach you something like Arkham Horror, you鈥檒l probably be in way over your head.

Q10: Roth IRA as emergency fund?
Would it be prudent to put household emergency reserves in a Roth IRA?

I understand there are no penalties for withdrawal of deposits to a Roth IRA, that monies that remain in the account for 5 years qualify for the lifetime tax exemption and the self-directed nature of the account that would allow any portion to remain invested in cash. This seems like a liquid location to park family cash while allowing for possible tax-free growth of investment returns for funds that are never withdrawn.

Have you heard of this strategy and what鈥檚 your opinion?
- Doug

It can work in that regard if that鈥檚 how you want it. The only problem with that is that the Roth is a great vehicle for retirement and this will eat up your eligibility.

Each year, you鈥檙e only allowed to invest $5,000 in a Roth IRA. If you withdraw money, you don鈥檛 get to put that money back into the account later. You get $5,000 a year, period, regardless of whether you take out money. That means that if you鈥檙e viewing this as family savings and intend to withdraw from it later, you won鈥檛 have that money around for retirement. It鈥檚 gone.

If you have no interest in actually using a Roth for retirement, this is certainly another way to use it.

Got any questions? Email them to me or leave them in the comments and I鈥檒l attempt to answer them in a future mailbag. However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours. Please keep your questions short, as long questions are very difficult to break down and answer in a reasonable format.

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