海角大神

What鈥檚 inside?聽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.
1.聽鈥淲askuya鈥� (corn)
2.聽Illegal income
3.聽Interest rates and national debt
4.聽Playing the lottery
5.聽Managing financial progress
6.听颁丑补谤颈迟测
7.聽How much for retirement savings?
8.听Bryce Harper and Mike Trout
9.聽Monetizing a blog
10.聽Dental care

For the past several days, our children have been visiting grandparents, leaving Sarah and myself at home without any children around.

The biggest difference is the quiet. Our house is so quiet now that it鈥檚 almost unnerving. When the children are around, there is so much laughing and singing and talking and playing that there鈥檚 almost always noise of some sort going on in our house during the day.

Without them, it鈥檚 quiet. It鈥檒l be a strange thing to get used to when they grow older.

Q1: 鈥淲askuya鈥� (corn)
When I worked on a Sioux reservation here, I learned an even cheaper way to enjoy sweet corn all year round. The ladies made 鈥渨askuya鈥� or dried corn all summer and saved it to eat during winter, making yummy corn soup. You take a mess of sweet corn, blanch it, take off the kernels with a tablespoon so you get all of the sweetness down to the cob, then spread it out on bedsheets on the grass. You walk around turning it every now and then so it dries evenly, then save it in jars or plastic containers or whatever you have. No freezer required. I鈥檝e heard the Navajo ladies who have access to the oilfields and have made some bucks even sew it into bags like pillowcases and use their clothes dryers! A dehydrator would work too, but would use a lot of electricity over the summer.
- Jane

Drying corn is a really good idea. Dried sweet corn still works as a really good ingredient in meals that cook for a while and allow the corn kernels to rehydrate.

I鈥檝e used dried corn myself in many recipes, though I鈥檝e never made it myself (it鈥檚 been gifted to me).

Given that many people don鈥檛 have the uninterrupted yard space (meaning devoid of children and pests) to use the 鈥渄rying on a sheet鈥� trick, the dryer technique seems particularly useful.

Q2: Illegal income
A few days ago, I found out that a significant portion of my husband鈥檚 income over the last few years has come about as the result of [an illegal activity].

I鈥檓 really unsure how this affects our finances. Should we have a larger emergency fund? What about taxes?
- Angela

I had to edit this email quite a bit so that it didn鈥檛 turn into a discussion of said activity, as that鈥檚 not really the issue here. She鈥檚 not pleased with her husband鈥檚 choices and they are looking at options to extract themselves from said illegal income, though it will take them some time.

My suggestion would be to contact a tax attorney. Attorneys are bound by lawyer-client privilege to not share what you鈥檝e told them about your activities. Such an attorney would probably provide the best advice.

Your goal should be to minimize your legal liability should this end up in a bad situation. Thus, if I were you guys, I鈥檇 probably maximize my emergency fund just in case.

Q3: Interest rates and national debt
You often discuss interest rates as being cyclical and allude to a time in the future when we will again see safe investments like CDs and such at 5% APY. My concern is with national debt, being that if the Fed were to raise rates a few percent, interest on national debt could outpace GDP. In light of that, do you think we will really ever see any policy decisions but ZIRP and higher-than-reported inflation as long as the status quo is maintained? I鈥檝e been a dedicated student to investment strategies, but I feel that the macroeconomic climate of late has made much of that knowledge obsolete. What are your considerations on the bigger picture and the savings/investment climate going forward?
- David

I鈥檓 often frustrated when people want to make wild leaps with their finances based on their understanding of 鈥渕acroeconomics.鈥� Galbraith and Hayek didn鈥檛 understand macroeconomics well enough to make useful predictions that actually worked all the time, so why would a layperson think that they should bet their future on the macroeconomics they鈥檝e heard and understood?

The best step anyone can take is to minimize their reliance on the dollar and maximize their self-sustainability. Own your house and your car. Have some supplies on hand so that you won鈥檛 starve. Have a strong social network of people that you can cooperate with in a bad situation.

If you want a hedge against economic disaster, take real steps. Don鈥檛 just move investments around based on ZIRP and debt to GDP ratios.

Q4: Playing the lottery
My mother loves to play the lottery. When I go visit her each week, she gives me some money to buy groceries with, but she insists that I buy $5 worth of lottery tickets for her when I do so.

I鈥檇 like to just take that money and put it in a savings account for her so she has some money for things that might happen to her, but I鈥檓 torn. Is that the right thing to do?
- John

The lottery is a little spike of joy in your mother鈥檚 life. She buys those $5 worth of tickets because she gets to dream a bit. It鈥檚 also likely one of her few ways she has in her life to spend money that鈥檚 not revolving around a need (keeping food on the table and a roof over the head).

Let it be. It鈥檚 $5 a week and it brings her some joy.

Sure, it鈥檚 not the most effective use of $5, but there is no one alive that makes maximal use of their money. Everyone spends some of their money on frivolous things. This seems to be your mother鈥檚 frivolous thing.

Q5: Managing financial progress
When I bought my house last August I only had around $5000 in credit card debt, $7500 on a 3.5% car loan, and my student loans of $35,000 at 5%. I was planning to wait until December to buy, but was able to get my home at 4.25% fixed 30 year for only $132k when it had previously sold for $220k 5 years ago brand new. It was a HUD home, so it needed a little bit of TLC, but long story short, I have put less than $10k into my home and it鈥檚 now better than it was brand new, with some of the additions/changes I have made (wired whole-home Ethernet, upgraded kitchen appliances, etc).

Flash forward to today: I鈥檝e made some financial mistakes along the way and am finding myself cash poor monthly, and am worried about the money 鈥渞unning out鈥� before too long.

Overview of my finances:
$1400 credit card at 19.99% (min. monthly payment $50, have been paying over $100/month)
$1500 credit card at 17.99% (min. monthly payment $50)
$5300 credit card at 13.24% (min. monthly payment $115)
$2700 credit card at 0% (monthly payment $166, min. monthly payment $96, appliances purchased w/24 months same as cash, must be paid off by August 2013)
$4750 car payment at 3.5% (min. monthly payment $335)
Monthly student loan payments $360
Monthly mortgage payment (with PMI, taxes, insurance) $1175
Utilities in my home are split three ways, and are roughly $75/month doing a 12 month average
Water/trash, etc is budgeted at around $45/month (I don鈥檛 charge my renters and portion of this)
Total fixed monthly payments: $2371

Monthly take home salary from work is $2750
Monthly income from two renters is $700 (not including the 2/3 of utilities they pay)
Total monthly income: $3450

Current cash on hand: $1500 with no bills due

These fixed payments don鈥檛 include anything such as entertainment, gas, food, car insurance, etc.; with those things budgeted in, I estimate my expenses to be close to $3000/month.

I hate saying to myself, 鈥淚 just have to make it to September, 2013鈥� but that鈥檚 how I feel. At that point, my car will be paid off as will my appliances, freeing up around $500/month in payments. Around that same time, I should also have the 19.99% credit card paid off (currently I鈥檝e been paying around $100/month on it).

Now to my question (and unconventional logic): Of these things, what should I do to best free up some additional cash every month, so that I ensure that I am in the positive cash flow each month? Currently I am working to cut back drastically on my entertainment and food (non-grocery) expenses every month. I have thought that maybe I should pay off my appliances first, just to free up the $166/month. The more I鈥檝e read back through this email, the more I think that would be a bad idea, not only because of the fact that it鈥檚 0% interest currently, but also because paying off both of the higher interest rate cards would still net me ~$150/month in freed up money, and eliminate the interest payments from those as well.

Another potential alternative would be to sell my car, but I travel a lot for work, and need something that is reliable, gets good gas mileage, and is comfortable to ride in for extended periods of time. My 鈥�07 Accord gets 29-30MPG highway, is very comfortable and highly reliable, plus has the built in GPS for making those trips to remote locations easier to follow. At 145k miles, I feel that the car has many years of service left, even though I鈥檓 currently putting nearly 35k miles on it annually between personal and professional usage.
- Geoff

You are not in a truly bad debt situation. I think the only mistake you made was buying a house before you were ready to do so, as you鈥檙e paying PMI and had to incur credit card debts to keep the ball rolling.

You have to decide what鈥檚 more important to you: the quickest route to a bigger monthly cash flow or the quickest route to a complete payoff of all of your debts. There isn鈥檛 a right answer here and different financial gurus will give you different answers.

If I were you, I wouldn鈥檛 sell off important things unless it were an emergency. Instead, I鈥檇 just keep following the path you鈥檙e on, which is a good one. Debt freedom doesn鈥檛 happen overnight.

Q6: Charity
Your ideas about charity are silly. Most of the people reading your blog are the people that should be receiving charity, not giving it. If you鈥檙e giving money away while you鈥檙e barely making minimum wage, you鈥檙e a fool.
- Alan

I can鈥檛 tell you how much I disagree with that.

Charity isn鈥檛 about emptying your wallet for someone else. It鈥檚 about giving what you have to help someone who doesn鈥檛 have what they need. For some people, that might be time. For others, it might be their talents. For still others, it might be their money.

I consider it charitable work when I spend a few hours collecting food or sitting in a phone bank. Those choices don鈥檛 require me to spend a dime of my money. Instead, they ask me to give something else: my time. I鈥檝e also given presentations for free to groups who have requested it; again, it鈥檚 my time and talent I鈥檓 giving, not my money.

Everyone has something in their life that they鈥檙e not using effectively, whether it鈥檚 time or money or talents. Simply giving a little bit of that excess to a group that can convert it into something that others desperately need is always a good thing.

Q7: How much for retirement?
My fiance and I are 30. After a year working at a horrible, low-paid job in his field, he has accepted a new job paying $91,000 plus excellent benefits. He has no retirement savings whatsoever, but the new job has a 401(a) with a 5 percent match. I have a very small 401(k) left over from my previous job. I鈥檓 currently in graduate school and surviving on loans.

I am trying to figure out how much my fiance should contribute to his 401(a) to save for retirement for both of us. I know he should at least hit the match percentage, but we鈥檙e both starting late on saving for retirement.
- Jenna

In general, a 401(a) plan that allows employee contributions is known as a 401(k) plan. 401(a) is a more general term than a 401(k), in other words. I鈥檓 going to assume based on your email that this is a 401(a) plan that allows for pre-tax employee contributions; in other words, a 401(k).

If that鈥檚 the case, your fiance should be putting in at least enough so that he鈥檚 saving 10% of his income for retirement聽at a bare minimum. Given that he鈥檚 not contributed anything as of yet in his life, 12% is probably a better target. So, that means he鈥檇 contribute 7% himself and scoop in 5% from his employer.

As for investment choices, he should try to get into a target retirement fund that most closely matches his 70th birthday. This will provide him with the simplest route to a properly diversified retirement.

Q8: Bryce Harper and Mike Trout
I鈥檝e got to know what you think of the two really young guys who are making a big impact in baseball this year, Mike Trout and Bryce Harper. These guys are going to have 20-25 year major league careers. How do you think they will pan out?
- Joe

The amount of talent being put on display by those two young guys this year is just incredible. It鈥檚 amazing that Trout is hitting over .350 and is a strong contender for AL MVP (let alone rookie of the year) before his 21st birthday (coming up in early August). Bryce Harper, on the other hand, is 19 (and won鈥檛 be 20 until after the season is over) and is hitting .275 (Trout only hit .220 at age 19 in the big leagues during his stint late last year).

When guys get off to career starts like this, all you can hope is that they don鈥檛 have a major injury along the way. These two guys have the potential to chase a lot of career numbers over the next twenty to twenty five years. It seems crazy to think about, but if they continue growing as baseball players do and hit their peaks a聽decade聽from now, these two guys could be chasing pretty much every career record in the books when they鈥檙e at the end of their thirties.

I truly hope these guys both are able to have injury-free and conflict-free careers, because it will be a聽lot聽of fun to watch.

Q9: Monetizing a blog
I鈥檓 looking to monetize a new blog and am curious what the best services and methods are to use?
- Marcus

If you鈥檙e starting from scratch, your best tool is聽. This will enable you to place ads on pretty much any website that you wish to create. The ads will be automatically generated based on the content of the site you鈥檙e placing the ads on.

If you鈥檙e going to ever mention a product, there鈥檚 a decent chance you鈥檒l link to the product on Amazon. If that鈥檚 the case, you should sign up for聽. You just link to Amazon like normal and you get a small cut of anything that the person who visits Amazon through your link buys.

There are as many affiliate-type programs as there are grains of sands on the beach, but that largely involves selling to your readers, which is a pretty poor idea if you鈥檙e getting started.

Q10: Dental care
What products are worth buying for home dental care? Is it worth dropping money on things like a Sonicare toothbrush or not?
- Monica

All I can go by here is what my dentist told me, which is that if you brush your teeth at least once a day for two minutes and floss beforehand, your teeth should be just fine.

He seemed to indicate that while there is some variation between toothbrushes and toothpaste, it鈥檚 far聽far聽more important to just brush and floss every day regardless of what you use.

In other words, I wouldn鈥檛 sweat it too much.

Got any questions?聽Email them to me or leave them in the comments and I鈥檒l 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.