Ask the grumpies: When is the movie better than the book?

Leah asks:

When is the movie better than the book?

Rarely.  Bad books aren’t usually made into movies!

#2 Didn’t like the book version of the Princess Bride as much as the movie, but #1 liked the book version more.

I guess there are several versions of Brewster’s Millions that are better than the original source material.  There’s a lot of Gutenberg material out there that has extremely cringey racial/ethnic stereotypes which don’t make it into the movie versions (or at least not into the movie remakes).

Peter Pan is a much better movie– terrifying book.  Similarly Pinocchio.  Fox and the Hound.  That era of Disney picked some pretty awful source material.  Even Mary Poppins is dramatically different (though one can argue which version is better).

We’ve heard that 50 Shades of Grey was a better movie than book, but we’ve got no desire to watch either one(!)

Grumpy Nation, help Leah out, have you seen movies that were better than their books?

Ask the grumpies: What is your favorite card game?

Leah asks:

What is your favorite card game?

The Great Dalmuti.  Also, three person spades.

I really like the kinds of card games that are fast and allow for lots of revolutions of who is in charge in repeated games.  So everyone wins a bunch.  (Though I also like the person who is winning gets an advantage… until the Revolution, of course.)

My family is really into the Werewolf games.

Ask the Grumpies: Is there any reason not to put money in a Roth IRA if you can pull out the principal at any time?

Beth asks:

Short version of this question: if I have some money saved that I don’t expect to use in the next year or so, and I don’t have any non-mortgage debt to pay off – is there any reason NOT to put that savings into a Roth account?

Longer version:
I feel I am in okay shape in terms of retirement savings (far better than most Americans, not doing as well as the FIRE community), with 10-20 more years to go (preferably 10 years from now, depending on the market & health care). Because I”m in okay shape and max out my 401(k), I haven’t been saving in a Roth. Instead I’ve been focusing on paying down my mortgage (still about 10 years out) and enjoying my life in the moment.

I have been putting aside money in hopes of self-funding a sabbatical at some point. My vision is I’d arrange a leave of absence for up to 3 months; I’m not at all sure my employer will go for it so it’s all quite hypothetical. I’m too conservative/aware of age bias to quit my job without another lined up and I would really really like a chunk of time off. Words cannot express how I envy friends who work in academia and get summers off! (future post? brainstorming jobs that get summers off but don’t require being a teacher?)

I realized that I could set the hypothetical-sabbatical money aside into a Roth account, and pull out the contribution to use if I DO have a sabbatical, and if I don’t, then I’m that much closer to being in even-better retirement shape.

Is there any reason to NOT put my savings into a Roth? My usual tendency is to go VTSAX but I might be more conservative with this money since I would like to use it in the shorter term. Or, by putting it into a Roth, am I going to mentally classify it as untouchable?

I’ve got other money sitting in an emergency fund (combo of money market and VTSAX) and am now wondering why I haven’t put it in a Roth all along. Please advise!

 

If you qualify to do a regular Roth IRA without having to convert from a traditional IRA, the only reason not to would be having to deal with figuring out how to take out the principal and any other paperwork costs. For that reason it’s good to have some cash in an emergency fund (the money market in your case) in case you need money immediately without paperwork hassle (because short-term emergencies often come with mental and emotional angst and the last thing you need is a month delay because of some sort of paperwork snafu). So… I guess laziness is the main reason not to? If you’re planning on using Vanguard I doubt it will be that difficult to get your principal out (some other providers make taking any money out more of a hassle).

You can put money in VTSAX within the Roth! Though yes, within the shorter term you might want to stick it in a bond fund or something similar. The heuristic is generally to put money you think you’ll need in more than 5 years into stocks and to be more conservative with money you’ll need sooner.

If you can only do Roth IRAs through a traditional conversion (a Backdoor Roth) because you’re too high income to contribute to a Roth directly, you have to wait 5 years to access the Roth funds, at least according to this random website I found. So if you need the principal sooner than that, you might want to avoid doing a Backdoor Roth and instead save the money as taxable.

Here are some reasons you could withdraw distributions (not just principal) from a Roth without penalty.  (They include things like disability, first time house purchases, educational expenses, etc.)

Grumpy Nation, is there anything I haven’t thought of?  Have you ever withdrawn the principal from a Roth IRA before age 59.5?

Ask the Grumpies: Should I move to England for three years to get dual-citizenship for my son?

bogart asks:

I have British citizenship by descent, could convey British citizenship to my son (both of us could also keep US citizenship) but only if we live there for 3 years between now and when he turns 18 in 5 years.  I can work in the UK but don’t have a job lined up; however, we do (household of 3) have roughly the US median income before anyone gets out of bed thanks to DH’s pension).  Should we or shouldn’t we?

That is not an easy question to answer.  In normal times the benefit of automatic citizenship in a country outside the US wouldn’t seem like that big a deal, but who knows how the future is going to pan out.  Having an easy escape might be valuable in the future.  Though perhaps I’ve been reading too many Kate Parker mysteries.

Besides the jobs and red tape, some things to think about:

Is living in the UK during Brexit going to be better or worse than living in the US under the current regime?

What are the pros of experiencing life in another country while a teen vs. the cons of not getting a full four years of high school at the same school?  How will this affect college admission choices, or does it not matter?  (Also:  which 3/5 years if he’s considering a school in-state?– that could matter a lot for tuition costs.)

Other than that, we don’t really know what should be considered, but likely Grumpy Nation will have ideas.

Grumpy Citizens, what else should bogart be considering?

Ask the Grumpies: What to do with a 13th paycheck?

Debbie M asks:

In my retirement system, retirees are getting a so-called 13th paycheck (up to a maximum of $2,000) this year. (Interestingly, I learned that a 13th paycheck is standard or even required for employees in many countries. Weird!) So what should I do with it? As pension money, it is “unearned” and therefore cannot be contributed to retirement savings vehicles. And I don’t have debt (woo hoo!) or an HSA. So currently I’m thinking:
10% to charity
45% to taxable investments
45% to my vacation fund (still, uh, negative since I went to two foreign countries expensively in one year a while back)

Any other ideas?

Sorry for the delay on this– I hope it isn’t too late!

But… those all sound like really reasonable choices.  Go for it!

I guess you could check to make sure your emergency fund is padded for housing expenses or car expenses etc., but presumably you could take out of the vacation fund or sell taxable investments in the case of an emergency.  In theory you could use it to make energy saving improvements around your house like more efficient lighting or insulation if you don’t have those already.

Grumpy Nation, what other things could Debbie M do?

Ask the grumpies: Should universities take Koch or Epstein money?

SLAC prof asks:

Is taking money from Jeffrey Epstein worse than taking money from the Koch foundation?  Which is worse?  Clearly we shouldn’t take money from the KKK.  Is it ok to take anyone’s money if there aren’t strings, or is there a line?  Who gets to decide the line?  Does Koch money ever truly have no strings?  Should personal morals be irrelevant when an institution takes money?

Oh wow, this is a hard one.  We’re really not ethicists and don’t have enough expertise to have an opinion on non-obvious cases.  That said… here are some thoughts.

First off, personally I think it’s fine to take money that doesn’t have strings attached (including naming rights!!) from the estate of someone who is dead.  So if you’re an institution that has a morally horrific but extremely wealthy graduate and he just gives you a couple million in his will but it’s completely unrestricted, go ahead and take it without advertising it.  Put it towards something completely antithetical to what he would have wanted (sexual assault prevention training for freshmen with a focus on how not to assualt) or spend it on something boring (utility bills) freeing up that fungible money for other things.  If he says you have to name something after him or hire someone specific etc., then don’t take the money (and advertise you didn’t take it).

If the bad person or group is still alive, don’t take money with strings attached.  No naming rights.  No final approval of tenure track hires.

When there aren’t strings it gets much more complicated.  Yes, one shouldn’t take KKK money (unless it’s used for training frats how not to do blackface or to pay for programs etc. that benefit black students and faculty– I’m a big fan of F-U uses of bad guys’ money).  But if Koch money is offered for something that isn’t evil (no strings scholarships)?  And they do fund things that aren’t evil along with their massive funding of evil… I’m not sure.  I mean, I’d like to encourage them to spend more money on not-evil and less money on evil.  But I don’t want them to get credit for the not-evil stuff as if it makes up for the evil stuff because it really doesn’t.

This is hard.

What do you think, Grumpy Nation?  Should institutes of higher education accept money from bad people and bad organizations?  Under what circumstances?

Ask the grumpies: Getting started with money

Mel asks:

What books do you recommend for someone who is looking to understand the basics of investing for retirement and how much money a person should hold in their savings account for emergencies? Or to that end, also understanding which comes first: having savings you can reach for at a moment’s notice or putting money into a retirement plan? I’m looking for that sort of information in a book form.

I have a fairly (I think?) healthy relationship with money, carry no debt beyond the mortgage, and feel the word that best describes me is “careful.” So I don’t really need to understand budgeting or how to pay off debt, but I do want to make sure that we’ve saved enough for retirement, saved enough for college (and aren’t going to be locked out of applying for certain loans because we have too much in a savings account vs. moved over into a retirement account — is that even a thing?), and saved enough for emergencies.

I’m looking for big picture books to understand how the various plans work as well as books to avoid because they contain terrible advice.

A good primer on all things personal finance is JD Roth’s book, Your Money:  The Missing Manual.  The numbers will be out of date (you can now save $19K annually in a 401k and 6K annually in an IRA), and we now know that you can legally do a Backdoor Roth, but it is really good at explaining the basics.  Like the difference between an investment (ex. a specific stock fund) and the bucket you save an investment in (ex. a 401k).  It also summarizes many of the best ideas from the best personal finance books.

How much a person should hold in their savings account for emergencies isn’t something there’s 100% agreement on.  In general, most people agree that you should have at minimum around 1K (give or take, probably more given inflation) to cover small emergencies.  After that people tend to think in terms of months of expenses– you need 1 month of regular expenses in case your work has a billing mistake.  You need 3 months of expenses to cover things like car problems or a short-layoff.  You need 6 months of expenses to cover a lengthier spell of unemployment.  Some people will argue a year of expenses, but that’s a luxury.  Other factors are also important like how stable your industry is– if there’s more uncertainty, you need a larger emergency fund, if you are hard to fire then you need a smaller emergency fund.  If you have dual incomes and a spouse can increase hours or cover expenses you might need less.  If you own rental properties you might need more to cover tenant absences or large repairs.  Some people will keep part of their emergency fund in something safe like savings, but keep the bulk of it in an investment that could be tapped in an emergency without penalty, for example the contribution part of an IRA Roth or taxable accounts (or a 457 plan for government employees).  All Your Worth by Elizabeth Warren (yes, that Elizabeth Warren) and Amelia Warren Tyagi does an excellent job helping you think through what your monthly expenses are and how emergencies might affect them.

All Your Worth also does a great job in providing heuristics about how much you really can afford to spend given your income.  It provides great guidelines for what percent to put in required spending vs. optional spending vs. savings to provide stability in when there are emergencies.  It’s a really great read and a smart book.  As a note– one thing people often get wrong about her balanced money formula is that they think that they *must* spend what she says to spend and save only what she says to save, which isn’t true– if you read carefully, the spending amount is an upper bound and the savings amount is a lower bound.  She does note that if you are unhappy with your spending and you are saving the recommended amount then you can loosen up, but you don’t have to, especially if you’re considering early retirement.

Once you understand these big picture ideas, you can do one of two things.  You can read the Bogleheads Guide to Investing, or you can just figure out the cheapest target-date fund that your savings provider provides (ex. my work provides Fidelity so I use that for my 403b, outside of work the cheapest is usually Vanguard which I use for my backdoor Roth and taxable investments).  With the target date fund you can just pick a single date (when you plan to retire) and set and forget and it will take care of all the rebalancing and diversification and so on for you.  Easy peasy AND it matches the market, unlike the majority of active managers (who get out-performed by the market).

Here’s a couple of advanced posts on diversification of your overall personal portfolio (not just your retirement investments).  Here’s an ordering strategy of how you could choose to use your money.

In terms of college savings and financial aid, you definitely want to read this series of posts from Forbes Magazine.  Here’s one of our many posts discussing retirement vs college savings.  The short version is that depending on what schools your kids are considering and how much money you make (say, under 300K/year) then you are likely to want to shove as much money into retirement vehicles as possible.  (If I had to go back, I’d funnel some of our 529 money into 403b and 457 accounts, but I didn’t know we’d be as high income as we are now and I didn’t know that financial aid at fancy schools went so high up the income distribution.)

In email conversation you also mentioned that as a freelancer you wanted to know more about ways for self-employed people to save for retirement.  If anybody has book recommendations, that would be great.  I found a couple useful web articles on the topic.   You also mentioned you’d be interested in finding out more about how to tap into retirement money without penalty before age 59.5.  For that there’s something called substantially equal payments that you can use in some cases.  You can also always take money out with the 10% penalty.  Or take the principal out of a Roth (or 457 if you leave that employer).

In terms of what books to avoid:  Dave Ramsey is awesome for debt payment, but he is absolute garbage for investing.  Do not follow his advice for investing.

Grumpy Nation– What books do you and don’t you recommend for Mel?  Any web resources?  How should she get started?  Any advice specific to freelancers?