There were several big reasons that finally made me transition completely. What I found, though, is that most of those reasons actually directly helped me manage my personal finances, believe it or not. It turned out that my money was one of the biggest reasons to finally make that transition.

Here are nine ways I use Google Calendar to make my personal finances that much easier. Many of these can be done using paper calendars, but in most cases, GCal makes it easier to do them.

1. Keep track of bill due dates
This is perhaps the most obvious use of using a calendar for personal finance. When you know a bill’s due date, add it to your calendar, then pay the bill when you see it’s coming close to its due date. So, for example, our mortgage payment is due on the 28th of each month, so on my calendar, on the 28th of each month, there’s a note that our mortgage payment is due. It helps me keep track of our payments.

How can I do this? It’s simple. Log onto Google Calendar. First, I recommend creating a new calendar specifically for bill due dates if you haven’t already - this makes it easy to highlight them. Then, click on the day the bill is due, create a new event, and add the appropriate information - the amount and the type of bill, at the very least. If this bill recurs on a regular basis, make the bill a repeating event. You might also want to add an event reminder so you’re emailed a few days in advance of the bill due date.

Free from Broke offers a nice visual guide to adding a bill due date to your calendar.

2. Plan ahead for gift-giving occasions
My family has always been really into gift-giving and it’s considered a serious faux pas to forget someone’s birthday. In order to make sure I don’t forget a parent or a niece or a nephew, I schedule all of those important days right into Google Calendar.

How can I do this? I use almost exactly the same technique as for the bill due dates. I have an “Important Personal Days” calendar and I add birthdays, anniversaries, and the like to that calendar, scheduling them to recur every year. I also have two email reminders for each one - one about twelve days in advance, and another about five days in advance.

3. Pencil in key dates for sales
Let’s say I’m shopping around for a washing machine, and I’m looking for the best deal I can get. I discover that the local appliance store is having a sale on washing machines next month and given that their prices are already decent, I want to take a look at their numbers. But I might forget the sale! Not any more - I just pencil in the dates of the sale in the calendar, reminding me to check out the sale during that time frame.

This works for any sale that you come across. But, as with any sale, it’s important to distinguish between buying something because it’s on sale (bad) and buying something you already need and taking advantage of a sale to do it (good).

How can I do this? Again, this is just a simple scheduling of an event, except that I set the event as a multi-day one, with the start date and the end date matching those of the sale. Since this isn’t too regular, I have a “Miscellaneous” calendar where I put such events.

4. Keep track of milestones for big goals
As I’ve mentioned a few times on here, I have a handful of pretty big goals: finishing my second book (here’s my first one), running a 5K, and saving for a van. For each of these goals, I have some milestones along the way. I try to make my best attempt at a 5K each week, for one, and I have a word count goal on the first draft of my book each week, too. So I schedule these milestones. I just create an event each Friday saying something like “Book word count target: 30,000.” On Sundays, I have a “Walk/run your best 5K” penciled in.

How can I do this? Just pencil in your milestones whenever they occur. I have a “Goals” calendar that I put these under. Why so many calendars? It allows me to make groups of things appear and disappear at will when I’m looking at the calendar, which makes it very easy for me to keep track of what’s going on.

Dal, Chilean style, with chickpea curry, which I discussed in this earlier article.

5. Schedule meal plans intelligently
Remember my post about making multiple casseroles? As I mentioned there, it’s usually worthwhile to eat those casseroles within two months or so. So, in that example, I made four casseroles on a Thursday afternoon. We ate one that Thursday night, then I actually scheduled the casserole again for three weeks, six weeks, and nine weeks later. Then, when we sat down to plan for the week, my calendar would show me that we already have a meal in place for one night that week, meaning we can plan for fewer meals and save money at the grocery store.

If you do these in multiples, it gets really neat. Let’s say you cook six pounds of chicken breasts on a Tuesday in a slow cooker and freeze four and a half pounds of them. You’ll want to use these within a month or so, so I’ll mark down the following Tuesday, the Tuesday after that, and the Tuesday after that that we have 1 1/2 pounds of cooked chicken that need to be used. This keeps us from “wasting” food in the freezer. You can do the same thing with any frozen item you buy in bulk - for example, we often buy beef in bulk from a local butcher because of the quality and low prices, so in order to avoid freezer burn, I’ll pencil in when we should use the meat. Again, having this information right there drastically reduces our grocery bill and fits in perfectly with planning ahead for meals, which is itself a huge money saver.

How can I do this? I use a “dinner” calendar to manage these things. I just create recurring events for both of the cases above, and when we plan meals once a week, I create events with what we plan for meals those days. I usually label any ingredients we need to use by saying “Ingredient: ” right in the name of the event. That doesn’t mean that we’ll use the ingredient on that exact day, but it works as a reminder when I sit down to exactly plan meals that we have, say, chicken breasts to use that week already in hand. I schedule a meal each night and include the recipes in it - we even usually pencil in a “leftovers” night about every third or fourth night. This really works well.

6. Plan ahead for scheduled maintenance
Home maintenance saves you money, period. Taking a bit of time on a regular basis to do things like change furnace filters, check fire alarms, check vents for clogging, and so on can make an enormous difference in the life of your appliances, the appearance of your home, and the energy efficiency of your home.

I speak from experience here. When we first moved into our home, we didn’t realize that our dryer occasionally ejected a very small amount of lint into the ventilation, which led directly outside the house. After several months of use, our dryer seemed to not work very well. We had to run it two or three times to dry a reasonably-sized load. We puzzled over this and considered calling a repairman, but my two year old son actually figured it out. He came walking over to me with some lint in his hand one day. I asked him where he found it and he walked me straight to the vent. A few finger sweeps later and the dryer suddenly ran as good as new.

The problem is remembering the numerous little home and auto maintenance tasks you need to take care of. The solution? A home maintenance calendar, which tells you when you need to change filters and when you need to do a walkthrough to check on things - and, yes, when you should check vents. I made a big list of home and auto maintenance tasks - picking out the ones you use and scheduling them can save you some serious change over time.

How can I do this? Again, with a “maintenance” calendar. These are almost all recurring events on different schedules - some every month, some every three months, some every six months, some every so many weeks (so that I don’t have days LOADED with tons of such tasks). If I see some maintenance tasks for that day, I just do them and then I know that things are being maintained.

7. Take control of your portfolio planning
I often encourage people to just put their retirement savings in a “target retirement” fund and just forget about it, but many people like to have more control than that. They want to balance things themselves. Perhaps they want more risk than those plans give, or maybe they want less risk. They might also want low risk investments in their retirement accounts but very high risk investments in their taxable accounts.

Either way, rebalancing those investments regularly is key. On a regular basis, it’s important to sit down and think about whether or not your investment allotments match up with what you really want to be doing. You might change your contributions significantly - or you might even actually move your investments around.

It’s important to do this regularly, and that’s what a recurring event is very useful for. I “rebalance” every three months or so, mostly by just altering my contributions. I’m fine with using a “target retirement” fund, but I actually enjoy digging in and tinkering with things myself.

How can I do this? If you’re involved enough in your investing to rebalance it regularly, just set up a recurring event with a reminder of what you want to be doing, as a note. So, you might have a “Rebalance my Roth IRA” event, with a note that says “I want to have 10% in this fund, 20% in this fund, 30% in this fund, and 40% in this fund.” I actually keep mine on my “maintenance” calendar.

8. Set up seasonal reminders
Different times of the year bring different things we should think about with our personal finances. Charles Schwab has a very useful article listing many of these seasonal concerns, some of which may apply perfectly to you.

Some things we all might want to do: get a copy of our credit report every four months from the FTC at AnnualCreditReport.com (you get one from each of the three agencies each year for free, so just get one from one agency in January, another from another agency in May, then again in September), start budgeting for the holidays in the spring or summer, plan seasonal charitable giving or volunteer work, and so on.

How can I do this? I put these in my “miscellaneous” calendar, but many of these are recurring. For example, I remind myself a few times during the summer to look for Habitat for Humanity dates, and I also prod myself regularly to put aside money for and shop ahead for Christmas. I also snag my credit report like clockwork and I also remind myself to occasionally touch base with my parents about their financial needs (a will or a master information document or anything else like that).

9. Remind yourself of the things that really matter
If you’re putting forth this effort into saving money, you ought to be doing it for a great reason. For me, my children are my big motivation - I want to make a truly great life for them. Of course, a great life means that I spend a lot of quality time with them, so I plan ahead for that. Aside from the “evening block” that’s devoted every day to family time, I often pencil in other events. Some of them are known - soccer practice and the like - but others are surprises, like whisking my kids away for a long afternoon at the Science Center of Iowa or going to story time at the library.

Make sure you’re taking time out for the things that actually matter in your life. It’s easy to see the big reasons before we get started, but often when we’re involved with projects and get so drawn in, it’s sometimes hard to remember to take time for the reasons why we’re doing this.

How can I do this? I have a calendar called “Family” where I schedule things like this. When I look at the week ahead and see a trip to the library or a trip to the Science Center or something like that, I feel like my week is more … complete.

An effective calendaring system has almost unlimited uses. Just remember that it’s a tool - the calendar doesn’t have meaning, your life does.

Being fat is voluntary. People make a choice to eat unhealthy and not excercise. Therefore, it should never be covered by the Americans with Disabilities Act.
- Lindsay

This was such an egregious comment that I felt the need to clearly respond to it.

Being fat is sometimes voluntary, but in many cases it is not. Many illnesses bring on unwanted and unwarranted weight gain - my uncle’s liver problems caused him to gain huge amounts of weight with basically no change in diet or activity, going from a formerly rail-thin person to someone who was very overweight. Many medications bring on unwanted weight gain - many thyroid medications, resulting from conditions present at birth, result in excessive weight that’s far beyond the choice of the person.

The problem with being overweight is that sometimes it is the result of personal choice and sometimes it is not - yet it is often assumed that it is due to poor choice, a trap that Lindsay falls directly into.

Yes, it’s true that an overweight person might result in a greater cost for a business that might hire that person - they’re statistically more likely to have heart disease, etc. However, one could make the same argument for a female - they’re statistically more likely to have children than men, thus they’re more likely to need maternal leave and incur replacement costs. Yet the former argument is accepted, while the latter argument is sexist?

Forms of discrimination that are clearly based on factors that are beyond a person’s choice - sex, skin coloration, ethnicity - are clearly frowned upon in modern society. Just because we went through revolutions throwing off racism and sexism doesn’t mean that there aren’t still big forms of discrimination out there.

The way I see it, a person is a person, and as Martin Luther King said, a person should be judged by the content of their character. Being overweight might mean that they have some personal issues - or it might just mean that they were born with a thyroid condition. Either way, what matters is how they treat others and what they produce with their time.

I live in Chile and i’m planning on getting a macbook laptop in my next trip to the states.
i was wandering, considering the vast world of choices available in the computer world, if it was really worth it.
- Ricardo Carrasco

I think it really comes down to how vital a computer is for the work you do.

If you’re just checking email or web surfing for convenience, there’s no reason not to just get a netbook and call it good enough. If you’re going to be doing Photoshop and intend to use it as your primary workstation, then a Macbook makes more sense.

For the work I do, which is slowly expanding into lots of videoconferencing, podcasting, video editing, image editing, and so on, I’m saving for a Macbook Pro for my next portable computer purchase. My desktop Mac is simply the best computer I’ve ever used - to have that portable would be invaluable.

You wrote an article some days ago: “Using Consumer Reports to Assemble Your Grocery List” which talks about Consumer Reports, but you have previously deleted your earlier content pointing to them. Your reason for doing so was “Consumer Reports has asked me to eliminate the content of my summaries and any other references to the content of Consumer Reports. I have complied.”

Now if they (Consumer Reports) do not want to be mentioned then why have you mentioned them again?
- Tordr

Over time, Consumer Reports is figuring out how the internet works.

When I first started blogging, they were pretty agreeable to most writing about their publication. In 2008, possibly because of online backlash about their child safety seat articles, they suddenly went through a very draconian phase, where they complained loudly about all “unofficial” mention of their work.

Since then, they’ve taken a more open turn, encouraging people to write and discuss CR information - a policy that’s much more reasonable.

For organizations rooted in old media, the transition to a world where people will quote and talk about your information freely is a hard one. CR is figuring it all out, one step at a time.

I’m a little puzzled about the Twitter goal. I can understand that increased blog subscriptions probably means increased traffic/profit (and I’m not knocking that). I don’t understand what benefit you derive from 25,000 Twitter followers, unless it’s mainly that it increases recognition of your work.
- bethh

The Twitter goal - frankly, all my goals - come back to one thing: reaching as many people as I can with ideas about managing their money a little better and perhaps putting their life on a new path.

The numbers themselves are mostly goals, to give me something clear and tangible to strive for. In both cases, it keeps me focused on writing and sharing good, worthwhile, valuable stuff that people can actually use and relate to. I use readership numbers because if I’m picking up new readers, I’m doing something right.

High targets - like 25,000 Twitter followers in a year and 100,000 site subscribers in a year - make me really think about what I can do to strongly appeal to people: make personal finance accessible, make it interesting, and make it applicable to real change in people’s lives.

Any income that I earn follows from that. The content leads everything else.

I am planning on starting a loan for my last year of college. I have been paying college with my own money through my Amex Blue Cash (to get cash back) but I pay it off monthly. My limit is just enough to pay for monthly tuition plus $100 for myself, but sometimes, this isn’t enough. I tried raising my limit but Amex denied me. Does it make sense to apply for a new CC before applying for a student loan? Will it hurt my credit score (because of the hard pull) or will it help it (because my overall limit will increase)? What is the smarter thing to do?
- Carlo

The hard pull’s effect is pretty small and pretty temporary. If you’re approved for a new card, the increase in your credit limit should be much more of a boon to your credit score than the short-term negative effect of the hard pull.

I’m not sure why Amex denied you, though. Unless you’re not disclosing some other aspect of your situation, you would seem like a good target for raising a credit limit. The fact that you were denied seems to indicate that your credit - for some unspecified reason - is worse than you’ve said.

If that’s the case, applying for a new card can be a risk. If you get denied for it, you get the negative ding of a hard pull without the benefit of an increase in credit limit.

Your best bet, then, would be to put the card aside for a while and just pay your monthly tuition directly. That way, you’ll be utilizing 0% of your credit limit, which should help your score.

Where would you recommend for buying larger sized shoes? My husband wears a 15 EE, and he could probably go a size up… It’s the largest we can find in a store. He needs waterproof boots that breath. I got him a pair at Sportsman’s Warehouse, and his feet are white and peeling from sweat after a day on the lake (he’s on the rescue squad and sometimes he’s out there for 12+ hours multiple days).
- Deborah

I wear a size 16/17 (depending on manufacturer). For my own shoe needs, I watch eBay carefully - that’s how I picked up a really good pair of running shoes for just a few dollars that fit me.

For dress shoes, I’ve had real problems. I found a mediocre pair through a “big and tall” website, but they’re massively uncomfortable and don’t look all that good, either. I’m stuck when it comes to this category - I may end up going to a shoemaker.

When I was younger (junior high) and my feet first grew to this size, my family used a catalog from Eastbay to buy my shoes. I’m pretty sure they still sell a lot of models going up to size 18.

I am currently a PhD English student, so while a lot of my assigned reading is in hard copy books, most of my reading is actually in PDF files culled from library databases. I should state now that I don’t have a lot of money, I am paying my tuition fees and living expenses while *not* working since I’m in school, and the campus has a pay-to-print policy. Because academic reading requires annotating, I print the PDFs, annotate them by hand, and type my notes to prepare for papers. Is there a way to put digital annotations on PDFs? I have already tried in Adobe, but unless the document author authorized the comment feature, I can’t figure out a way to do it. My other option is the Kindle, which supposedly can save annotations and export into a word document, but costs $450… can you help sort this out?
- Shevaun

Well, if you’re using a Mac, it’s easy - Preview allows you to annotate PDFs to your heart’s content. I use this feature myself sometimes.

If that doesn’t work (because of restrictions on the PDF), you could select all the text, copy it out to Microsoft Word, then add the notes yourself.

If that doesn’t work, you can try installing Ghostscript, which can often extract the text from PDFs - from there, you can get them into Microsoft Word.

However, if the pages are images (as is the case sometimes, particularly on older papers), you’re pretty much stuck printing them off.

My neighbor has a riding lawnmower, while I have an old beat-up pushmower. During the winter, though, I have an awesome snowblower and he has a scoop shovel. I’m thinking about suggesting some sort of sharing arrangement, where I can mow using his mower (saving time) and he can blow his snow with my snowblower (saving him time), but I don’t know how to propose it. Any suggestions?
- Charlie

Invite your neighbors over for a barbecue and simply make your proposal over a big hamburger. It’s that simple.

Really, there’s no need to overthink it or be nervous about it at all. If it works out, great. If it doesn’t - you still have your own mower and you still have your snowblower - no harm done.

Just suggest it simply - “Hey, I’ve got an idea. I’ve noticed you’ve got that sweet riding lawnmower … and I’ve also seen you scooping snow in the winter. How about we make a little arrangement that helps us both? In the winter, you can borrow my snowblower to clear your sidewalk and driveway. In the summer, you’ll lend me your riding mower to mow my yard. I’ll keep the rider filled up with gas. What do you think?”

Another tip: don’t be insulted by a “no.” Your neighbor might be scooping snow by choice (as it is good exercise) and might not want a lot of extra miles on their rider - a completely understandable position. If you get a “no,” don’t sweat it - just say you thought you’d throw the idea out there and move on with life.

What do you listen to during the day when you write? Or do you write in silence?
- Frances

I listen to a handful of podcasts, usually first thing in the morning. Most of the podcasts I listen to are pretty short daily ones (a format I considered for The Simple Dollar podcast). For instance, this morning I’ve listened to PTI, Marketplace, Marketplace Morning Report, The B.S. Report, The Writer’s Almanac, and Fresh Air. I have a pile of weekly ones as well that I listen to throughout the week.

Honestly, I don’t pay full attention to most of them. They float in one ear and out the other, but they provide good background noise.

The interesting part is this: about four or five times a day, a point will stick into my head and worm its way up to my conscious thought, usually about a minute after the point is made on the podcast. I’ll back up the podcast, listen again, and usually wind up jotting down a note for later.

Once I get tired of podcasts, I listen to music. I usually fill my afternoons with solid music from one artist - Old Crow Medicine Show, Dave Matthews Band, Regina Spektor, Neko Case, and so on. I’ll say, “Today… is a U2 day” and just shuffle songs from that artist.

How come you never talk about investing in rental properties?
- Shiloh

Frankly, it usually seems like more of a hassle than it’s worth.

One of my best friends owned a rental property for two years. He hired a management company that he thought would take care of everything and just expected checks to roll in.

What he found, though, is that the property was a constant hassle. The renters figured out who actually owned the property and constantly complained directly to him. He’d then refer the complaint back to the management company.

Then, there were constant additional expenses - something needed repaired, something needed replaced.

In the end, he was only making a tiny trickle of income from the property and he was investing a ton of time in it. So he sold the property, only breaking slightly above even on it.

I’ve talked to several other readers who have rental properties and most of them share the same notes. The exceptions are people who own quite a few properties, deal with them themselves - effectively, they’re landlords and that’s their life. Those people love it, since all they have to do is deal with these little details.

Since it’s not something that seems like an exciting route to explore - and it’s an area I certainly won’t be writing about from my own experience - I’m letting this sleeping dog lie.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

If you’ve been reading The Simple Dollar for a while, you’ll know that I’m a fan of WiseBread. It’s a “group” personal finance blog with a small pack of contributing writers, some of which I quite like (like Philip Brewer).

10,001 Ways to Live Large on a Small Budget is something of a compilation of the “best” of Wise Bread, along with contributions from several other top personal finance bloggers (myself included - my contribution to the book was Everything You Ever Really Needed to Know About Personal Finance, which appears on pages 199 to 205). Most of the contributions are lists of frugal ideas or other personal finance concepts, each of them actionable - the titular “10,001″ comes from a liberal accounting of these tips.

The book itself comes off much like a thick magazine - glossy pages and lots of relatively short, independent articles with specific action tips.

Thus, instead of a full-on review, I just picked out ten of my favorite pieces from the book, tried to find the originals online, and offer my thoughts on them. If you like these ten pieces, you’ll likely enjoy the rest of the book.

12 Affordable Ingredients that Add Gourmet Flair to any Meal
Contributed by Linsey Knerl
This is really an awesome list of ingredients to have on hand to make more upscale meals at home on the fly. We usually have most of these things on hand, but often we grow our own substitutes for these - for example, instead of shallots, we have green onions from our own garden.

Eight Natural Ways to Make Water More Flavorful
Contributed by Xin Lu
Water is the ideal beverage - it’s practically free and it quenches your thirst. The only problem for many people is that it’s bland and boring - so people skip water and drink sodas or coffee or other beverages. If you’re trying to cut other beverages out of your diet for health and financial reasons, try some of these great tactics to kick boring water up a notch.

Make Your Clothes Last Longer (without spending big)
Contributed by Andrea Dickson
I basically tend to wear my clothes until they’re ready to fall apart - ask my wife; sometimes, she’s not impressed with that at all. These tips do a great job of extending the lifespan of clothes, whether you choose to wear them that long or not.

25 Great Gifts for $5 or Less
Contributed by Julie Rains
I find that pretty much anything homemade, if done with thought and care, can make a great gift but not cost you too much in terms of money. For example, I can make homemade dry pasta and homemade pasta sauce quite inexpensively, package them well, and it becomes a really cool gift for someone.

10 Ways to Simplify Your Budget
Contributed by Leo Babauta
Many people fail at budgeting because they make it way too complicated. The end result? They simply don’t follow through with it - it becomes a dead document that means nothing at all. Leo has some really good tips for making a budget actually work in the sonc

10 Ways for College Students to Eat for Free
Contributed by Margaret Garcia-Couch
College can be tough. You’re trying to get by on pennies without racking up any more debt than you have to, and many students do this by eating cheaper. However, college has a big advantage - you can often eat for free if you plan ahead and know what you’re doing. I wish I had done things like this more often.

How to Find Savings in Every Room
Contributed by Myscha Theriault
I like tips like these. They’re simple, apply to almost everyone, and just work without too much effort or thought. I believe that many people are turned off from frugality because their first taste of it is some tip that looks like a giant time investment and without experiencing how useful frugality can be, they don’t think it’s worth it (for good reason). That’s why the best frugality tips for beginners are really simple ones, particularly ones with big bang for the buck. Why do you think I talk about light bulbs all the time?

21 Great Uses for Beer
Contributed by Paul Michael
I often have really cheap beer in the fridge for various purposes (mostly because some of my guests seem to actually prefer Natural Light to a great craft beer - to each his own, I guess). Sometimes, though, I pop open a can - but not to drink it. I use it for other things, like beer batter or flavoring rice.

How to Have a Frugal Vacation and Still Treat Yourself
Contributed by Nora Dunn
My favorite advice for a cheap vacation is to stay with friends and family. Choose destinations where you already know people, then call them up and let them know you’re thinking of a vacation there. You might just find yourself with free housing and a very hospitable host. Of course, you should always return the favor when this comes up!

55 Ways I Saved (or Considered Saving) Time and Money Planning my Wedding
Contributed by Sarah Winfrey
A wedding can be a gigantic money suck - that’s why there are lots of lists of tips on how to save money on weddings. This is one of the most complete ones I’ve ever seen. My attitude is this: a wedding is about people, not about stuff. Don’t blow exorbitant amounts on stuff.

Is 10,001 Ways to Live Large on a Small Budget Worth Reading?
Did you find the articles above worthwhile? Does the idea of a magazine-format book seem appealing to you - a bunch of unrelated articles on money-saving topics? If you’re saying yes to both, you’ll probably find 10,001 Ways to Live Large on a Small Budget very worthwhile.

I’ll be honest, though. I’ve been a long-time reader of Wise Bread and some of the other blogs touched on in the book and I found that I’d already read most of the book. It had a very, very familiar tone for me. That doesn’t mean it wasn’t worthwhile, it just means that the best audience for this book is people who have never read Wise Bread (or other personal finance blogs) too much.

10,001 Ways to Live Large on a Small Budget has great content. I look at it as a knock-’em-dead issue of a great personal finance magazine. If that’s up your alley, check this one out.

In order to start cranking the numbers on this, I had to use a few assumptions. Let’s walk through them.

First, I figured that you have 1/4% chance of receiving a speeding ticket for each mile you’re over the speed limit for an hour. So, if you drive 68 in a 65 zone for an hour, you have only a 3/4% chance of receiving a ticket. On the other hand, if you drive 82 in a 65 zone for three hours, you have a 12 3/4% chance of receiving a speeding ticket.

Second, I figured the cost of a speeding ticket is $200 and has a ten minute time cost. The ticket itself will cost you less than that, but the raise in your insurance rates will eat the rest.

Third, I figured you lose 1% fuel efficiency for every mile per hour over 65. I’m using government estimates for this figure.

Fourth, I’m using a figure of $2.50 a gallon for gas, and I’ll use a car that get 25 miles per gallon for the calculation.

Got that? Let’s get cracking.

Is it more efficient to drive 80 miles per hour or 65 miles per hour on the interstate? Let’s say you’re making a 200 trip on the interstate.

If you go 65, you have zero chance of receiving the speeding ticket. You’ll consume 8 gallons of gas and arrive in three hours and five minutes, costing you $20.

If you go 80, you have an 11.25% chance of receiving a speeding ticket. If all goes perfectly, you’ll consume 9.4 gallons of gas and arrive in two hours and thirty minutes. However, if you receive a ticket, you’ll arrive in two hours and forty minutes - that’ll happen 11.25% of the time. So, combining the odds of the two, an average trip driving 80 will allow you to arrive in two hours and thirty one minutes (saving thirty four minutes) and cost you $46.03.

So, driving faster saves you thirty four minutes but costs you $26.03 - an hourly rate of $45.11 for driving slower.

What about going 70? You have a 3.75% chance of receiving a speeding ticket. If all goes perfectly, you’ll consume 8.4 gallons of gas and arrive in two hours and fifty one minutes. However, 3.75% of the time, you’ll receive a ticket and arrive in three hours and one minute and drop $200 on that ticket. So, combining the odds of the two, an average trip driving 70 will allow you to arrive in two hours and fifty two minutes (saving thirteen minutes) and costing you $28.55 (costing an average of $8.55 more). Your hourly earnings from driving 65 instead of 70 is $38.91.

What about going 66? Only a completely malicious cop bent on getting their quota would give you a ticket then - you have a 0.75% chance of getting a ticket over three hours. If all goes perfectly, you’ll consume 8.1 gallons of gas and arrive in three hours and two minutes. However, you have a 0.75% chance of getting a ticket, and if you do, you’ll arrive three hours and twelve minutes and get a $200 ticket. Combining the odds, on an average trip going 66, you’ll arrive at three hours and a bit over two minutes (saving a bit under three minutes) and spending $21.70. Your hourly earnings from driving 65 instead of 66 is $36.50.

Here’s the data up through 120 miles per hour. The data in the “TRIP COST” column is the total cost (gas plus odds of a speeding ticket) of an average 200 mile trip on the interstate at that speed in a 25 miles per gallon car. The “SPEED COST” indicates the total cost you incur by going that speed instead of going 65. The “MINS SAVED” column tells you how many minutes you save by going that speed instead of 65. The “HOURLY” column indicates the hourly wage you earn by simply going 65 instead of speeding. So, for example, if you go 120 miles per hour, your trip costs, on average, $126.94, which is $106.94 more than you’d spend if you drove the speed limit. Driving this fast saves you 84.6 minutes on average, though, so if you drove the speed limit instead of going this fast, you’d earn an hourly rate of $75.83 for your time.

Conclusions
First of all, each mile per hour you speed is more costly than the one before it. Going from 70 to 71 is more costly than going from 69 to 70. That’s fairly straightforward, though.

Second, if you look at it in terms of an hourly wage, speeding can be pretty costly. Remember, we’re talking about after-tax dollars here, not the raw amount you bring home. Thus, a $36.50 hourly rate for the two minutes and forty eight seconds you spend driving 65 instead of 66 is more like $50 or $55 an hour in pre-tax money. The chances of a speeding ticket are more costly than you might think.

Third, this doesn’t include a “wear and tear” factor. Continually speeding puts additional wear and tear on your car - an amount that’s hard to quantify. With an enormous pool of real-world data, one could come up with a factor for this, but it would simply serve to make the cost of going faster even higher.

Fourth, this is all about probability. You’ll hear from people who claim to always drive eighty and never get a ticket. Others may get a ticket going 37 in a 35 (the ticket said 42, but I was going substantially slower - an officer was pretty obviously trying to get a quota filled). One lucky person is a great anomaly, but it doesn’t change the simple fact that the faster you go, the more likely you are to get a ticket.

Finally, some people with a high value on their time can justify speeding. If you are hurrying to a place so you can start billing $100 an hour, there might be a great justification in speeding. However, the more you push it, the less you actually gain, because the hourly cost for each mile per hour goes up.

However, on most road trips, you’re better off setting the cruise control at the speed limit and just cruising along. Getting to Aunt Melba’s ten minutes earlier isn’t worth the potential cost for most people.

The comments on this one should be fun. All I suggest is that you shouldn’t get bogged down in picking apart the assumptions, because even radically changing them still results in the same conclusions. I tinkered with and researched the assumptions extensively for this post and found that even if you modify the assumptions radically, the conclusions still hold.

One Year Ago (July 5-11, 2008)
Seven Websites That Saved Me Money in the Last Week I save money on the ‘net all the time. One week, I simply jotted down every website I visited that actually saved me money in some way - and here are the seven that either reduced my spending or helped my finances in some other way. These all actually work - they all helped my bottom line and I still use all of these.

Ten Tactics for Improving Your Luck Yes, I believe you actually can improve your luck, mostly by putting yourself in positions where more “lucky” things are likely to happen. Here are ten ways you can do just that.

Finding the Motivation to Get Started on Major Tasks It’s often hard to get started on a huge project. I discovered this with my first book - it was much more difficult than simply jumping in. Often, the size of the project made me step back and pause. Here’s how I overcame it.

When Personal Finance Is Boring: Five Tactics for People Who’d Rather Do ANYTHING Than Manage Their Money I’m sure you know someone who’d rather be shot than have to think about managing their money in any way. This article is for them - five little ways they can improve their financial state without digging into the dreaded “money management.”

The First Steps Away from Paycheck-to-Paycheck Living Quite often, people who are living paycheck-to-paycheck feel stuck. They have no idea how to get started towards changing anything. Here are ten ways to begin chipping away at that brick wall.

Two Years Ago (July 5-11, 2007)
Ten Financial Bulls: Moving From Desperation To Financial Enlightenment Using A Zen Parable After reading a Zen parable called “Ten Bulls” about the path to enlightenment, I realized that the parable applied very well to financial growth, going from debt to financial freedom. I discuss the analogy in detail here.

One Thing You Can Do Today That Will Put You In Better Financial Shape Tomorrow This is a guaranteed technique that you can do today that will improve your financial position in the days to come. Even better, you can apply this technique any day and the effect will be largely the same.

Walking Through a Financial Horror Story A reader writes in with a depressing tale about her financial state. Here, I do my best to piece through it and figure out what she can possibly do next.

Review: It Pays to Talk This is a great book about the difficult subject of talking to family members about money issues. As time goes by, I appreciate it more and more, particularly as we begin having serious money conversations with our parents.

Time For A Change: Seven Things To Consider When Choosing A New Career Path I wrote this as I was doing my own soul searching with regards to a career direction. Was switching to a completely different career - one without a steady paycheck - the right move for me? Here are the things I was thinking about.

If you’d like to browse through more of the archives, visit the chronology, where all posts are listed in chronological order.

Nine Ways to Get More out of The Simple Dollar
This is kind of a FAQ for new readers and is posted each week along with the Time Machine. Here are nine great ways for new readers to dig deeper into The Simple Dollar.

1. Subscribe by email or RSS. Visiting The Simple Dollar’s website is great, but for many people, it’s more convenient to receive the articles in another form. It’s easy to join 60,000 other subscribers and get The Simple Dollar’s content by email or in your RSS feeder (if you’re unfamiliar with RSS, check out Google Reader.

2. Comment. Each article on The Simple Dollar has lively discussion. Just click on the green square in the upper right of each article on the website and join in!

3. Read my story of financial meltdown and recovery. The Simple Dollar isn’t based on what I’ve read in books or learned in school. I’ve made a lifetime of financial mistakes - The Simple Dollar is a record of what works for me during the process of getting my life on a better track.

4. Download my free 49 page e-book. Everything You Ever Really Needed to Know About Personal Finance On Just One Page is completely free. It summarizes all of the key lessons I’ve learned along the way about personal finance in one tidy package - in fact, all of the main principles can be found right on the cover.

5. Follow me on Twitter. I post tons of interesting articles, quotes, follow-up material, commentary, and other material on Twitter. Follow me! If you’re unfamiliar with Twitter, it’s essentially an open discussion forum for people to share ideas and thoughts with other like-minded folks - you just choose the people you want to listen to and their ideas and thoughts are all delivered to you on a single page.

6. Dig through “31 Days to Fix Your Finances.” 31 Days to Fix Your Finances is an article series that outlines how you can get a grip on your finances over the course of a month.

7. Send me your questions and suggestions. Send me an email and let me know what you’re thinking, what you’d like to see, and any questions you might have. I try to respond to as many emails as possible and I read them all. I may even use your question in a future article!

8. Become a “Friend of The Simple Dollar.” If you find the stuff on The Simple Dollar valuable and are willing to spend five minutes or so a month to help me out with small things, please consider signing up to be a “Friend of The Simple Dollar”.

9. Email a great article you find to a friend. Find an article that you think your friend would love? At the bottom of each article, you’ll find a link that says “Email this” - just click on that, type in your friend’s address, and send it right along to them!

The first five chapters of The Total Money Makeover don’t actually address Ramsey’s plan at all. Instead, it’s mostly an argument against culture, mostly the idea that the easy availability of debt in our modern life is a serious problem.

I agree with Ramsey in that regard, but I usually find that the root of it is deeper: a lack of personal finance education mixed with a prevalence of awful messages about ourselves delivered by the media. Think about it: did you learn anything about personal finance in school? Also, think about the ads you see - don’t they portray the people in those ads as being somehow better than you?

Together, that’s some awful medicine. Dave, in his own way, takes on both of those factors in this chapter.

Ignorance Isn’t a Four Letter Word
We live in a culture that rewards intelligence and knowledge, and often ignorance is seriously derided when it shouldn’t be. Dave spells it out pretty well on page 78:

In a culture that worships knowledge, to say ignorance about money is an issue makes some people defensive. Don’t be defensive. Ignorance is not a lack of intelligence; it is a lack of know-how.

The idea that ignorance is not a lack of knowledge is vital. Intelligence is the ability to take the knowledge that you have and put it together in interesting ways. Intelligence shines when you read two articles on only vaguely related subjects and are able to put together a completely new idea from those two articles. Intelligence does not mean that you’ve got tons of knowledge in your head. In fact, I’d often make the opposite observation - many of the most intelligent people I know continually respect how little they know and how much they do not know.

I’ll use myself for an example. I don’t know much about world history. I don’t know much about physics. I don’t know much about high-level athletic training. I don’t know much about fixing cars. I don’t know much about plumbing. I don’t know much about complex mathematics. There are countless other areas that I’m willing to admit ignorance in.

Ignorance can be overcome, though. If I so chose, I could spend some time educating myself on plumbing with a good do-it-yourself book or two and some time around the pipes. I could learn more about physics by reading up on the subject and perhaps taking some coursework on it. I could learn more about working on cars by simply trying it. Hard work overcomes ignorance every time.

It’s not shameful to admit you do not know everything - no one does. In fact, I’d argue the opposite - pretending you know everything when you do not is dangerous and harmful to yourself and to others. This same exact logic applies to personal finance - it’s fine to admit that you’re ignorant about money. What’s dangerous is when you choose not to admit it - or you delude yourself into thinking that you truly aren’t ignorant about it.

Overcoming Ignorance About Money (or Anything Else)
Dave’s recipe for overcoming ignorance matches up well with my own feelings on the topic. On page 79:

Overcoming ignorance is easy. First, with no shame, admit that you are not a financial expert because you were never taught. Second, finish this book. Third, go on a lifetime quest to learn more about money. You don’t need to apply to Harvard to get an MBA with a specialization in finance; you don’t have to watch the financial channel instead of a great movie. You do need to read something about money at least once a year. Your actions should show that you care about money by learning something about it.

This really is a strong formula for overcoming general ignorance on a subject. It will not make you a world-beating expert, but it will give you the background you need to actually make that topic work in your everyday life.

Let’s translate it a bit. Pick a topic you’d like to not be ignorant on, then do as follows.

First, with no shame, admit that you are not an expert on that topic because you were never taught or were taught poorly. Second, read a general book on the topic. Third, go on a quest to learn more about the topic. You don’t need to apply to Harvard to get an advanced degree in the topic; you don’t have to watch documentaries or read piles of dry books instead of watching a great movie or reading a fun book. You do need to read something about the topic at least once a year. Your actions should show that you care about the topic by learning something about it.

Sounds like a recipe for getting up to speed to me!

What’s Expected of Us
On pages 81-82:

Peer pressure, cultural expectations, “reasonable standard of living” - I don’t care how you say it, we all need to be accepted by our crowd and our families. The need for approval and respect drives us to do some really insane things. One of the paradoxically dumb things we do is to destroy our finances by buying garbage we can’t afford to try to make ourselves appear wealthy to others.

I fell into this trap big time before my financial turnaround. I constantly tried to buy things to impress others. I’d pay for a huge group to go out to eat. I’d buy gadgets I didn’t even really want simply because it was impressive to have an amazing item. I had to always have the “latest” of everything.

Now? I realized that people didn’t like me because I had the latest things or because I bought dinner. They liked me because I was me. Sure, there were a few hangers-on who didn’t want to hang out with me any more because I wasn’t engaged in whatever activity they were obsessed with, but what was that friendship, really, if that happens?

In fact, it became easier to relate to people once I realized this. I was no longer worried about saying the right thing, having the right thing, or keeping up appearances. People wanted to be around because I was me - and that’s all I needed.

Who cares what the Joneses have? I can either be me, or I can be me with a car I don’t really want and a debt burden making me sad.

What’s Your Jaguar?
I really liked the tale Dave told about owning a Jaguar, starting on page 86:

I had the eye of my heart set on a Jaguar. I “needed” a Jaguar. What I needed was for people to be impressed with my success. What I needed was family raising an eyebrow of approval based on my ability to win. What I yearned for was respect. What I was so shallow to believe was that the car I drove gave me these things.

My Jaguar was food. I felt a constant desire to take people out to eat at my favorite restaurants - often very expensive ones. I’d take my parents out. I’d take my friends out. I’d seek out really expensive amazing places and tell the waiter to just give the whole bill straight to me. I’d tip really big right in front of everyone.

Doing this made me feel like I was important and that I was earning respect. What I found was that mostly I was just making the other people feel sort of awkward. They weren’t there to be shocked by my largesse - they were there because they wanted to go out for a nice evening with someone whose company they enjoyed.

Guess what? I stopped paying for meals for others. Guess what else? Whenever I ask any of my family or friends to actually go out to eat - something I don’t do too often any more - they’re still quite happy to accept and quite happy to fit the bill. In fact, they may be happier - they don’t have that vague sense of discomfort they used to get when I’d grab the bill and throw down the plastic.

The American Nightmare
If you’re jealous of what others have, put yourself in their shoes for a moment. Do you think they are actually able to afford what they have? On page 83:

They present the perfect picture of the American dream that has turned into a nightmare. Behind the perfect hair and the French manicure, there was deep desperation, a sense of futility, an unraveling marriage, and disgust with themselves.

The people that you’re jealous of often have had to make huge sacrifices to get the things you want. The fancy car? It’s often paid for with a huge pile of debt. The amazing career? That person spent a lot of sleepless nights cutting their teeth to get there - and likely has sacrificed a strong relationship with the people around them to get it. That perfect marriage? It’s likely either the result of a lot of maintenance or it’s a facade.

There is no such thing as a free lunch in life. The people that have those things that you’re jealous of have often paid dearly for those things. When you peek behind the mirror a bit, you’ll see the cost they paid - and are likely still paying - to get there. And, quite often, when you look at things as a whole, you find a balance of affairs that you don’t want yourself.

That’s why I gave up so much spending. I once thought I couldn’t imagine life without lots of trips to bookstores and game stores and coffee shops. At the same time, though, I was up at night sick with worry about my debts and leashed to a paperwork-filled career. I had those little oases of seeming happiness, but they were surrounded by lots of unhappiness. If you saw me out and about at the bookstore or at the coffee shop, you might have been jealous - look at that guy with the armload of books and the smile on his face?

But if you saw the worried guy, sitting there writing computer code at eleven at night, then not sleeping at two in the morning because he was worried about the bills… then you might get a different picture of things.

A Useful Lesson from Twelve-Step Programs
On page 91, Ramsey points out a worthwhile lesson from twelve step programs:

The Twelve Steppers have it right. They say, “Continuing to do the same thing over and over again and expecting a different result is the definition of insanity.”

If you’re trying to succeed in life - or in some specific aspect of life - and you keep failing at it or never getting anywhere, you probably need to change your approach.

Obviously, Dave is referring to money issues here. If you keep doing the same things you’re doing and you’re not getting ahead financially, you need to make some changes.

But it’s true for everything. Let’s say you’re a writer and you’ve finished a book. You’re trying to get it published but you’ve received twenty rejection letters. You need to change something. Why not give away the book in bite-sized increments? Why not chunk it down into 1,000 word segments and blog the entire book? Why not put that book aside for a while, write something new, and look at it later? The key here is that what you’re doing isn’t working, so you need to try something else. Getting a steady stream of rejection is never the road to success.

On Wednesday, we’ll tackle the sixth chapter - Save $1,000 Fast.

Dal is a delicious simple Indian dish, often served with rice or wheat flatbread (called “roti”). It’s often a mainstay of vegetarian diets because it provides quite a bit of protein, and the rich flavorings make it palatable to us omnivores as well. Valerie Gaino, of Pichilemu, Chile, submitted a delicious Chilean variant on the dish to the How Low Can You Go contest:

3 cups of lentils
2 cups of chopped potatoes
2 chopped carrots
3 chopped tomatoes
1 hot pepper, chopped
1 small onion chopped
2 gloves garlic chopped
16 ounces tomato sauce
1 tsp cumin
a little beer or sherry
a little red vinegar
olive oil
1/2 cup chopped cilantro
salt and pepper

1. Soak and cook lentils till soft. Drain and rinse, set aside.
2. Sautee onions, garlic, hot pepper, and cumin in olive oil. Add beer or sherry.
3. Add potatoes and carrots, cover with water, bring to boil.
4. Add tomatoes and cook till potatoes are soft.
5. Add lentils and tomato sauce.
6. Salt and pepper to taste. (I sometimes add more water or beer if it’s too thick, or vinegar if it’s too sweet.) Add more cumin or hot sauce if you like it really spicy.
7. Throw in the cilantro, take if off the heat. Serve after a few minutes.

One immediate problem I observed is that the “three cups of lentils” likely refers to three cups of lentils after boiling, which means that 1 1/2 to 2 cups of dry lentils should be more than adequate for this recipe. Three cups of dry lentils would make this recipe mostly flavored lentils with a few other pieces thrown in.

Sarah (my wife, for those of you new to The Simple Dollar) handled most of the food preparation for this dish, so most of the notes that follow come from her. Here are the ingredients we used:

First, you simply boil some dry lentils, easily found in the bean section of any grocery store. We only used two cups of dry lentils to start with. Just boil them in a large pot with plenty of water for about thirty minutes or so and they’re fine, then drain the water off of them. This can be done a day or two in advance - store the cooked, drained lentils in the refrigerator. Here are the lentils we had after boiling:

While the lentils are boiling, you’re going to be spending that time chopping vegetables - again, something you can do a day or two in advance. The potatoes, carrots, tomatoes, onion, and garlic all need to be chopped.

We use a special knife called an ulu to make this process easier. An ulu is an all-purpose knife used by the Inuit for many different purposes, but it works really well for quickly chopping small amounts of vegetables. You simply grasp it by the handle and rock it back and forth on a cutting board with the vegetables underneath.

Of course, you can use pretty much any knife to chop vegetables - this is just a recipe where the ulu really comes in handy.

Next, I sauteed the onions, garlic, pepper, and cumin together, with about two tablespoons of white sherry. The same amount of a mild beer would be fine.

Next, add the potatoes and carrots, then add enough water to cover everything, then raise it to a boil. Once the water is boiling, add the tomatoes and then let it boil for ten minutes or so. Check a piece of potato and see whether it’s soft enough for your tastes - if it isn’t, let it boil for another five minutes and check again.

Once the potatoes are finished, it’s basically done. Just add the tomato sauce and the lentils, stir it a bit, season with some salt and pepper, and serve it!

Of course, you’ll want to serve it on something. If you have access to a flatbread, that’ll do just fine. Alternately, you can simply use rice. Here’s our rice steamer in action, steaming while the dal was cooking:

You might also want to have something else on the side. We had a very simple chickpea curry - basically just chickpeas (garbanzo beans) loaded up with curry paste. Yes, we love our chickpeas at the Hamm household!

Here’s our final plate:

This made a huge amount of dal. We had enough for our dinner that night, lunch the following day, and lunch two days after that for all four of us, and we still wound up freezing some of it.

Did we like it? All of us liked it quite a bit. Sarah perhaps liked it the least, particularly on reheating, and strongly suggested trimming the amount of cilantro, which I agreed with. It was delicious, though, and I was happy eating it even the third time.

Our total cost (ignoring fractional items we had on hand): $8.29, almost entirely on fresh vegetables. Given the amount we made, though, the cost per meal was $0.69 - pretty nice!

Changes I Would Make to Save Cost and Time
First of all, I’d trim the entire recipe by half. This made far too much food for us as is. Without some significant changes, you’ll either be freezing it - not a great option, since the texture will be ruined - or eating it all the time for days.

Second, I’d cut the remaining cilantro by half - and use dried cilantro. Fresh cilantro has a stronger flavor, but dried will work fine.

Third, I’d chop the vegetables and boil the lentils the night before. Turn on a radio in the kitchen and take care of these tasks in the evening so you can toss the meal together very easily when you arrive home from work the next day.

These changes modify the recipe a fair amount, making it cheaper and perhaps slightly faster. Here’s what the new recipe would be, as modified by me:

Trent’s Chilean Dal

1 cup of lentils
1 large red potato, chopped but unskinned
1 chopped carrot
2 chopped tomatoes
1/2 hot pepper, chopped
1/2 small onion chopped
1 clove garlic chopped
8 ounces tomato sauce (small can)
1/2 tsp cumin
1 tbsp beer or sherry
olive oil
1/8 cup chopped cilantro
salt and pepper

Night before:
1. Chop potato, carrot, tomatoes, pepper, onion, garlic, and cilantro.
2. Soak and cook lentils till soft. Drain and rinse, set aside.

Next day:
1. Sautee onions, garlic, hot pepper, and cumin in olive oil. Add beer or sherry.
2. Add vinegar, potatoes, and carrots, cover with water, bring to boil.
3. Add tomatoes and cook till potatoes are soft.
4. Add lentils and tomato sauce.
5. Salt and pepper to taste. Add more water or beer if it’s too dry, or add hot sauce if you like it spicier.
6. Throw in the cilantro, take if off the heat. Serve after a few minutes.

This rule is about as subtle as a sledgehammer, of course. Many of you started visiting The Simple Dollar because you came to this realization on your own - high interest debt is a terrible idea, and even low interest debts are a terrible idea. Let’s count the ways.

The higher the interest rate, the more money you lose with nothing in return. Leave a $1,000 debt on a credit card with an 5.5% APR for a year and you lose $55 - not good. But if you bump that amount up to a level that’s typical for credit cards - say, 19.9% - and you’re up to $199 a year. Gone. Poof. Vanished.

The higher the debt level, the more money you lose with nothing in return. So, you have $1,000 debt on a credit card with a 19.9% APR and you lose $199 a year. Bump that up to $5,000 and you’re losing $998 a year. Gone. Nothing in return.

You’re open to late payment fees, over-limit fees, annual fees, ATM fees, cash advance fees, and countless other drains on your money. If there’s a way to ding you, credit card companies will figure out how to do it. A fee here, a fee there, and you’re suddenly watching even more money evaporate for nothing in return.

A required debt payment each month reduces your freedom. With that $5,000 debt above, you’re paying about $100 every single month as a minimum payment. That’s $100 you could be saving for a down payment. That’s $100 you could be saving to start a business. That’s $100 you could be saving for a car. That’s $100 you could be saving towards retiring early. That’s $100 you could be saving towards a great vacation. Your freedom is gone, eaten by the debt monster.

The mere presence of high interest debt often brings other debt into your life. You make a big commitment to getting rid of all of this debt, then start really bearing down on it. You get half of the debt gone, then all of a sudden disaster strikes. You lose your job. Your car breaks down. Your hot water heater leaks water all over the basement. Suddenly, you’re busting out the plastic again to take care of the problem - and you’re right back deep into debt. It’s like escaping from quicksand - if all of your strokes are perfect, you can pull yourself out slowly, but if even one little thing goes wrong, you’re slurped right back in.

In other words, it costs you money, costs you freedom, and puts you into a vicious cycle of even more debt.

There are really two prongs to getting out of this trap. Whether you’re avoiding it entirely or you’re trying to escape from the pit of despair, there’s one big first step you must take.

Build a Small Emergency Fund
The first step is not paying off debt. Paying off debt first is like kicking to get out of quicksand without getting your arms around something safe first - you might be able to kick out, but if anything goes wrong, you’ll just be sucked in deeper.

So, no matter what state you’re in, give yourself that rock - a cash emergency fund, sitting in a savings account. It doesn’t need to be too big - $1,000 should be your big target, but just start by putting $20 a week into savings - or more if you can swing it. Instruct your bank to do this automatically. Do it right now - call up your bank and ask them to do it.

You won’t miss that $20 a week. Your life will quickly find little ways to save - you’ll eat a few less expensive meals, start carpooling with a friend, or skip a few coffee shop visits and you’re there. What happens is that over the course of three months, your savings account reaches $250. After just shy of a year, your savings account will have $1,000 in it.

If you’re already making extra payments on your debts and you don’t have an emergency fund, stop those overpayments for a while and deposit that extra amount into your savings each month until you reach that $1,000.

Leave this money alone except for an emergency. You might be tempted to spend it on something fun or to pay off a big slug of debt with it. Don’t. That money is your rock - it’ll be there for you if your car breaks down or you lose your job. You won’t be sucked back into debt by these unfortunate events - your savings will save you.

What do you do when you reach that $1,000 level? Many people keep saving. Then, once a month, they sweep anything over $1,000 back into their checking and use it to make an extra debt payment, knocking down their debt without touching their $1,000 emergency fund.

Here’s the big key: if you do face that emergency, like having your car break down or losing your job, and you tap that emergency fund, replenish the fund after the emergency. Go back to minimum payments on your debts and rebuild that fund. It’s your rock.

I’ve written a detailed guide to building your first emergency fund if you want to know more.

Make a Debt Repayment Plan
When you have that emergency fund in place, it’s time to start tackling your debts in an intelligent fashion. Make a big list of all of your debts; then, attempt to get the rate on each of those debts reduced. Give your credit card companies a call and negotiate your rate down. Contact your local credit union and see if there are any opportunities to consolidate your debt at a lower rate.

Once you’ve done these things, list all of your remaining debts in order of interest rate, with the highest rate first. Then throw everything you can at the highest interest rate debt. Your only extra payment should be towards this top debt, and it should be the biggest overpayment you can muster without tapping your emergency fund. Live lean. Sell off stuff you don’t use. Find ways to earn a few extra bucks to throw at it.

Once that first debt is gone, throw everything at the next one, then the next one, then the next one. Your extra payments will grow larger because you’ve got fewer minimum payments to make, and soon you’ll find yourself free.

I’ve written a detailed guide to building a debt repayment plan, too.

Avoiding High Interest Debt
I’m not a “no debt” absolutist. I think that home mortgages are often worthwhile for most people, and I think credit cards can be a useful tool if used carefully.

Having said that, many people do not use credit cards carefully. Instead of carefully using them as a tool during very regular purchases (like gas) and then setting the cash aside to pay the bill in full each month, they use credit cards mindlessly to buy whatever they throw in their shopping cart, not worrying too much about prices because, hey, the credit card will cover it!

Bad idea. If you have any inclination in that direction, cut up your credit cards, seriously. It’s the equivalent of swinging a chainsaw around with your eyes closed after knocking back three shots - you might luck out and wind up safe, but it’s more likely to wind up bloody and painful.

Instead, adopt a different approach. Leave your card at home most of the time. When you do use it, use it for specific purposes, like using a BP credit card and use it only at BP gas stations so you can get a nice kick back, or use the Target Visa only at Target to get 10% off your entire purchase regularly, and pay off the balance in full every time. Otherwise, leave it at home and use a debit card (one that features a Visa or MasterCard logo) for your purchases because then you’re actually accountable for every dime you spend while still enjoying the convenience of card use.

There are two big reasons for using this approach instead of going entirely down the cash road. First, it builds a positive credit rating, and a good credit rating improves your insurance rates and helps your employment opportunities. Second, using cards only in a very targeted fashion - as shown above - and paying off the bills in full each time results in some sweet cash kickbacks - 3% at least.

You’ve just got to respect the tool - and not start swinging it around like a toddler with an axe.

About two years ago, I wrote an article detailing my Wii: how do I maximize my gaming dollars on it? This was a popular topic, one I’m often asked about by people my age who still want to play occasional video games but don’t want to break the bank. Many other readers have requested similar notes on a Nintendo DS, either for themselves or for a friend or a child.

What I’ve found is that for my gaming dollar, my Nintendo DSi is the best bargain I’ve yet found. The Nintendo DSi is a handheld console that easily fits in a pocket. Let’s walk through the details.

First, why a handheld console at all? If you’re a video game fan, why not buy an Xbox 360 or a Playstation 3? If you’re more into casual games, why not just play the games available on your cell phone?

The biggest factor that improves upon the consoles is portability, obviously. Most of the time, when I do actually play with my DSi, I’m out and about. I’ll play it on a long road trip. I’ll play it at the doctor’s office. I’ll play it whenever I’m in line. Although those situations make up the vast majority of my playing time, I can also play it at home on the couch if I so choose.

Why not just play the ones on the cell phones? Frankly, it’s the quality of the games. I’ve played a ton of different cell phone games and not many match up to the quality of even the worst games on the DS. The only cell phone that has even a few quality games is the iPhone, and if you’re looking at the iPhone because you want a cell phone that plays good games, it’s vastly cheaper to just get a low-end Verizon phone for your calls and a DSi for your games - and you’ll get both services better than you would with an iPhone.

Obviously, there is the option of simply not playing at all, which is completely worthwhile as well, but I’m fairly obviously writing to people who enjoy gaming and value it as a hobby.

Second, why a DSi instead of a DS Lite? A DS Lite is currently $40 less expensive, plus it has a slot that lets you play older Game Boy Advance titles - a feature that the DSi lacks. So why is a DSi a better value?

The biggest reason is the downloadable software. The DSi allows you to download very, very good games for just a few dollars each (more on them below), with more appearing all the time. Even better, you’re able to download two of them for free when you first get a DSi, and it comes with a free web browser, too (which I’m using in the picture at the top of this post).

The second reason is it functions as an mp3 player. All you need is an SD card loaded up with mp3s and headphones and the DSi functions as a portable music player - another solid argument for simply getting a dirt cheap cell phone in conjunction with this device.

The third reason is a bit of a knock against the old Advance games - the worthwhile games for the Advance are getting difficult to find. At the used game stores I frequent, it’s almost impossible to find any worthwhile Advance games for a reasonable price.

Finding a bargain on a DSi A DSi currently has a list price of $169.99. How can you shave a bit more off of that?

Suggestion one: trade in any older video games or consoles you don’t play with. I traded in my Nintendo DS Lite and several Advance games that I had thoroughly played to get my DSi for free. Another friend of mine traded in several old played-through games to get one. If you have any older games sitting around that you’ve already played through, gather them up, take them to the local gaming shop, and trade them in.

Suggestion two: wait for a sale on Amazon. If you’re interested, use this trick to automatically find a deal on a DSi at Amazon. You’ll have to be patient, but it’s a great way to dig up a deal.

Suggestion three: be patient. Do some comparison price searching yourself and decide if you really want one or not. Spending some time thinking about the purchase has a good chance of talking you out of it if you’re not truly interested.

Starting Out With a DSi
Unlike any other video game console I’ve ever tried, you can get quite a bit of enjoyment out of the DSi without buying anything else. Pick up the console, take it home, and fire it up. When you log onto the DSi Shop, you’ll automatically be given 1,000 free points, which you can use to download software. I strongly recommend spending those 1,000 points downloading the web browser, Art Style: Boxlife and Art Style: Pictobits.

Boxlife is a puzzle game in which you are given a piece of “paper” with tons of squares drawn on it, like a piece of graph paper. You cut the paper along the edges of the squares, then fold the pieces you cut out into cubes - which means that the pieces you cut out have to be of certain shapes. It also features an amusing simple storyline detailing your rise through the employee ranks in a factory. This is a highly addictive puzzle game.

Pictobits is another addictive Tetris-like puzzle game where you have to match up colored pieces. When you do, the pieces disappear and then reappear above, filling in colors automatically in a picture.

Both of these are great ways to spend five minutes juicing up your brain while you’re sitting at the doctor’s office or on the bus, and since you can get them both for free with the purchase of a unit, why not?

Before I discuss any other purchases, I should point something out: I don’t think a video game is a worthwhile purchase unless you get the cost of the purchase down to $1 per hour of playing it. Ideally, I can do better than that, which I’ll discuss below.

If you decide to make an additional purchase with your DSi, I’d recommend getting a single Nintendo points card (SRP: $20), which gives you 2,000 more points with which to download games - and there are plenty of additional worthwhile games to download. I recommend Mario vs. Donkey Kong: Minis March Again (800 points), Dr. Mario Express (500 points), and Art Style: Aquia (500 points), then just hold onto the other 200 points for the future.

What about the DS cartridges? There are a ton of games available for the DS, many of which are awful and many of which are incredibly worth playing. My strategy for maximizing my gaming dollar is pretty simple: I buy and trade used games. Occasionally, I’ll receive new ones as gifts (because my wife and my family know what kinds of games I enjoy) and I’ll cycle them in as well.

Here’s how I do it. Let’s say I go to the used game shop and buy two used games which together cost about the price of one new game. I play through both of these thoroughly until I’m truly tired of both games. Along the way, my kids get me another game for my birthday and I play through that one, too. I’ll then take those three games to the used game store and trade them in for two others that I haven’t played. I’ll play through those two thoroughly, then I’ll take those into the used game store and trade them in for two more. Along the way, I might stumble upon a huge bargain (like recently, when I found a game I really wanted to play for the DS, Fire Emblem, for $5 new) and add that into the mix.

I recently calculated that I’ve invested an average of $6 out of pocket per game I’ve played through for the DS (and that includes the cost of the console averaged into each game) - and I’ve played some games nearly to death. That drops a game down into the used paperback range, since I’ll spend much more time on a game than on a single book.

If you’re looking for games to pick up that really maximize bang for the buck, the six best values I’ve found in DS gaming are Advance Wars: Dual Strike (war strategy; I’ve spent more hours on this game than any other, ever), Elite Beat Agents (rhythm tapping game, often inexplicably available for $5-10 on the discount rack at Target), Mario Kart DS (kart racing with a lot of variety, plus this is a must-buy if you have multiple DS owners in the household), Legend of Zelda: Phantom Hourglass (distinctive and very fun adventure), Final Fantasy Tactics A2: Grimoire of the Rift (adventure/strategy mix, a HUGE game), and New Super Mario Bros. (if you ever enjoyed playing a Mario Bros. game, this will be tons and tons of fun). All of these were well worth the price, especially if you can get them used.

I’ve had tons of fun with my DS Lite - and now my DSi. The best part is, if you’re careful, it can be a real bargain.

Obviously, the big difference comes when you pay into these accounts. With a Roth IRA, you put your money in after taxes - from your take-home pay. With a 401(k), you invest with money before taxes. Thus, a 401(k) investment reduces your taxes today, while a Roth IRA investment reduces your taxes tomorrow.

Many people want a simple answer to the question of which retirement account type is better - but it’s not that simple at all. To truly know which option is the best one would require a crystal ball.

The best we can do is make the case for a future where a Roth IRA is better - and a future where a 401(k) is better. Let’s look at each one.

A Roth IRA Is Better If…
… income tax rates go up from where they’re at now. Let’s face it - the United States is deep into debt. The revenue to pay for that debt will have to come from somewhere. At the same time, income tax rates are currently about as low as they’ve been in decades. What’s a reasonable conclusion from this? The government will raise individual income tax rates gradually over time to make up for all of the rampant spending since the start of the Reagan years.

… your earnings go way up from your current level. If you have higher earnings later in life, it’s likely that most of your retirement savings will also come later in life so that you can have a standard of living in retirement that’s notably higher than what you have now. If you need a lot of money in retirement, it’ll be very useful to have some of that money arrive on your plate tax-free, especially if the income tax rates are higher. In other words, if you have a big entrepreneurial bone in your body, a Roth IRA is probably a better option.

… you have other avenues of income in retirement besides the Roth IRA. Most likely, if your income goes way up, you’re going to have investments of all kinds that earn income for you in retirement. Almost all of that will be taxable income. Again, having some of your income in a non-taxable form means substantially less taxes for you, particularly, again, if tax rates are higher.

… your employer isn’t offering matching contributions into a 401(k). If you’re self-employed or with an employer that doesn’t offer a 401(k) - or doesn’t offer any sort of 401(k) contribution matching - a Roth IRA definitely looks good in comparison, since the 401(k) doesn’t have this huge advantage.

A 401(k) Is Better If…
… income tax rates stay at the same level - or go down. Many argue that the best way to increase revenue is to actually lower tax rates, spurring on business growth. If future governments apply this philosophy, it’s likely that tax levels will either stay steady or decline.

… your earnings decline, stay the same, or only go up at a slow rate until retirement. If you’re not entrepreneurial in any way, shape, or form and you’re not interested in battling your way up the corporate ladder, your income will likely remain pretty steady throughout your life. This means you won’t bump yourself up to higher tax brackets later on and you’ll likely be in this tax bracket (or a lower one) in retirement. Thus, deferring the taxes until then is advantageous.

… your main income (besides Social Security) will be your 401(k). If your income in retirement will mostly come from your 401(k) and not from outside investments, your total tax bill will be limited significantly. You won’t have additional income pushing up your tax burden (which your 401(k) will contribute to).

… your employer offers matching 401(k) contributions. This is free money that blows away any tax benefits that might come from a Roth IRA. If your employer matches your contributions, the decision becomes pretty easy - take those matches all the way to the bank.

What About a Roth 401(k)?
Some people also have the option of a Roth 401(k), which essentially works like a 401(k) except with after-tax money. A Roth 401(k) often ends up being like a Roth IRA that gets employer matching, which means that most of the arguments in favor of a Roth IRA apply to it.

In the end, though, you need to decide for yourself where you’re headed and where you believe the government is headed. Of course, all of this is moot if you don’t start saving right now. Regardless of what you choose, you’ll lose any advantage of either choice by putting off saving while you decide. If you’re unsure, sign up for one plan or another and start contributing. If you change your mind later, switch your savings plan. But, no matter what, start saving now - don’t put it off.

You can get rich in just three weeks with my $99 tape course!

We can eliminate 70% of your debt immediately!

Gold is the only thing that will save you when the economy fails!

Do you smell the snake oil yet?

There are countless sharks in the water that want your money. One powerful technique for selling you something you don’t need is to prey on your fears. Perhaps you fear the government’s long term future (been listening to too much talk radio, haven’t you?). Perhaps you fear immediate personal financial failure. Perhaps you fear your professional failure - and what others might think of you if you’re not successful.

People will prey on those fears. They try to do it all the time. Commercials telling you that you can eliminate your debt. Pitchmen talking about how great an investment gold is. Smooth talkers telling you about their “program” for quick income at home.

Almost all of these plans do two things. They grab onto your fears and they combine it with some sort of widely-spread myth. The myth of the person who got rich quickly. The myth that debt can be whisked away through this or that loophole in the law.

Myths are dangerous things. They’re usually based on information that might have been true a hundred years ago - or are based on extremely rare cases that, again, don’t reflect how you live your life. Yet they persist because they sound good.

Denying Risk Because of Laziness
Early in the chapter, Ramsey goes on a rant about the dangers of denying risk in your life. One point he makes on page 52:

Sometimes risk denial is a kind of laziness, when we don’t want to take the energy to realize that energy is needed to win.

I think this very factor holds people back from a lot of career advancement. They look at the huge amount of energy they would need to expend to get ahead - networking, building a business, and so on - and decide that they’d rather expend their energy doing something else.

Another example: we look at the effort that it would take to keep track of our spending for a few months and get a real grip on our finances - and we decide that the status quo is just fine.

Or we think about the effort that it would take to actually build a price book and figure out which grocery store really is the cheapest for what we buy - so we shrug it off and just go shopping at the Wal-Mart Supercenter.

Laziness is the enemy of success in every area.

Denying Risk Because of the Beat Down
Dave’s rant against risk denial continues:

Other times, risk denial is a kind of surrender in which we settle for a bad solution because we are so beat down or beat up that we wave the white flag and do something stupid.

I’m reminded of those ludicrous debt elimination programs advertised on late night television. “We can eliminate 90% of your debt with our program!”

Well, this means one of two things. You’re either going to file for some sort of bankruptcy protection (which has a whole different can of worms) and pay them for the “help” or you’re going to sign up for their debt repayment plan, where you pay them money for something you could cook up yourself.

Either way, you lose. Why not just make your own debt repayment plan? It’s easy and a lot cheaper than paying outrageous monthly fees for companies to do this for you.

Denying Risk for False Security
Yes, I liked the denying risk theme. Dave goes on to say:

At still other times, risk denial can have an active component in which we search for a false security that simply doesn’t exist.

Gold investing immediately comes to mind. The local talk radio station in Des Moines carries tons of ads for buying gold as an investment, coupled with shows like Glenn Beck which talk breathlessly about the fall of the American government (I wish I were kidding).

Gold sellers prey on that fear, bringing up the old tales about how gold is the safest thing to own when governments are falling. In practice, though, that’s rarely true - gold is scarce enough that most people resort to a barter system until things straighten out, and land, skills, and resources have the real value.

Gold is that false security. It makes people believe that they’ll be safe if the government collapses. In a fearful environment, people seek out that safety.

That’s not to say gold doesn’t have a role in a diversified investment portfolio, but people with enough of a bankroll to need diversification into precious metals probably aren’t reading The Simple Dollar or listening to talk radio all day.

Cash Value Life Insurance Is Junk
This is one of those points that I absolutely love in this book. Dave lays out the case against whole life and universal life insurance on page 58:

All of the [extra payments beyond the price of term insurance] per month disappears in commissions and expenses for the first three years; after that, the return will average 2.6 percent per year for Whole Life, 4.2 percent for Universal Life, and 7.4 percent for the new-and-improved Variable Life policy that includes mutual funds. These statistics are from Consumer Reports, Consumer Federation of America, Kiplinger’s Personal Finance, and Fortune magazine, so these are the real numbers. Additionally, a recent article in National Underwriter, The Industry Mouthpiece, showed charts of returns from fourteen national companies. The returns they show average only 6.29 percent over twenty years. [...] Worse yet, with Whole Life and Universal Life, the savings you finally build up after being ripped off for years don’t go to your family upon your death; the only benefit paid to your family is the face value of a policy [...]. The truth is that you would be better off to get the [inexpensive] term policy and put the [extra payments beyond the price of term insurance] in a cookie jar!

That pretty much sums it up. If you want insurance, buy bread-and-butter term life insurance. If you want an investment, buy an investment from a brokerage with low-cost investments (like Vanguard, for one). Mix the two and you’ll find yourself eaten alive by fees and commissions.

Look, I don’t blame a well-meaning grandparent for buying whole life insurance for their grandchildren. Their heart is in the right place - they want to protect their own children when their grandchildren are young and give the grandchildren a valuable investment when they’re older.

However, I’d encourage them to split that $100 a month into two batches instead of putting it all into the insurance. Use a small part of that money for a small term policy on the child so your own children won’t have a financial burden if the unthinkable happens. The other $93 a month? Put it in an investment account.

Important/Not Urgent
One of the handful of useful ideas in Stephen Covey’s book The 7 Habits of Highly Effective People (which I reviewed a while back) is the idea that our tasks all fall into four groups - Urgent & Important, Urgent & Not Important, Important & Not Urgent, and Not Important & Not Urgent.

Covey argues that the distinction we should make is whether something is important or not (tasks in the Important & Urgent and the Important & Not Urgent groups), but in practice we usually focus on the urgency instead (Urgent & Important and Urgent & Not Important).

This has a huge impact on personal finance. Dave spells it out on page 62:

We take care of the Urgent/Important stuff, but what is Important/Not Urgent [...] is planning. You can pay the electric bill or sit in the dark, but if you don’t do a monthly spending plan, there is no apparent immediate damage.

I think this is one of the biggest reasons people put off financial planning. They are aware that it’s important, but they’re also aware that it’s not urgent.

Since so many of our lives are seemingly in constant “crisis mode” where we move from one fire to the next, we find ourselves falling easily into a situation where we just deal with what’s urgent and don’t even consider what’s important.

The end result? We find ourselves often missing out on many very important things in life because they’re not urgent. We skip playing with our kids because a client is calling us about a minor detail. We gloss over financial planning because there are fifty eight household chores that need to be done.

That lost time costs us. Every month we don’t save directly hurts our retirement. Every week we don’t contribute to our 401(k) hurts us. It comes around.

A Weird Argument for Cash
I think Dave goes off the rails on page 71 when talking about the risk of carrying cash versus carrying credit cards:

The crooks assume that your purse is like all the others filled with credit cards that are over the limit. Look, I’m not making light of crime. There’s a chance you may get robbed, because people do get robbed -whether they carry extra cash or not. And if it happens to you, the cash will be taken. But, trust me, you need to be far more worried about the danger of using credit cards than the danger of being robbed while carrying cash. Carrying cash doesn’t make you more likely to get robbed; on the contrary, the mismanagement of plastic is robbing you every month.

First of all, why not use a debit card instead of cash? A debit card allows you to only access the cash you actually have - the stuff sitting in your checking account. It also has virtually the same consumer protections as a credit card - if someone steals your debit card, just call up your bank and things are secure.

Second, having $200 in your purse (or wallet) makes it just as easy to blow $200 on something unnecessary as it is having a credit card in your purse (or wallet).

A credit card is just an excuse to exercise a lack of self control.

Having a large amount of cash on you is a security risk, no two ways about it. Dave is making the mistake of confusing one kind of risk (the risk of a lack of self control, which can take hold whether you have cash or a credit card in your pocket) with another kind (the risk of having your money stolen, which is much easier to fall prey to with cash on hand than with a credit card on hand).

Do you have any other thoughts on the fourth chapter of The Total Money Makeover? Please share them in the comments - and feel free to respond to any of my impressions as well. After all, a good book club is all about discussion!

On Saturday, we’ll tackle the fifth chapter - Two More Hurdles.

1,100 notes, without any sort of structure at all.

What does it all mean? That’s what I’m really puzzling through right now. I definitely see some huge patterns in the notes, but what’s the big theme really tying all of these ideas together?

Lately, I’ve been taking long walks and puzzling through all of this. I’ll spend an hour reading through note after note after note, then I’ll get up, put on my shoes, and go walking/jogging for a while. Connections pop into my mind when I’m out there and by the time I’m back, I see things in a new light.

It’s coming together. The shapes are beginning to emerge.

Here are some interesting personal finance articles I found in the last week.

The Basics Behind a Budget that Works After reading tons of articles describing different versions of “a budget that works,” I’ve come to the conclusion that no budgeting technique really works for everyone. For me, a much simpler approach works well. (@ simple mom)

Things Wear Out I agree - the best value is an item that simply wears out. It’s worn, well-utilized, and useful until the very end. Like a good pair of shoes. (@ wise bread)

A New Era of Personal Finance The old advice isn’t working any more. (@ saving for serenity)

Why Pursue Financial Freedom? I think different people have different answers to this question. For example, my reason is simply so I can pursue some of my major life goals - writing a novel and having it published and well-promoted - without worrying about an income. (@ get rich slowly)

30 Days to a Better Man This is a set of truly great articles, but a better name for the series would probably be “30 Days to a Better Person” as most of these articles apply well to well-rounded women, too. (@ art of manliness)

Helpful Finance Tips, or Sneaky Payday Loan Ad? Proof positive that you need to be very careful about what you read online. I think the future of the internet is “trusted advisors” - people who build long-term relationships with readers and give them advice on any number of things. I would probably be in that category. (@ red tape chronicles)

Listen In!

Other options for enjoying The Simple Dollar Podcast include:
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Though I hope you do subscribe using one of the above methods, don’t worry - each episode will be featured in its own post, much like this one, on Tuesday afternoons. The podcast itself may appear earlier than that, however, if you subscribe using one of the above forms, but the notes won’t appear until I post about it here on The Simple Dollar.

Episode Notes
Here are some additional notes that go alongside the comments in the podcast. Approximate times for the corresponding links and notes are listed.

0:00 - The theme song is a snippet of a Camper van Beethoven concert on October 25, 1986, shared via their very open taping policy. Listen to the concert in its entirety.
0:44 - We played Dominion multiple times, Ticket to Ride: Europe, and Torres (I think … I might be mixing it with the previous game night we had).
1:05 - Her family plays the card game 500, which is quite fun.
2:10 - Good card games with kids: slapjack, go fish, and war.
2:18 - Good card games with adults: bridge, gin, canasta, poker, spades, hearts, cribbage, pitch, euchre … a nearly infinite list.
2:44 - My family always plays four point pitch.
2:55 - Monopoly seems to never end - I played a game for more than twelve hours once. Even worse, many people seem to play it without the auction rule - when someone lands on a property and chooses not to buy it, it goes up for auction. Without that, the game really does never seem to end.
3:27 - Ticket to Ride is a great board game that revolves around connecting various cities to one another via train. You essentially play on a map of a continent, with major cities highlighted, and throughout the game you connect these cities. You only have a limited number of connections, though, and other players are trying to do the same thing (and thus sometimes block your connections). It’s incredibly fun.
3:39 - Puerto Rico is a board game in which you’re trying to build a successful Puerto Rican farm while competing against the other players for resources - workers, money, and space on ships to sell what your farm grows. It can be played in an hour and fits three or four people really well.
3:45 - Settlers of Catan is a board game where you’re simply trying to settle on an island by placing just a small handful of towns and roads. It’s really simple and incredibly fun - as I say on the podcast, we played our first copy until it looks…. grizzled is a good word for it.
4:20 - You want a great way to network with someone? Play a game with them. You’ll almost magically open up a bit during the game.
6:25 - I use Gamerz in Ames, Iowa for most of my video game trading.
6:55 - Yes, I know I “overlooked” the social aspect of XBox Live and many online RPGs, but unless you’re (a) willing to give a lot of time to it or (b) have a strong affinity for teenagers being “funny” by yelling racial epithets, I’d suggest skipping it.
8:35 - I turn walks outdoors into a scavenger hunt.
8:50 - Here are ten ways I save money golfing.
10:40 - A preview of next week’s topic.

One thing I’d like to do in a future episode is have an audio reader’s mailbag. If you have a microphone on your computer and can record an MP3 of a simple, short question you might have on personal finance, careers, pop culture, or anything else you’d like me to answer, record it as an MP3 and send it to me. Keep the total recording under 15 seconds, please. Also, if you use Skype, feel free to ask your question that way - my username is trenttsd.

Comments and suggestions welcome.

Michael Jackson got most of the media coverage - and for good reason. He recorded the best-selling pop music album of all time and virtually everyone can recognize the beat of many of his songs. He was simply an amazing performer - here’s my favorite example, actually:

However, I was more shocked and psychically bothered by the passing of Billy Mays. If you don’t know him, he was the ubiquitous television pitch man for a huge diversity of products - most notably OxyClean. His beard, friendly demeanor, pure skill at promoting products, and often nearly over-the-top enthusiasm made him memorable:

Both of these men were fifty years old when they passed away.

Both of these men died of sudden cardiac arrest, a common outcome of heart disease.

Those facts together shook me quite a bit. Fifty years old? I’m thirty - twenty years away from that magic number. Both of my kids would merely be college age when I’m fifty. I have many things that I want to do in life, and the thought that my life could easily end - or my quality of life could rapidly fall - at such an early age made me think quite a bit about the future - and other things I can do now to protect it.

I’ve invested quite a bit of time and energy in my own life - and I’m sure you have in your own - building the foundation for a great later life. My retirement accounts are solid. I have a book in print that pays me royalties and another one on the way. I want to be able to enjoy the benefits of these things in my golden years as I play with my grandchildren. I want to protect my investment.

So I’ve decided to do something about it. For my family, for my health, for my finances, and for my long term future, I’m going to make a number of changes that directly reduce the chances of heart disease - and also help with preventing other diseases, such as type 2 diabetes.

I should note that I’ve already been doing these things in 2009. I made a resolution to improve my health and I’ve lost about forty pounds this year through a mix of more exercise and better eating and I hope to keep up the progress.

I simply started by asking my doctor what I could do to reduce my chances of heart disease as I grow older. He suggested eight things, all of them pretty simple.

First, don’t smoke. Nicotine raises your blood pressure (not good) and the tar reduces your lung capacity and makes exercise more difficult (not good). It also increases your risk of many other diseases, like emphysema.

Second. exercise. If you don’t exercise at all, start really slow. Make a commitment to just walk for thirty minutes each evening around your neighborhood. The goal is to raise your heart rate to a reasonably elevated level for a sustained period, and continuous movement (like walking) is an easy way to get there. If you want to go beyond that, that’s great, but take it slow - don’t dive in and try to run a 5K right off the bat. Just go for a walk.

Third, eat more green things. Eat broccoli, spinach, brussels sprouts, and leafy vegetables. You can start by having a side salad with dinner. I’ve found that spinach is a great ingredient in many, many dishes, for example - just add a bunch of spinach to lasagna, for example.

Fourth, eat fewer meats. Going vegetarian isn’t necessarily the best option, but reducing your meat intake is a good idea. For example, try eating no meats until your last meal of the day - for breakfast and lunch, eat vegetables and fruits and whole grains.

Fifth, eat some nuts. Seriously. Nuts contain fiber and also contain vitamin E, one vitamin that tends to be deficient in modern diets. One great way to do three, four, and five all at once is to make your own granola bars - something I’ll talk about in the future.

Sixth, cut down on your sodium intake. In other words, don’t dump table salt on your foods. Sodium directly raises blood pressure and we already get enough sodium in our normal foods without extra salting.

Seventh, try meditation or relaxation techniques. Stress elevates your blood pressure and causes all kinds of health issues. Take some time to calm down and psychologically deal with the stresses in your life. Here are some great beginning meditation and stress management techniques.

Finally, cut down on your caffeine. Caffeine also raises blood pressure. Many people say they can’t “live” without the caffeine, but coupling caffeine reduction with other diet improvements and a bit of exercise will make the transition easier.

Most of these changes are not very hard to do in your life. As with any behavior change, take it slow. Don’t go whole hog at first. Just start walking in the evening (I do it while listening to podcasts) and maybe substitute a food or two that you eat for something better for you, particularly at dinner. Put the salt shaker in the cupboard and put out granola bars and fruits for snacks instead of cookies.

It’s simple to protect your life’s investment with a few little changes. Today’s the day to get started.

Hold On… What Is Evernote?
Evernote is basically a note manager that synchronizes the notes across computers. You can create and edit notes on any machine with a web browser and several types of mobile phones. You can save pictures, web pages, voice recordings, text - anything you want.

The thing that I find really useful, though, is that if you take a picture of a handwritten note - if it’s legible at all - Evernote will automatically extract the text for you. So, let’s say I’m at a meeting and I’ve jotted down a few notes that I might want to write about later on. I can just take pictures of the notes with my camera, stick them on Evernote, and boom - I’ve got the text.

The best part? It’s free (well, not entirely - there’s some very high level of data beyond which you have to have a paid account (40 MB), but I’ve never reached it). I have upgraded to a premium account there, simply because I have a deep philosophy of supporting what I use, but you can use it to your heart’s content without paying a dime. They pay the bills with a small ad on the site.

Obviously, you wouldn’t want to store highly sensitive personal information on here, but for 99% of the notes you’ll take, Evernote simply works.

Seven Ways I Use Evernote to Improve My Finances
Given that Evernote makes text notes basically ubiquitous, this means I can update them pretty much wherever I’m at. This is perfect for little pieces of personal finance data that you’ll want to retrieve later on. Here are seven examples of how I’m using Evernote in that regard (note that you could also use a pad and pencil for these, but that having them in electronic form is almost always more convenient).

I use it to track my spending on the go. I keep a note going where I just record my expenses. A great example of this was on vacation, where my parents and I had agreed to split all expenses equally. During the vacation, whenever we simply paid for an activity or something else, I jotted it down in Evernote. Then, at the end of the trip, it was quite easy - I just copied the numbers into a spreadsheet and automatically totaled them, easy as pie.

I use it to jot down prices for comparison shopping. Evernote is incredibly useful as a price book. Whenever I’m in a store and I spot a great price on an item, I jot down that price and where I found it. Later, I’ll compare it to other prices, both online and off. If you’re shopping for a large purchase, like a piece of furniture or a television, this can be a great way to compare prices.

However, I’ve found it really useful for little things. Since we split a lot of our shopping for food and domestic items between Fareway (most food), Sam’s Club (some bulk purchases), Target (most household), and Hy-Vee (specialty foods), I find it really useful to keep track of what’s actually cheapest at each store and buy them there. Evernote makes this really easy - I now know that many deli cheeses are cheapest at Fareway, but some upscale cheeses are far cheaper at Sam’s Club thanks to using this technique, and that enables me to easily get the best price on the items that I buy.

I use it to take notes if someone lets me in on a bargain. Let’s say I’m chatting with my neighbor and he mentions that he saw that Lowes is having a sale on lawnmowers this weekend - and I’m in the market for a lawnmower. That can be a very valuable piece of information - and so I immediately jot it down. Later, when I see it electronically, I remember to visit the Lowes website, see what’s on sale, and do some comparison shopping.

Similarly, I overheard recently at the grocery store that one could find $1.50 off coupons for V8 Fusion online. I jotted that down quickly, went home, searched for it, and unfortunately came up short - but it’s easy to see how something like this could really pay off (if someone has a link to $1 off or more V8 Fusion coupons, I’d love ‘em!).

I use it to keep track of potential investments. On Sunday mornings, I’m usually found at the kitchen table reading the Sunday Des Moines Register - and while reading, I usually find out something interesting about some investment. I also find myself reading the Wall Street Journal sometimes at the library, and I always find some interesting businesses or investments in there.

Obviously, I want to follow up, so I just jot down that investment’s symbol on Evernote. Later, when I’m home, I just copy and paste that symbol into Google and into Yahoo! Finance and see what I find. This has helped me become more familiar with the business side - and the product side - of many companies and also led me to quite a few index funds that I’m watching for potential future investments.

I use it to jot down product research notes at the library. As I’ve mentioned many times, whenever we begin to look at a major purchase, I hit the library. I dig out piles of old issues of Consumer Reports and other consumer magazines and go through them, finding out what independent testers have to say about it.

Naturally, I take my laptop along on such journeys, and I find that jotting these things down in Evernote is quite helpful. I’ll type the interesting notes in quickly, take snapshots of anything interesting with my camera, and collect all the research electronically in one place. Later, when I’m at home, I can add to this research. Or maybe I’ll be at my parents’ house and I find something useful to add - I can just log on via the website and add to a note.

I use it to keep a convenient schedule of automated transactions. One note includes nothing more than a list of the automatic transactions that come out of our primary checking account every month - our children’s 529 accounts, my Roth IRA, our car payment, our mortgage payment, and a SmartyPig savings goal (for a better laptop sometime way down the road).

This has come in handy several times. Once, not too long ago, we were in Texas on vacation and I was trying to decide if I should pull some cash out of my checking account or my savings account. I pulled out my list of automatic transactions, did the math, and realized it wasn’t a problem at all to leave the savings alone - we had plenty of buffer.

The best part: if I make a change to the automatic transactions I have, I can just update one text file and I have the info everywhere. I don’t have to write a new note or make a bunch of scribbles on it. It’s clean and just works.

I use it to keep track of gift ideas for people. I keep a constantly running list of gift ideas for people. It’s actually quite easy - I just listen to what people talk about and if they mention anything they like or may want, I jot it down on this note. Then, every once in a while, I’ll go bargain hunting with this note - I’ll update my Amazon deal search filters with these items and I’ll search through several different bargain sites that I look at. Occasionally, I’ll find a hit - and when I do, I might turn a $70 idle wish someone has into a gift from me that only cost $20.

Not only that, this gift list comes in big handy when the holidays are actually close. I’ll get out this gift list just before Black Friday and browse through the circulars on Thanksgiving Day - and sometimes I’ll find an amazing match, connecting a great deal to a recipient who actually wants the item.

To put it simply, the sheer utility of Evernote gives me tons of opportunities to save money. The examples above just scratch the surface.

The only problem is that when I ask for such help, it clutters up the site a bit. Instead of posting about something interesting and useful to everyone, I wind up filling up site space with such requests. Most people don’t mind, but for people new to the site, that’s not really interesting. They’ve come to The Simple Dollar to learn more about their finances and their life, not to fill out a survey or do some other little thing that I need help with.

So, I’ve come up with a solution. Friends of The Simple Dollar.

Here’s how it works. “Friends of The Simple Dollar” is an email list that I’ve set up privately - I won’t share a single email address with anyone else.. Roughly once a month or so (or maybe a bit more often when I release a book or something similar), I’ll send out an email to everyone who has signed up for that list asking for help on something small - filling out a survey, helping me a bit with book promotion, or sharing something of interest. It shouldn’t take someone more than five minutes or so to do the little things I might ask. On occasion, I might send out something special to the list to show my appreciation for your help, too.

So, if you’re willing to give up five or ten minutes once a month to help out The Simple Dollar with such simple things, please sign up to be a “Friend of The Simple Dollar”.

If this isn’t your thing, no big deal - don’t sweat it. I won’t be sending out unique content to the list, just occasional requests for help. I’m just looking for people who enjoy the site, think it provides value, and are willing to offer a bit of a helping hand on occasion.

As always, thanks for your time and consideration!

I’m getting married in September to a woman who just started a Master’s degree program. We have a fair amount in savings and have set some of it aside for the next 2 years of her college expenses. You’ve discussed 529 plans before, and that got me thinking about a possibility. Could I start maxxing a 529 plan and live out of that savings, then use the 529 to pay for her last year of college? I don’t like living out of savings, but that money has already been taxed. Say her last year of school costs $5,000; I’d be saving about $500 in federal taxes by utilizing a 529 plan. But can you put that much in a 529 in a year? Can you turn around and use the money that soon? We live in Missouri, if the state’s plan types are different.
- Michael the Dumb Tech Geek

There’s no limit to the amount you can contribute to a 529 for you or your spouse (provided you’re filing your taxes jointly). An aside: the only limit is that such contributions are seen as gifts in the eyes of the federal government and thus if anyone else contributes, their contribution must stay under the gift tax exclusion ($12,000 this year, $13,000 this year) or be a one-time gift that isn’t repeated over the next five years (allowing up to a $60,000 contribution). Anything over that would be taxable.

However, if you’re saving over that short of a term, putting your money into any sort of risky investment is extremely risky. You sure can contribute to a 529 as you suggest, but you should choose a really conservative option. In that situation, it basically becomes a bank account where you don’t have to pay taxes on the interest earned if you spend it all on schooling.

No matter what you do at this point, you’re not going to earn any major gains either way unless you’re extremely lucky or take on a large amount of risk.

I believe you owe it to your readers to point out that 529s are a big gamble because if your children get a full scholarship or decide not to go to college you could end up paying income tax on the 529 earnings PLUS sometimes a 10% penalty. Whereas the funds you choose to invest in the Roth IRA are guaranteed to retain all the benefits, tax breaks, and flexibility of the Roth no matter what happens with your child.
- Sophie

The only way that occurs is if you have a child that earns more than full tuition, room, and board scholarships for their undergraduate work, doesn’t attend graduate school, and is an only child. Read the details here. If any of those details are untrue, then the 529 works quite well.

On the other hand, when you use a Roth IRA for education expenses, you have to pay income tax on any gains used for education - using a Roth IRA for educational expenses only avoids the 10% penalty. On the other hand, for education expenses, a 529 is tax free.

So, a Roth IRA is preferable for education expenses if you have a child that earns more than full tuition, room, and board scholarships for their undergraduate work, doesn’t attend graduate school, and is an only child, because in that case, the child would have to pay income tax and a 10% penalty to get the money out of the account. Otherwise, the 529 is preferable, because you don’t have to pay income tax at all for education expenses.

I think, for my kids, I’ll stick with the 529.

*Everyone* told me that I would eventually grow apart from my high school friends when I was graduating high school.

I know it’s unusual, but it’s NOT a given that you will lose your high school friends. Maybe likely, but not guaranteed.
- Heather

Here’s a better way of stating it. There are two types of friends people have in life: friends based on the overlap of interests and experiences and friends based on true caring for each other.

Most friends people find in a high school environment are of the former type - you’re friends because you know the same people, go to the same school, attend the same classes, and so on. When those touchstones go away, so do most friendships.

Now, in some cases, those touchstones get replaced by other ones. You stay in the same town, live near each other, work in similar jobs, and stay in similar social circles. If that happens, you’re keeping those touchstone-based friends, it’s just that the touchstones have changed.

My oldest brother is a great example of this. After he graduated, he more or less stayed in the same area where he grew up, and at least some of the group of friends he had in high school did the same. Those guys remain friends to this day. If he moved away, would they remain friends? I’d bet against it - he might stay in touch with one or two of them, but he’d find a new social circle based on common interests wherever he moved.

It’s healthy to have both types of friends - some transient, some permanent. Disappointment comes in when one group is confused with the other.

In Your Money or Your Life long term treasury bonds are suggested as the ideal retirement investment. Their logic supporting that seems to make sense- the returns are predictable (which is important when you’re living off of them) and the principal investment is perfectly safe. Why do you find the stock market to be the better option? Is it just because of the higher rate of returns? Do you worry that the market will fall while you’re “living off the interest” and cut your income?
- Ariel

Your Money or Your Life offers great investment advice for when you’ve actually reached the point when you’re living off the interest - you want the money to be safe.

However, when you’re trying to reach that point, there’s no reason to restrict yourself to ultra-safe investment opportunities. If you’re still employed, you can afford some risk, particularly if the point of living off the interest is a long way off.

So, let’s say you need $25,000 in expenses a year to survive and you figure that your bond investments will return 3%. That means you need to own about $850,000 in bonds - and ideally more than that, so you have some protection against inflation. That’s a daunting number - it’ll take you many years to save it.

During those years, you may (depending on your risk tolerance) find it worthwhile to invest in higher risk, higher reward things. If they pay off, you’ll move that date a little closer. If they don’t, you just delay it a little longer. Over longer periods of time (ten years or more), the stock market tends to return around 7% a year - including dividends and increases in stock value. So, if you have that much time, it’s worthwhile to put some of your money into stocks.

Then, when you get closer, start investing your newer savings wholly into bonds and slowly start moving that stock investment into bonds as well. This way, if you’re getting close, a sudden market downturn won’t hurt you.

When you’ve finally made it, everything is safe and secure in bonds.

here’s a tip that really helped me and my family - RENTING BOOKS. We found the Netflix of books, Bookswim, and it’s been amazing to save money for required school reading in addition to my personal reading. we rent instead of buy - genius!
- Jennie

I hear you can also rent books at your local library! For free!

Okay, enough snark. Jennie does have a great point. Bookswim is basically Netflix for books, meaning you can keep them as long as you want and mail them back and forth for free, only paying the subscription. It’s a reasonable alternative to the library, especially if you’re a slow reader and find yourself always accruing late fees at the library.

However, there are some problems. If I find a book personally useful, I tend to write a lot in the margins - and that’s a big no-no with Bookswim and with the library. I tend to use PaperBackSwap for my book habits. No monthly fee at all. Roughly $2 to send out a book you’ve already read and get another book in exchange for it in your mailbox. If you want to keep a book - say, a copy of a business book that you’ve scribbled all over - you sure can, no problem, no cost.

I think Bookswim does hit a particular niche quite well, one that isn’t met by the library (late fees, long wait lists) or by PaperBackSwap (sometimes limited selection, cost-per-book instead of per month). If you’re an avid reader, it’s probably worth considering.

My high efficiency washer requires HE detergent, so I don’t know if I can use your recipe. What’s the difference?
- Richard Potts

I do not have any direct experience using my homemade laundry soap in a high-efficiency washer.

However, the laundry soap made in that recipe is a formula that does not produce excessive suds, which is the real danger with HE washing machines. It’s also pretty potent.

Thus, the general recommendation I have is to try half a cup of the homemade detergent in a HE load and see how that works for your clothes cleanliness needs.

Do “The Simple Dollar Artists” cater their work for your posts, or do they have a portfolio that always has what you are looking for? Or something else?
- Mol

“The Simple Dollar Artists” refers to a sidebar section on The Simple Dollar where I highlight two artists that contributed a lot of photography and other stock images to The Simple Dollar early on. I wanted some small, interesting items to use as accent pieces for posts - I wasn’t too picky - and so I asked for it. I wasn’t looking for commissioned stuff - I intended it as just a way for people to show off some of their portfolio work, stuff they’d already made that they wouldn’t mind being used on The Simple Dollar.

I was blasted for this and was roundly accused of trying to “rip off” artists, but two loyal readers - Daizy H. and David Herring - stepped up with contributions. All they did was help out a blog that they liked by digging through their collections of their own art, finding five little pieces, and allowing me to use them in posts. In exchange, they both received permanent thanks on the sidebar of The Simple Dollar.

For being kind and helpful, they’ve both had links to their sites that have generated several clicks a day for years, the Google boost that comes from being linked on every page of The Simple Dollar, and a page on The Simple Dollar highlighting their art contributions. Though David’s site is no longer updated, Daizy’s site is actually pretty interesting and I stop in regularly.

In fact, “Daizy” actually asked me to begin using a pseudonym for her because the link was attracting more attention than she wanted. If she’s still reading, I wonder if she considers the deal to be a “rip off”…

Just came across this article on LifeHacker - http://lifehacker.com/5280491/the-road-to-happiness-in-your-work-lies-in-the-hooray-zone - and couldn’t help but think that this is exactly what you’ve done with your writing. What are your thoughts on this diagram?
- Dave

I agree wholeheartedly with that image. With my current job, I think I’m firmly in the “Hooray!” part of the picture. I think I started off in the “what we want to do” circle, moved gradually into the “learn to do it better” part, and eventually moved into “Hooray!” (though I’m still learning).

With my former job, I think I started in the “Hooray!” part of the picture but gradually moved into the “Learn to say ‘no’” part and failed to escape from it. I found myself responsible for stuff that I simply didn’t want to be responsible for that ran contrary to what I loved about the job in the first place and that hurt my enthusiasm for the work quite a bit.

That’s a very good image - a great way of summing up a lot of the ideas I have about work.

Here’s a question for a future reader mailbag; what to do about failed frugal experiments? Or maybe stories of repurposing frugal moves that don’t work into stuff that does.

Tonight’s example: I have a $1.88 packages of noodles, cream of mushroom soup + lox casserole experiment in the crock pot that for various reasons, is not edible. I’m not out a lot of money as these were all pretty much on sale, but i feel the guilt of waste as I scraped stuff into the garbage.
- Betsy

I simply chalk those up to experience.

The way we look at meals is this: if it’s terrible, we’ve learned never to prepare it again. However, it’s still a meal, even if it’s one we didn’t enjoy. It still provided nutrition and sustenance, even if it didn’t provide enjoyment.

I look at it the same way if I try a generic version of a product. It’s a trial run at a low cost. If it works out, great - I’ve found a good long-term solution. If it doesn’t work out, I’m not out too much and I’ve usually been able to use at least some of the product.

Some experiments are going to succeed. Others are going to fail. But those are short term failures - and long term successes. If you have a bad meal or use a bad product, it doesn’t have to ever be repeated - you can go back to what worked before with only a small loss. If it works, though, you’ve found a new routine, likely one that requires less regular spending on your behalf.

One success - because it’s a long term success - is well worth ten failures, in my eyes.

One of our favorite restaurants is cafeteria-style, but they have bus-staff to clear the tables when done. Clearly they’re not providing the same level of service as a sit-down restaurant, but there’s some sort of service. We’d like to leave a little something, but don’t know an “appropriate” amount…something more than 0% but less than 15%. Do you or your other readers have a suggestion?
- Gumnos

I really don’t worry that much about “guidelines” for tipping. Tip whatever you feel like the service was worth.

By “service,” I do mean the whole package. Many people focus really heavily on the table service, but that’s only one part of the experience. If you get no table service but believe you’re getting exceptional value from the food, there’s no reason not to tip a little in any situation.

If you spend $7.95 at a cafeteria and the food was great, I see no problem tipping a dollar. Just make sure that you do it in such a way that it’s not accidentally thrown away - and also be aware that it’s likely to just vanish into the pocket of the first employee that finds it.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

The New Global Student by Maya Frost is one of those books that takes what you think you know about a subject and flips it on its ear. This time around, it’s the standard route that most high schoolers take towards their education: take lots of AP classes, sweat about the ACT and SAT, apply to hyper-competitive colleges and hope you get in, apply for piles of scholarships, sweat out the FAFSA, then go on to college, where you’ll likely be buried in mountains of student loans.

This process is seen as so standard that many people don’t even question whether or not it makes sense to start pushing our fourteen and fifteen year olds through this woodchipper. The New Global Student argues that this path is not the only path - in fact, Frost argues that there is a much better way to help your children transition into the latter stages of their education. Hence the eye-catching subtitle: Skip the SAT, Save Thousands on Tuition, and Get a Truly International Education.

I fully expect that many people will immediately reject the central premise of this book - that the “traditional hypercompetitive SAT/AP/GPA path” can be easily dumped and a new path to educational success can be found. All I can say is this: time and time again, throughout my college career, the people that seemed to have the best grasp of what they needed to do to succeed and the value they could get out of college were people who came in from outside that treadmill.

Ready to dig in? Here are my impressions of and thoughts on The New Global Student.

One: Creative, Not Crazy - Our Family’s Story
In the summer of 2005, the Frost family sold everything and moved to Mexico for a year, then to Argentina. The family had four teenage daughters, including a high school freshman, a junior, and a senior, and they were unable to speak Spanish when they left. Not only that, the girls also spent years in other countries on yearlong exchanges. They did not worry too much about the perfect GPA and they also didn’t take the SAT. You might think that this would blow up all of the girls’ chances of getting into a good school, but instead it did the opposite - it painted very compelling pictures of young women who were experiencing the world, not just pumping up their numbers. Compelling enough to get them piles of scholarships and admissions to good schools.

Two: Beyond Math and Mandarin
Frost’s argument about why all of this works really boils down to two big factors. First, the diversity of experiences forced the children to learn how to be collaborative. They were constantly being put into cultural and intellectual situations where they had to learn to work well with others in order to get through it. In contrast, high school in America - with the SAT/GPA/AP milestones - are highly competitive without much focus on collaboration. The collaborative nature of their high school experience, in other words, was a huge advantage.

Second, the children were heavily ingrained throughout their lives with five key principles: flexibility (independent thinking, eagerness to explore new ideas and places), awareness (ability to intelligently discuss a wide variety of topics, compassion and respect for others), curiosity (an interest in a variety of areas and the ability to ask questions and investigate those areas), trustworthiness (realization of the vitality of being dependable, strong communication skills, complete things on time), and self-direction (establish and move towards goals, internalized work ethic and motivation).

These aspects combine together to make young people who are ready to tackle anything. In my eyes, it’s a great recipe for parenting in the modern world - I strive for all of these things with my own children, even at their young age.

Three: Fego: You’re Soaking in It!
What keeps our children from having these attributes? Frost points at two huge factors.

First, fear. We fear letting go of our kids. We fear not doing enough. We fear taking charge. We fear slowing down. We fear unstructured time and unstructured activities. We fear falling behind. These fears all lead us towards pushing our children hard down that typical path. Instead, we’re better off hammering in the big principles of independent thought and self-responsibility when they’re young and letting go as much as we can when they’re older.

Second, ego. We want to believe that we’re vital to the process of our children’s final steps towards adulthood. We’re not. Once puberty hits, we’re a support staff - we’re no longer absolutely vital to the process. Similarly, we tie our own sense of self-worth to the accomplishments of our children - if our kids get a high score on the SAT or get an A in an AP class, that’s proof that we’re great and something we can brag about to others, right? Wrong. It’s just ego fuel that actually hurts our kids.

Another interesting argument: our children have huge advantages with the advent of computers, the internet age, and the easy access to information. Shouldn’t this mean that they blow us away in terms of intellectual growth at a young age? The problem is that instead of focusing on actually raising intellectually curious and self-reliant kids, we focus on them getting A’s in classes that likely aren’t pushing them very hard at all. So why should they grow if all that matters is that A? Instead, the book suggests using local community colleges to put your child in genuinely challenging classes that really push them - a “B” in a class that really pushes their work ethic and intellect is much more valuable than a cruise-control “A” in every aspect other than the almighty GPA.

Four: AP, IB, & SAT - OMG!
So many students today stress themselves out over taking tons of AP classes and getting a great SAT score. Frost argues that both of these have less value in terms of getting into college than you might think.

First of all, she argues that so many students are taking AP courses that they’re becoming watered down. With B- students taking the courses and sometimes passing, the material may be at a somewhat lower level than before. On top of that, students are now taking three or four AP courses at once. As a result, many colleges are eliminating the credits they offer in exchange for AP courses. In the end, the value of an AP course is lower than it once was, both in terms of what’s learned and in terms of how colleges value it.

A similar phenomenon is happening with the SAT and ACT. High schools are now beginning to require the exams; meanwhile, community colleges don’t require the test at all and most colleges and universities are de-emphasizing the test in terms of admission criteria. In other words, instead of becoming a useful prep tool for college, it’s become so universalized that it no longer matters as much as it once did.

What does matter, then? How can a student stand out? Frost points towards the IB, which provides a rigorous plan of study available in many different nations that, upon completion, is accepted (and often considered quite valuable) for college admission. Plus, the IB de-emphasizes the pressure of AP classes and the SAT, instead focusing on teaching how to learn and how to collaborate, skills invaluable in a person’s career. Another approach: taking the GED as early as possible, skipping the high school “experience,” and moving on to college early.

Five: Meet the New A Student: Artful, Advanced, Atypical, and Adventurous
Frost argues (quite well, with a pile of anecdotes) that a well-balanced student is incredibly well served by spending time abroad during their high school experience. Such an experience provides a huge deal of personal growth, vastly improves personal awareness, and demonstrates on college applications that a student is committed to outside-the-box exploration.

Here’s the thing: people at this age are passionate and that passion floods in surprising directions. If you stifle that passion and attempt to channel it in a way you see fit, you’re likely to see the dam break and see passion flow in a terrible direction. Instead, offer your child as many positive channels as possible and see where their passion takes them. Putting a study abroad experience on the table certainly does that.

Six: The Boldest Advantage: A Yearlong High School Exchange
Almost all parents feel some strong reticence at the idea of sending their child abroad for a year to study. That’s the “fear and ego” mentioned earlier raising its head.

Instead, a study abroad program - if done with thought and planning - is probably the best move you could make for your child. It’ll help you deal with the “empty nest” problem in a cold turkey way, keeping you from being a helicopter parent when your child moves on. It’ll show your child in the clearest way possible that you respect their independence. Most importantly, though, it’ll give your child a huge dose of personal and intellectual growth as they learn about a different culture and different way of life while also continuing their education. Few things set up a student better for college than such an adventure.

How can you make the most of this? Go early (sophomore year is a good target), go long (a full year instead of a semester), and go challenging (a place with a different language and a different culture).

Seven: How to Save Thousands on College: Study Abroad
A similar philosophy applies in college - go early (sophomore year is a good target), go long (a full year instead of a semester), and go challenging (a place with a different language and a different culture). A study abroad program while in college also has an additional benefit: it’s cheap.

Many people scoff at this, pointing toward expensive study abroad packages offered by schools. The truth, though, is that those packages are often glorified travel packages - instead of immersing the student in another culture, it actually isolates them in a vacation-like bubble, housing them with other native English speakers and providing every possible accommodation. Very little actual value is gained.

Instead, consider applying directly to the university you desire to attend as an independent international student. You’ll live in the same housing as students there and will be fully immersed in the culture instead of isolated in a “submarine” of your own culture. Plus, the price is reasonable - often very reasonable. In many cases, it’s far less expensive than the price you’re paying for university at home.

Eight: The Full Family Deal: Sabbatical or Sell-It-All?
A third option - one that works well if you have multiple high-schoolers at once - is to simply spend a year abroad, enrolling your kids in school in that country for a year. This will be something we consider circa 2019, for example, when we have two children in early high school.

Obviously, this doesn’t work for everyone, but it does have certain advantages. If you can find a job in your career in another country, it’s a huge resume booster. If you’re engaged in a creative career, immersing yourself in a different culture can pay real dividends.

This is something that’s at least on the radar for us in several years. If my wife can get a job teaching English in another country for a year, we would be quite interested in pursuing this. I can in theory write from anywhere, too, so that also helps.

One good compromise - a summer-long sabbatical. Rent an apartment in a foreign nation for three months and see how things go. Engage in every activity you can while there - not tourist stops, but the way of life that people have there. Shop at their stores. Eat their food. Learn their language.

Nine: The Get-Real Guide for Bold Parents
The final chapter is something of a clean-up of the many issues brought up by this book. How do you handle the criticism from others who say you’re sinking your child’s chances because you’re not following the “normal” path? What about their safety?

Each of these questions has a very reasonable answer. As for the criticism, such study abroad programs actually vastly improve chances of college acceptance and of growing a student to the point where they can really take advantage of college. With the safety issue, high school students are often more safe abroad than at home - no drivers under the age of eighteen, students are protected from anti-American sentiments by their youth, and students are naturally more cautious because they’re in unfamiliar territory.

Is The New Global Student Worth Reading?
I’ll be honest with you: I’ve been questioning the absoluteness of the high school/SAT/college application/expensive college pipeline for a long time. I’m actually in favor of delaying college for a year or two after high school, allowing other life experiences to fill in the gap. Why not let a student spend a year working hard at a job or for a non-profit in between high school and college, learning what it actually means to earn a paycheck and make ends meet and what the value of a college education actually is. I know I certainly would have benefited from such a sojourn. I’ve also been thinking a lot about traveling abroad for an extended period when my children are older, perhaps spending a year in another country and allowing them to attend school there (Great Britain, perhaps, or maybe a nation where we don’t speak the language natively).

Reading The New Global Student actually knocked down the idea of the standard pipeline even more. It’s loaded with food for thought for any person with children school-aged or younger. Even if you consider the general idea to be nonsensical, there’s enough material in here about how to set the path for your child to excel in their educational and professional career and save money along the way that it’s at least worth a read for specific tips.

For us, it’s opened the door to a lot of discussion about what we can do as parents to prepare our children for this ever-shrinking world.

If you have kids, you owe it to yourself to read this one. It’ll really make you think about their education and how simply connecting the dots might not be the best route.

What is it? For those unaware, Mechanical Turk is a service from Amazon where you can complete simple tasks in exchange for a tiny payment. For example, you might look at an image and describe it in ten words for $0.08. You might fill out a multiple-choice survey for $0.10. You might be asked to write a product review for $2.50. For the most part, the tasks available through Mechanical Turk are quick and very simple. The problem is that, individually, they’re not big earners. You have to do quite a few in an hour in order to earn anything of significance.

Well, can you? I decided to try it out for myself. I browsed around the Mechanical Turk website, signed up, and set aside an hour to try to earn some money there. Here’s a detailed log of my experience.

8:46 AM - Signed up for Mechanical Turk. It took roughly a minute to open an account there - no problem.
8:47 AM - Chose my first task - write a 350-500 word article on “email autoresponder marketing” for $4. I’m just going to churn it out off the top of my head.
9:02 AM - Done - if that type of “off the cuff” writing is accepted, maybe Mechanical Turk is a decent way to earn money. I basically just wrote in a nearly train-of-thought style, something I would consider a weak first draft for The Simple Dollar, but still readable. I’m going to try categorizing some images at a penny a pop for a bit.
9:08 AM - I managed to do six images in six minutes for a whopping six cents. Not a good use of time. Note to future self: stay away from the single-penny tasks.
9:09 AM - After browsing some tasks, I decided to try a series of really short questionnaires from MasterCard for $0.10 a pop.
9:18 AM - I was able to do five of the dime surveys in eight minutes - totaling out to just under $4 an hour. Not good, but it could definitely be worse.
9:19 AM - I decided to try some simple product categorization for a nickel a pop. It seems easy - just look at a picture of an item and come up with some short tags to describe it.
9:25 AM - I managed to complete two of them in six minutes. I actually completed three, but one was lost to the Turk’s horrible page design, which eliminated everything I had filled in because I hadn’t clicked on the “Accept HIT” button. Ten cents in six minutes is not a win.
9:26 AM - I take on a task that involves looking up addresses for wineries at $0.40 a pop.
9:32 AM - Should have read more carefully, as it requires entering a bunch of wines from each winery as well. Six minutes work for $0.40 is NOT a good deal.
9:36 AM - I notice that if I sort by dollar value, some higher-dollar entries will pop up and then disappear before I can accept them - $6 to $10 a pop. Chasing them might pay off, but it seems to be a time waster.
9:37 AM - I take a short test to “qualify” me to do some higher-value HITs. Apparently, they don’t want just anyone writing service reviews. You have to at least be aware of the company.
9:41 AM - I finish the test - but the ones I would be “qualified” to do are now gone.
9:45 AM - I spent five minutes looking at really awful HITs. If they pay a penny a piece, if you can’t do them FAST, they’re not worth it.
9:46 AM - A moment later, I found a service review, enabling me to describe a service I received for $2.55.
9:50 AM - I finished the review, earning $2.55 for four minutes’ work. That task was actually the one I was “qualified” for because of the earlier test, meaning I invested eight minutes to earn $2.55 - or $19.13 an hour. Not bad at all!

And here’s the outcome of that adventure. I spent a total of one hour and four minutes there and earned a total of $7.61 (assuming everything I did was accepted), giving an hourly wage of $7.11 for my effort. I probably could have done better than that if I weren’t logging what I was doing as I went along.

Some tips Here are several things I learned that can help someone interested in Mechanical Turk earn more for their time.

First, it pays to be able to write comprehensible stuff quickly. If you can be given a topic and immediately begin to write something readable on that topic, you can probably do pretty well at Mechanical Turk. The two biggest earners during that hour - the service review and the piece about email marketing - mostly involved me writing off the top of my head. Of course, if you were to focus that ability towards a passion, you could build a great blog on your own that would provide your own steady revenue stream.

Second, the extremely low-cost Turk tasks aren’t worth it. If it pays less than fifty cents and takes more than a couple mouse clicks to complete, it’s not worth it. If you can’t finish a fifty cent task in less than four minutes and move on to the next one, you’re earning less than minimum wage at this.

Third, most of the tasks fit well into short breaks. I can see someone who mans a customer support line or something similar actually using Mechanical Turk to earn a bit of cash during the delays between calls. If you work at a job that has lots of short periods of downtime throughout the day, Mechanical Turk might fit well into those gaps, since the tasks mostly just take a moment or two.

Fourth, tasks that require “tests” seem to pay off. Go ahead and take that test - it seemed to unlock quite a few tasks that paid well. Obviously, they were just trying to filter out people who just wanted to throw themselves at the next available task, enter junk, and move on as fast as possible.

Another big tip: if you do take on a task in the lower price range, look at it first. Are you really going to be able to do this in a time frame short enough that you’ll actually make a reasonable wage for your time? Take my experience with the winery - it seemed, at first glance, that I would just be looking up contact information for wineries - easy enough. What they wanted, though, was a ton of data entry about wines sold at that winery - not worth the forty cents they were paying.

Finally, be patient. If you don’t see anything worthwhile available - meaning nothing that earns more than $0.50 - just hit refresh a few times. Good opportunities seem to pop up all the time, but are devoured quickly. Hitting refresh helps you get your foot in the door with better Turk tasks.

Is it worthwhile? I was genuinely surprised by the experience. If you have the ability to throw down readable writing very quickly, you can earn minimum wage with the Turk - more than I ever expected. Given the short timeframe and the wide variety of tasks available, it’s something that you can sit down and do in short little bits when it’s convenient for you.

Having said that, you can do better than minimum wage with your time. Turk earns well enough that you might be able to fill in spare moments with it - or use it as a stopgap when you’re job hunting - but approximating minimum wage isn’t a good reason to just sit at your computer and click all day. If you have the abilities to earn minimum wage at Turk over an eight hour period, you’d be much better served using that mental energy building something for yourself - a blog on a topic you’re passionate about, a healthy network of people in your field, or something similar.

For me, at least, I don’t think I’ll be returning in the future, but I could see myself using it in the right situation - for example, if I did wind up doing customer service-type work or if I was really in a serious financial pinch. I also might use it if I was bored while watching a television program with my wife - but even then, I’d much more likely spend my time on Twitter or something like that. I value my mental energy at a rate higher than minimum wage.

One Year Ago (June 28-July 4, 2008)
The Minimalist Kitchen: What You Need (and Don’t Need) to Set Up Your First Workable Home Kitchen You don’t need tons of things to cook well at home. In fact, you just need a few items - and the desire to start preparing your own food. Here’s a guide.

No Time for Frugality: Cutting Financial Corners with No Time Investment Many people claim they don’t have time to do anything to save money. In truth, we already have the time, because the best ways to save money involve just slightly tweaking what we already do.

Finding Inspiration for Financial Change What’s your motivation for making good financial choices? For some people, it’s hard to dig up a central reason, but central reasons can be powerful. Here are some ways to find inspiration for real financial change in your own life.

A Clever Trick for Automatically Finding Deals You Want at Amazon Amazon has tons of bargains, but there are so many things going on that it’s easy to lose the deals you actually want in all the noise. Here’s how to filter through all of that and find the stuff you actually want.

The Net Worth Mentality: The Road Less Traveled I often don’t know exactly how much I make. Why? I don’t worry about my paycheck - I just worry about my net worth. Here’s exactly what I mean - and why such a shift in perspective can be life-altering.

Two Years Ago (June 28-July 4, 2007)
Musings On Spending $3 On A Candy Bar This was such a humble, little, simple post, relating an experience I had with my wife and son on a rainy day. Yet, somehow, this one really struck a chord with quite a few people - it probably got me more mainstream attention than anything I’d written up to that point.

SmartMoney Magazine’s “7 Money Mistakes” - And The Simple Dollar’s “7 More Money Mistakes” This was an excellent little article in SmartMoney that I thought deserved some expansion - so I stepped up to the plate and did it myself.

Defining Minimum Acceptable Housing - And How It Varies From Person To Person What might work for minimal housing for a 23 year old single male fresh out of college is going to be vastly different than what a family of four needs. Don’t substitute other’s needs for your own - if you’re 23 and single, you don’t need a four bedroom house.

When Frugality Is Fun I’m much more likely to dive into a frugal project if it looks fun for other reasons. Take my homemade laundry detergent, for example. My wife is a chemistry teacher, so the homemade detergent became a project that we were able to dive into with gusto.

How I Made Brown Bag Lunches Work For Me Eating leftovers for lunch is a great way to save money, but many people go “Ewww…. leftovers…” Here are some ways to get around that little problem.

If you’d like to browse through more of the archives, visit the chronology, where all posts are listed in chronological order.

Eight Ways to Get More out of The Simple Dollar
This is kind of a FAQ for new readers and is posted each week along with the Time Machine. Here are eight great ways for new readers to dig deeper into The Simple Dollar.

1. Subscribe by email or RSS. Visiting The Simple Dollar’s website is great, but for many people, it’s more convenient to receive the articles in another form. It’s easy to join 60,000 other subscribers and get The Simple Dollar’s content by email or in your RSS feeder (if you’re unfamiliar with RSS, check out Google Reader.

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3. Read my story of financial meltdown and recovery. The Simple Dollar isn’t based on what I’ve read in books or learned in school. I’ve made a lifetime of financial mistakes - The Simple Dollar is a record of what works for me during the process of getting my life on a better track.

4. Download my free 49 page e-book. Everything You Ever Really Needed to Know About Personal Finance On Just One Page is completely free. It summarizes all of the key lessons I’ve learned along the way about personal finance in one tidy package - in fact, all of the main principles can be found right on the cover.

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