As you can imagine, Chris has accumulated a hell of a lot of frequent flyer miles over the past few years. He says he currently has 676,583 miles in eight accounts. But not all of these come from flying. Chris has learned all sorts of ways to accumulate miles without taking to the air. Now he’s put together a new e-book called Frequent Flyer Master that describes how you can maximize your miles, too.

I haven’t read Frequent Flyer Master but I’ve read several of Chris’ other books. They’re packed with information. They’re not scams. Plus they come with money-back guarantees. If you’re interested in travel, consider buying this guide.

Meanwhile, from elsewhere on the internet, here are few of my favorite articles from the past week:

First up, Flexo from Consumerism Commentary offers a great rebuttal to my advice to do what what works for you. “Doing what works for you can be a trap,” he warns. This philosophy can:

• Make you think you have a license to ignore criticism.
• Make you ignore better options.
• Make you accept mediocrity as a way of life.

I think Flexo’s points are spot-on, and I like his conclusion. (I like it so much, in fact, that I’ll incorporate the gist into my book!) “What works is just the minimum,” he says. “Do more than that. Do what works and look for something better.”

Next, The New York Times has an interactive graph that shows the jobless rate for people like you. Lowest unemployment? White women ages 25-44 with a college degree (3.6%). Highest? Black men ages 15-24 who didn’t complete high school (48.5%). And people like me? Just 3.9%.

Also from The New York Times, here’s a story about buying into a Christmas without presents. The older I get, the more I dislike Christmas gift-giving. Does that make me a Scrooge? Not according to this article. (For more on this subject, watch for April’s Anti-Stuff Holiday Gift Guide later this week.)

Finally, here’s a round-up of recent money carnivals. These are great sources for more info about personal finance:

• Kelly from The Centsible Life hosted Carnival of Personal Finance #229.
• Provident Planning was the home of The Best of Money Carnival #23.
• Bob at Christian PF shared this week’s Carnival of Money Stories.
• The Financial Blogger hosted Carnival of Money Hackers #89.
• Over at Don’t Mess with Taxes, you can read Tax Carnival #59.
• And The Skilled Investor shared Carnival of Financial Planning #114.

Now, if you’ll excuse me, I’m off to finish chapter six of Your Money: The Missing Manual.

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Recently my 19-month old daughter managed to get her tiny hands on a ballpoint pen. Normally, this wouldn’t have been a major event. This time was different. In the 30-45 seconds it took for me to notice, she’d thoroughly covered two-and-half cushions of our microsuede couch with a beautiful masterpiece in ink slashes and squiggles.

While I’m proud of the her dedication to detail and new art skills, this wasn’t exactly the platform I wanted to her display them on. I confiscated the pen and walked straight to the computer; I knew that time is of the essence with ink.

I found a wide variety of solutions on the internet. Two simple ones were most common: rubbing alcohol and/or Windex. Really? I knew water would only make matters worse, so my first though wasn’t to use rubbing alcohol.

I took a short walk to the corner store for a bottle of rubbing alcohol and a large pack of Q-Tips. Two l-o-n-g hours later, the ink was mostly gone. After the damp spots dried, the damage was all but invisible. Success!

As a fan of simplicity, I loved this easy, straight-forward solution to my problem. Afterward, I spent more time than I’d like to admit scouring the web for similar creative cleaning hacks that involve everyday products. There are more than you can imagine, but several in particular caught my eye.

The many uses for cola
It’s actually scary what cola can be used to accomplish. While there are many sites dedicated to amazing uses for this common soft drink, two cleaning solutions appear on almost every list:

• Polish tarnished chrome. Apparently the only other material you need is a piece of crumbled aluminum foil. Pour the coke on the chrome, scrub lightly with the foil, rinse with water, and repeat.  This can be used on everything from old motorcycles to bathroom sinks.
• Clean stains out of toilet bowls. Supposedly the acid in coke works well to break down stains in a toilet bowl. While this is commonly listed as a legit cleaning solution, a 2003 episode of MythBusters concluded that this was “busted” — it doesn’t really work.

However, the Myth Busters episode did confirm some other uses for cola:

• Shine and clean pennies,
• Help clean a battery terminal, and
• Even remove blood stains.

I’ve never been a huge fan of cola, and you can be sure just makes it more likely that I won’t be reaching for a can of Coke anytime soon.

Removing oil stains
Oil stains are some of the toughest to remove once they set in. When a spill occurs and you don’t have specially-designed cleaner on hand, you have two other options:

• Kitty litter
• Powdered dish-washing detergent

With either product, you should sprinkle the granules and let them sit for fifteen minutes or so. Next, soak with hot soapy water and scrub with a push broom. (Or you can use a pressure washer, if you have one.)

I also found an interesting suggestion for using dryer lint to soak up oil on Lifehacker.  The article doesn’t go into much detail, but this is a better option than paper towels or traditional towels, which tend to smear the stain rather than absorb it.

NOT-so-permanent markers
As with the oil stains, it’s exponentially easier to remove permanent marker if you get to the scribbles before they have a chance to set into the paint. In this case, many straight-forward cleaning solutions work very well.

Depending on the surface of the wall and type of paint, some options cause more fading than others. When in doubt, test the following options in a closet first so you can gauge gauge any negative reaction to the paint:

• Basic rubbing alcohol,
• Bathroom hand sanitizer, and
• Toothpaste (works better with baking soda as ingredient)

In all three instances, many people claim that scrubbing with a tooth brush gives good results!

Removing ink stains
In my own story above, we needed to remove ink from a microsuede couch. We had several options to choose from. In each case, though, experts suggested try the chemicals in small inconspicuous spots first since microsuede fabric has many different forms. Options included:

• Rubbing alcohol,
• Windex, and even
• Nail polish remover

In our case, the rubbing alcohol did an effective job when applied to small, targeted quantities.

But let’s face it: You’re more likely to get an ink stain on your clothes, not your microsuede sofa. When this happens, the most important rule is not to use hot water or apply strong pressure right away. Both hot water and intense pressure actually cause the ink to set in deeper, making it more difficult to remove. Instead, try applying:

• Hairspray,
• Foaming shaving cream, or
• Nail polish remover

After applying the chemical directly onto the stain, blot gently, switching the cleaning fabric frequently to maximize the amount absorbed. Once you’ve absorbed as much as possible, you can rinse the fabric thoroughly and attempt to wash it regularly in hot water.

Note: As a rule of thumb, you should test any alternative cleaning solution on a small sample before attacking the actual stain. And in nearly every case, you’ll have greater chance of success the quicker you’re able to start cleaning.

What other creative cleaning hacks have you found for around the house? Which of your homemade remedies have been most effective — and which have failed miserably?

Photo by geishaboy500.

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For the past month or so, I’ve been buried deep in writing my book. (I have bookhead, I tell Kris — my mind is wholly absorbed by this project.) I now spend most of every day (seven days a week) holed up in my office up the hill from the house. I walk up in the morning, work through the afternoon, and then walk home in the early evening.

Before I started writing the book, I’d take breaks to walk around the neighborhood or to walk home for lunch. I don’t do that anymore. Instead, I sit in this chair all day, staring at the screen. And I’ve developed the habit of breaking quickly to walk a few steps to the mini-mart next door.

I grab a candy bar, a bag of chips (or, more commonly, pork rinds), and a diet soda. I’m eating like crap and I’m frittering away my nickels and dimes. This stuff isn’t expensive, but it does cost me $3-$4 a day — more if I eat it for two meals.

As a result of this silly habit, my weight has ballooned and I have less money to spend on things that really matter — like comic books or steamed clams at my favorite Italian place.

“You’re being dumb,” Kris told me over the weekend. “You know better than this. You should be walking home to eat.”

“I know,” I said. “But when I have bookhead, all I want is to grab some quick snacks and get back at it.”

“Well, why don’t you take some good food to the office instead?” she asked. Good question.

This morning I drove the quarter mile to the office instead of walking. Actually, I drove to the grocery store first, stocked up on raisins and nuts and Clif bars and canned fish and fruit. I also bought a case of bottled water. (In another time and place, I’d groan about shelling out $3.49 for 24 bottles of stuff I could have for free, but it occurred to me that I’m spending that much on two bottles of soda alone. The bottled water is an instance of doing what works for me.)

How will this new set-up work? Time will tell. I’m a stubborn old cuss sometimes, and when I get set in my ways, they can difficult to change. For now, though, I’ve created a sort of barrier in front of my office door: a stack of food that’s good for me and cost much less than the junk at the mini-mart next door. In fact, I’m eating an apple and a bag of almonds even as I type this.

I don’t want to make it sound like I’m beating myself up over this. Yes, I’ve been lazy and stupid, but it’s not like I’ve ruined my life or anything. But I do find it interesting how easy it was for me to slip into bad habits: I’ve probably spent $100-$150 on junk food over the past month. It’s a reminder to keep a closer watch on my spending habits!

I’ll bet you find yourself doing silly stuff like this, too, sometimes. Right? Right? (Please tell me it’s not just me.)

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I struggled with debt for over a decade. I made several attempts to tackle the trouble, but nothing seemed to work. Compulsive spending was part of the problem — I bought anything I wanted, even if I couldn’t afford it — but there was another factor, too.

Everything I’d read gave the same advice for debt reduction: Start by paying off your highest-interest rate debt. I understood the logic behind this, but I couldn’t make it work.

The trouble was that my highest-interest rate debt was also my debt with the biggest balance (a fully-maxed $12,000 credit card at 19.8% interest). I’d plug away at this for several months at a time, but then give up because it felt like I was never getting anywhere.

Then I read about the debt snowball approach in Dave Ramsey’s The Total Money Makeover. It blew my mind. Here was somebody saying that it was okay (good even) to do something different, to start by paying low balances first. I tried it, and 39 months later I had eliminated over $35,000 in consumer debt.

In the process, I learned a valuable lesson. In order to succeed with money, sometimes you have to ignore the conventional wisdom. Sometimes you simply have to do what works for you.

The perils of dogmatism
There’s too much dogmatism in our culture. People are convinced that their way is the right way to do things. I don’t begrudge those who are certain they’re right. When something works for you, you have a tendency to believe it’s the right choice for everyone else, so you preach it with passionate zeal. I understand that.

The problem, of course, is that we’re all different. Your religion and your politics and your financial tips work for you, but won’t necessarily mesh with my situation and experiences. And mine won’t fit with yours. There are few one-size-fits-all solutions in personal finance — or anywhere else.

For example:

• As I hinted earlier, there’s no right way to pay off debt. Yes, you’ll save a little if you tackle the high-interest stuff first, but you may have better chances of success by starting with low balances instead.
• There’s no right way to invest. I like index funds, but you might prefer individual stocks.
• There’s no right way to tackle your mortgage. Some experts recommend paying it off quickly; others recommend stretching it out as long as possible to take advantage of the low interest. The best choice is the one that best matches your goals for the future.
• There’s no right way to be frugal. Some folks are unwilling to sacrifice organic groceries, and others are unwilling to take the bus. That’s fine. Find ways to practice thrift that fit your lifestyle.
• Joint or separate finances? There’s no right answer. Just because you can’t conceive that a couple can have a strong relationship with separate finances doesn’t mean that it’s impossible. Millions of people do it with no problems.
• There’s no right way to budget. Some people use a loose framework to guide their spending. Others need detailed line items. The best budget is one that you’ll actually use.
• There’s no single best savings account or checking account or credit card. There are plenty of great choices. Don’t listen to anyone who says you’re wrong for choosing a good option that works the way you do. (I don’t feel bad about using ING Direct, even if they don’t offer the highest rates.)

When you get trapped by the belief that there’s just one right way to do something, you set yourself up for failure: If this “right” method doesn’t work for you, you have no other options. You have to keep using it, even if you keep failing.

But if you allow yourself to consider other options, you give yourself multiple paths to success. Yes, you could use the “right” method — or you could take a different path to reach the same goal.

Doing what works
I’m not saying that it’s okay to do anything you feel. It’s not okay to keep on spending just because dealing with your debt is difficult or uncomfortable. But it is okay to try something new when what you’re doing doesn’t work. And it’s okay to ignore the naysayers who complain that you’re “not doing it right”. Your want to find what works for you, not for somebody else.

Don’t listen to anyone who tells you there’s just one right way to do something. Each person is different. What works for one person may not work for another. Be willing to experiment until you find methods that are suited to your life.

Make informed choices, understand the consequences, and focus on your goals.

This is the seventh of a thirteen-part series that explores my financial philosophy. These are the core tenets of Get Rich Slowly. Previous parts included:

• Tenet #1: Money is more about mind than it is about math
• Tenet #2: Goals are the gateway to financial success
• Tenet #3: Spend less than you earn
• Tenet #4: Pay yourself first
• Tenet #5: Small amounts matter
• Tenet #6: Large amounts matter,too
• Tenet #7: Do what works for you

Look for a new installment in this series every Monday through the end of the year.

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I’m usually a from-scratch kind of cook, and the sort of “semi-homemade” ingredients for this pot roast make me cringe a bit. But although I’ve tried other recipes and other methods, this one beats them all hands-down. I got the recipe from an old friend after enjoying it at her house a couple of times and wondering why my pot roast was never as good as Kim’s pot roast.

This recipe has one cardinal rule: You must start with good beef. Otherwise why bother? We use a roast from the beef we buy in bulk; it’s pasture-fed on a local farm and the resulting beef literally falls off the bone in succulent shreds of savory goodness. This roast cooks all day at a low temperature. It’s simple enough to start before you leave the house so that it’s ready when you come home for dinner.

I use a Dutch oven with a tight-fitting lid for this recipe. If you don’t have one, you can line a roasting pan with foil, then cover the meat with another piece of foil, and then crimp the two all the way around to make a sort of meat packet. The goal is to hold the moisture in while the beef becomes completely tender. The roast forms its own gravy as it cooks.

Separately, I like to roast vegetables to serve as a side dish for this beef. In a shallow pan, I cook carrots, onions, and russet potatoes, drizzled with a bit of vegetable oil and seasons with salt and pepper. I cook them for 80-90 minutes at 400 degrees or so. If you aren’t lucky enough to have two ovens, make mashed potatoes on the stovetop instead.

I don’t recommend baking vegetables at the low oven temperature needed for this pot roast. Don’t try adding them to the roast; their high moisture content somehow messes up the texture of the beef.

Internet versions of this recipe exist using a crockpot on low for 8-9 hours. This might be worth a try someday, but I’m reluctant to meddle with perfection! I’ve also heard you can start with two cans of soup if you’d like more gravy at the end.

I like to serve this meal with a salad, homemade applesauce, and our favorite homemade bread.

Do you have a favorite low-effort recipe? What do you make that offers maximum flavor with minimum fuss?

J.D.’s note: This pot roast is fantastic. I cannot rave about it enough. In fact, I’m tempted to call Kris right now and ask if we can have this for dinner tomorrow. Yum. Photo by Merelymel13.

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Earlier this week J.D. tackled an important issue with his tenet Large Amounts Matter Too.

This concept goes by many names:

• Focus on big wins.
• Pick the low-hanging fruit
• Attack high-leverage areas.

You get the point: It’s efficient to do things that have major impact with minimum effort. J.D. wrote:

Some people spend so much time sweating the small stuff that they don’t bother to do the same on the big stuff. They’re penny wise and pound foolish, negating their daily scrimping and saving by making poor financial decisions that burden them for years. Kris has a co-worker who once bought an SUV for $43,000. After a year, he decided to trade it in, but could only get $23,000 for it. Ouch!

His advice is spot on. An intense dedication to frugality can often do more harm than good. Getting caught up in the details can lead to mistakes or oversights in areas that cost us thousands.

But there’s another less-talked-about side of the coin.

While you certainly don’t want to miss the opportunity to capitalize on a major event, you also don’t want to develop the habit of relying on them either. These type of large gains for minimum effort can make us lazy.

After all, why should you clip coupons when you could spend that time planning your next pay negotiation? Why would you save money by making your own products at home, when you could be aggressively monitoring the classifieds for the next killer deal on a car?

Why casinos want you to win money
People that have been around the gambling industry will tell you that winning on your first trip to the casino is much worse than losing. Why? It changes your mindset. Most people will go from “I’m probably going to lose, so I’ll just plan to have a little fun” to “Wow, that was easy! Next time I go back I’ll be playing off my winnings”.

Next, you convince yourself that the losing streak you’ve bumped into is just a natural part of how things work. Hitting just one hand will make up all your loses. From there, it only gets worse.

Casinos make their profits when they can detach you from the value of your money. If you win the first time you visit, that process has already started. They know the average person will be back and will spend far more money than the guy or gal who lost it quickly on the first visit.

Encouraging lifestyle inflation
In our finances, the big wins have the potential to detach us in the same way. The value of these events is lost if you use them as an excuse to not attack your impulse spending or creeping lifestyle inflation. We are a culture that loves to celebrate shaving $200 off our monthly mortgage with a new $300/month car payment.

The problem is that all to often, we create a zero-sum game. We end up shuffling back ten steps in our daily lives and then trying to make it up in one big leap. That works well as long as we can keep leaping back up. Occasionally, though, we stumble when trying to leap. And when we do, we fall flat on our faces.

A constant reliance on these big wins is not sustainable. They aren’t meant to be Band-Aids to cover our daily financial boo-boos.

Reversing the curse
The cure for this curse is balance: Neither obsessive frugality nor an intense concentration on the big-ticket items will lead to long-term success. Balance will.

These big wins can be powerful influences in our financial lives. We can use them as sparks to turn around a desperate situation, or as fuel to build momentum on our existing progress.

For Courtney and me, focusing on correcting our day-to-day habits has actually fostered more big wins. Getting the basic principles of money management and frugality under control has given us more time, relieved stress, and provided more freedom to pursue larger activities.

What about you? Have you experienced the curse of the big-win mentality? Which has been the leading focus in your financial life: the small daily habits or the higher-leverage large amounts?

Photo by Haundreis.

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A college professor once told my journalism class that freelance writing is something you should do on the side. It’s not anything you could make a living at full-time. 

I graduated and worked at an office job until I decided I wanted to become self-employed and do something that would give me more free time to write. A real job and a writer on the side, just like the professor had suggested. I went into real estate.

To say it was an awful fit would be an understatement. The very thought of cold-calling made me want to stay in bed with the covers over my head. What’s worse is that I wrote a total of one article that year. What in the world happened?

“Freelance writing can’t be a successful business.” That was my limiting belief. (To be fair, it was a belief I held long before the well-meaning professor reinforced it.) So I took a full-time job as an editor, and on the side I’d write maybe one or two magazine articles a year. I didn’t believe I could have a thriving freelance business, so I didn’t even try.

One small step
Early this year, I made the decision to put more effort into my freelance writing. Not too long after, J.D. mentioned that he was going to hire one or two staff writers. It sounded like a great opportunity, but I was scared to death to send the e-mail just asking to try out. What if I wasn’t selected? Even scarier was the possibility that I might get the job. What if I ran out of stuff to write? Freelance writing can’t be a successful business!

Soon after getting the staff writing gig, I picked up another writing client who found me through GRS. It was a breakthrough. I’ve since added two more projects to the list. I was actively pursuing and attaining everything I passively dreamt about for years. I took one tiny step that scared the hell out of me, and it snowballed.

Separating from limiting beliefs
My limiting belief shrinks every day because I’m slowly proving it wrong.

The funny thing is that once you stop identifying with a limiting belief, you start to recognize them everywhere. There was the well-meaning friend who thought writing the GRS try-out articles without being paid for them was a bad idea (when in fact it insanely boosted my business in less than a month). There are the people who stay in jobs they hate because they have a kid in college. There are the ones who say they have no time for a side business, or so-and-so only did it because they had money or the right contacts (Ramit calls this The Shrug Effect). I empathize with their reasons because I did the same thing for years.

No matter what your limiting beliefs, the steps to knock them out are the same. I only realized it in retrospect, of course, but the steps I took to grow my freelance business aren’t much different than the steps I took to overcome some of my other limiting beliefs, such as:

• Only people who are rich can travel to Europe.
• Getting into a boxing ring will end with a trip to the ER.
• I’ll see a shark if I scuba dive, and I’ll panic and die.

Round one: Set the intention
Thoughts have a significant effect on reality. Truthfully, this has always sounded like new-agey stuff to me, and I agreed wholeheartedly with J.D.’s review of The Secret.

But what I’m talking about is clearly defining an intention or goal and writing it down. I set the intention to expand my freelance business this year. No, it didn’t happen magically and without any effort on my behalf. I did the work, but first I had to be clear about what I was setting out to do, and I had to believe that I could do it. As I progress, I distance myself more and more from the limiting beliefs that held me back. 

Round two: Find mentors who are already doing what you want to do
Some of the most helpful, friendly people I know are people I’ve “met” online. I have a mentor in Canada who I have never met in person, yet she’s willing to take time out of her schedule to talk with me over the phone. She is making a living doing something that several people have told me is hard or impossible to do. I choose not to listen to them. I choose to hear how she is already doing this impossible thing.

Mentors also keep you positive. If you are feeling stuck or uninspired, contact one of your mentors to ask a question or reread an inspiring e-mail they sent. Block out the noise.

Round three: Ignore others’ encroaching limiting beliefs
It’s easy to be discouraged by other people’s limiting beliefs. Maybe you know someone who loves to tell others why something can’t or shouldn’t be done. If it’s legitimate constructive criticism, by all means, don’t dismiss it. But you can recognize limiting beliefs pretty easily, especially if you used to be the one coming up with them. Just smile and move along.

Or, use it as fuel. Sometimes nothing gets me more fired up than hearing the reasons I can’t do something. (Especially if that reason is because I am a female!)

Finally, keep a Word document with positive statements people have made. It’s cheesy, but consider this: How many times do we remember the nice or positive things people say to us or about us? Most people fixate on the negative, and that’s what they remember. You probably can recall dozens of awful moments all the way back to kindergarten, but do you remember the professor who told you you have a talent for writing profiles or the editor who said you wrote a killer article? Write down the good stuff, and read it when you need a pep talk.

Round four: Make a move.
Do something small to get the ball rolling, even if you think you will fail, cancel, or back out later:

• One e-mail to rev up a freelance business.
• A $400 deposit on a trip to Europe.
• Weeks of training in the boxing gym on heavy bags and focus mitts.
• Reserve a class at a dive shop.

Once you light the fire, it’ll be harder to put the brakes on.

I can still list limiting beliefs I’m holding, and I’m sure there will be many more in my future. The solutions to overcoming these fears start with a desire to take action. What limiting beliefs do you hold? How are you working to overcome them?

J.D.’s note: For more on this subject, check out my advice on how to fight financial trolls.

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The version I just submitted to my editor is 11,643 words and includes April’s should I buy it? flowchart. I expect the published version to be significantly shorter, but we’ll see.

Though I’ve been writing nearly non-stop for the past week, I have managed to collect more articles than usual to share. Rather than provide extended commentary, I’m just going to bullet-point the good stuff today:

• The Consumerist has a story how Radio Shack charges 24 times more for the same product than the dollar store next door. You should comparison shop whenever possible, folks.
• The Art of Manliness (still one of my favorite blogs) explains how to change your motor oil. This is something of a lost art. I used to do this on my first two cars, but haven’t done it myself in 15+ years. Have you?
• The Simple Dollar just celebrated its third blogiversary. To mark the occasion, Trent listed ten things he’s learned about money and life since he started the site. Good stuff.
• Baker doesn’t just write for Get Rich Slowly. He also has his own blog. Or does he? Over at Man vs. Debt, guest author Jenny Newcomer posted a great story about how she paid off $15,000 in nine months by selling stuff on eBay.
• Did you know Goodwill offers on-line shopping? ShopGoodwill.com features the good stuff donated to Goodwill thrift sores. You can browse and bid on art, antiques, and collectibles. Cool beans.
• Wojciech from Fiscal Fizzle seems to have a permanent spot on these round-ups! This week, he’s written about how to send the SWOT on your money, where SWOT stands for strengths, weaknesses, opportunities, and threats. Wojciech explains how to use this framework to tackle your personal finances.
• Lastly, I wanted to point out that Kiplinger.com has finally re-vamped their website. It’s no secret that I hated their previous layout. It was an abomination. The new site is much more user-friendly.

Before I start on the next chapter of my book (Chapter 6: Boosting Income), here are some recent personal finance carnivals. These round-ups are great ways to explore other money blogs:

• Money Crashers hosted a spooky Carnival of Personal Finance #228.
• PT Money curated this week’s Carnival of Money Stories.
• My Journey to Millions presented Carnival of Debt Reduction #215.
• And Mike from Gather Little by Bittle rounded up Festival of Frugality #201.

Have a good evening everyone. I’ll see you in the comments of April’s post tomorrow morning…

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Progress on Your Money: The Missing Manual actually ground to a halt this week. Well, that’s not strictly true. I did miss my deadline on Monday, but it’s not for lack of trying. I’ve already written as much (~12,000 words) for the frugality chapter as for two normal chapters combined. The problem is that there are too many ways to save money! So, I’m producing a ton — I just didn’t finish the chapter on time.

The topic I’ll be tackling this morning is frugal fun. As I plotted the section last night, I realized we haven’t discussed this subject much at Get Rich Slowly. Why not? There are lots of cheap ways to have a good time.

While I finish pulling this section together, I thought it would be fun to poll you for suggestions. How do you have fun without spending a lot of money? Better yet, do you have hobbies or pastimes that actually make you money? I’ll go first.

Here are some of the ways I’ve learned to find maximum fun with minimum cost (and yes, some of these will be in the book):

• Take a class. Community ed classes usually cost about $50. Classes at the community college might run up to $200. While this may not seem frugal, remember that you’re not only having fun while you take your course, you’re (theoretically) picking up a skill that you can use to improve your life.
• Read a book. Boring, I know, but this is still one of my favorite ways to relax. For the past few years, I haven’t had much reading time. That’s changed in recent months. (Well, until I started the book, anyhow.) Now I remember how much I love Dickens and Twain and, yes, even Proust. If you use the public library or a used bookstore, this can be a frugal hobby, indeed.
• Exercise. I love activities that do double duty. When you find an exercise you love to do, you’ll not only enjoy yourself, you’ll also enjoy improved fitness, which in turn will save you money.
• Volunteer. I admit that this isn’t something I’ve done yet, but I’ve heard of other who have. The idea appeals to me. Find a way to do something that you love while also helping others.
• Make use of what you already have. Ah, this is a big one for me. I’ve shared before how much Stuff I have. At one time, I owned over 3,000 books. I still have about a thousand volumes, many of which I haven’t read. Plus tons of comics and music and movies. If I started using the stuff I already own, I’d probably never run out of things to do.

Last week, I interviewed Trent from The Simple Dollar to get his suggestions for simple pleasures. He had some great ideas. My favorite thing he said was this:

The mistake most people make is looking for the free stuff first. Look at the things you really enjoy doing. Once you know what you like to do, there’s almost always ways to do these cheap.

This is very true. If you know what it is you like to do, there are always people doing the same thing for very low cost. (Well, maybe not if you’re into boating. I’m not sure how you make boating a frugal hobby.) If you’re patient and clever, you can find out how others are doing what you want to do without going broke.

So, how about it? What sorts of frugal things do you do for fun? What info should I pass on to the readers of my book?

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Related Articles at Get Rich Slowly:

• Money and Values: When Frugality Goes Too Far
• My Frugal Life
• Save Money with a Frugal Buyers Club
• links for 2007-02-09
• links for 2006-11-17

Every summer, my wife and I cull our closets for stuff we and our kids no longer use. This is followed by a yard sale (complete with the obligatory lemonade stand from our kids), and the items that aren’t sold get donated to a local thrift store that uses the proceeds for charity. In the end, we have more closet space, some extra cash, an entrepreneurial opportunity for our kids, and a tax deduction.

And a little bit of regret.

Many of the items that get sold or donated were gifts we purchased for our kids or each other. They were enjoyed for a short time — or, sometimes, not at all — then relegated to the Pile of Misfit Stuff. It’s like that Marla Singer line from the movie Fight Club:

Someone loved it intensely for one day, and then tossed it. Like a Christmas tree. So special. Then, bam, it’s on the side of the road.

Kinda depressing. And expensive.

I know: It just turned November — do we really need to start talking about the holidays already? Well, if you’d rather not, read the rest of this post with your eyes closed. But my wife and I are already planning, because this year we are trying to avoid spending money on gifts that only provide a onetime squib of joy.

We know that no gift will be enjoyed forever, and that part of the fun of the holidays is letting lose a little bit. Also, we’re a little surprised each year by which presents turn out to be the favorites, so just limiting the number of gifts makes us a little nervous. Maybe we’ll cut out the wrong ones!

Our solution is to make an extra effort to spend less on the presents we give, and to give presents that will survive next summer’s closet-culling. Here are some things we’ve learned through the years:

Give things that provide repeat pleasure
Obvious, I know. But it’s not so obvious when you’re shopping. Two Christmases ago, we bought our son a Spider-Man action figure that climbed on doors. It looked so cool! And it was pretty fun…for about five minutes. Compare that to the Roku box I bought my wife last year. It allows Netflix subscribers instant access to thousands of movies and TV shows (though not necessarily the recent blockbusters). We don’t have cable TV, so NetFlix is our main source of movies. By getting the Roku box, we cut our Netflix subscription down from three DVDs at a time to one, saving $8 a month, which paid for the box in less than a year. And we use it several times a week.

When it comes to kids, we’ve found that gifts with narrow uses get used the least. Conversely, gifts with multiple uses, in all sorts of places, and in all sorts of spaces, get the most action. The classic example is Legos, which my kids play with in their rooms, in the bathtub, in the car, and even use for homework projects. (In fact, the Legos I was given as a kid serve as the foundation of my kids’ Legos collection; that’s a gift that has retained its usefulness!) A slot-car racing set, on the other hand, requires set-up, takes up space, and the cars just go ‘round and ‘round and ‘round.

Get it used
We’ve already started prowling Craigslist for things our friends and family might want. If items on your “To Buy” list are suitable to be given pre-owned, now’s the time keep an eye on the classifieds and (if you have an open-ended “To Buy” list) sites like Freecycle.org.

Buy year-round
This is something my wife does very well. She buys potential presents at all times of the year, when she finds them at excellent prices, and keeps them in the “gift box” in our basement. It’s also handy to have when you’re invited to a birthday party and don’t have time to get a gift.

Give experiences over stuff
This may seem to contradict our goal of buying things that last, but you know what they say about memories and all that. For my mother’s 70th birthday, my sisters and I took her on a trip. It wasn’t exactly cheap, but she valued it more than anything I could have wrapped. Plus, some experiences really can be the gifts that keep on giving, such as art, photography, or cooking classes (complete with providing babysitting services, if required for the recipient to attend the classes).

Buy in bulk
Sierra Black recently wrote about the pitfalls of buying in bulk, and I agree. But if there’s ever a time to save by buying a lot of stuff, it’s the holidays. It works for gifts, and for food if you’ll be entertaining or hosting relatives. As an experiment a couple of years ago, I looked at how much I’d save by shopping at Costco compared with my regular grocery store. I bought nearly identical items at both places and spent 37% less at Costco.

Underwear!
One holiday season, I bought pairs of white underwear in bulk, decorated them in ways not appropriate to discuss on a family blog, and gave them to my friends. I assume they were gifts that got multiple uses, though I didn’t perform any random spot-checks. The point, of course, is that homemade gifts really can be the most memorable…and least-expensive.

Be honest about what you don’t want
I have a very spotty record when it comes to buying things for my wife. In the past, she was too nice to tell me when she didn’t really like something I bought her. So it stayed in our closet until the next summer, and then…well, you know. Now, I keep all receipts, and she’s much more comfortable returning items that I gave her. (And I’ve been better about getting her friend’s help at holiday time.)

J.D.’s note: Robert may be worried that it’s too early to write about Christmas, but if Google traffic to this site is any indication, the Christmas season started weeks ago. Last year’s article on homemade Christmas gifts has been on fire!

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Related Articles at Get Rich Slowly:

• Christmas 1950
• Best Dates for Holiday Travel 2007
• December 24, 1958: A Six-Dollar Christmas
• links for 2006-12-01
• The Four Things Children Really Want for Christmas

On today’s episode of The Personal Finance Hour, I’ll join Jim from Bargaineering to discuss financial rules of thumb. Rules of thumb are no substitute for proper analysis, but they can be an excellent way to make general plans.

Today we’ll talk about things like:

• When should you repair an appliance and when should you buy new?
• When should you refinance your house?
• How much of your investments should be in stocks?

This show will air live at 3pm Pacific (6pm Eastern). It’s much more entertaining for everyone when you call in to participate. We’d love to hear your rules of thumb. When do you use them — and when don’t you? Call us at 1-347-327-9144 share (or join the rowdy crew in the chat room).

The Personal Finance Hour
There are a few ways you can catch The Personal Finance Hour. You can listen through an audio feed at the show page, or you can also listen through this widget:

We’re also on iTunes! You can subscribe to The Personal Finance Hour as a weekly podcast by following this link (which will open iTunes).

Jim and I do this most Mondays — and we hope you’ll join us. We think this is a fun way to connect with readers and to help everyone learn more about money management. You can catch The Personal Finance Hour live at 3pm Pacific (6pm Eastern) nearly every Monday.

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Related Articles at Get Rich Slowly:

• The Personal Finance Hour, Episode 11: Frugal Weekend Fun
• The Personal Finance Hour, Episode 12: Earning Extra Money
• The Personal Finance Hour, Episode 3: Finding Balance
• The Personal Finance Hour, Episode 4: Couples and Finances
• The Personal Finance Hour, Episode 13: Credit Scores with Liz Weston

Last winter, Kris and I re-financed our mortgage. In one fell swoop, we trimmed our monthly payments for principal and interest from $1386.60 to $1137.69, boosting our cash flow by $248.91 per month.

If we had consumer debt, that’s $248.91 per month we have could used for our debt snowball. It’s $248.91 per month we could stick in our retirement accounts, or to put into savings accounts for our trip to France next year — or to pursue other hobbies and interests. Really, it’s $248.91 we could use for anything we wanted. (As it happens, we chose to use that money to accelerate our mortgage payments.)

There’s no question that frugality is an important part of personal finance. It’s good to clip coupons and to mend broken furniture and to turn the thermostat down. But it’s even better to shop around for the best deal on a mortgage. Everyday frugality can save you a little money consistently, but by making smart choices on big ticket items, you can save thousands of dollars in one blow. Or you can boost your cash flow by hundreds of dollars per month.

Some people spend so much time sweating the small stuff that they don’t bother to do the same on the big stuff. They’re penny wise and pound foolish, negating their daily scrimping and saving by making poor financial decisions that burden them for years. Kris has a co-worker who once bought an SUV for $43,000. After a year, he decided to trade it in, but could only get $23,000 for it. Ouch!

Now obviously, you only get a few chances in your life to save big on a home or a car. You rarely make financial decisions involving tens (or hundreds) of thousands of dollars.

However, you probably do make other big decisions several times a year. You buy a camera or a television or a new piece of furniture. You book a cruise or fly home for Christmas or hire somebody to work on your house. These are prime opportunities to save money. Whenever you anticipate a big expense, you should look for ways to maximize the value you get for your dollar.

As I’ve shared before, here are the guidelines I use to steer my shopping for big-ticket items:

• Know what you want before you start. If you’re buying a vacuum cleaner, what are you going to use it for? What features do you need in a television? What features do you want? When I bought a small digital camera in 2007, I jotted a quick wishlist: wide-angle lens, large display, easy-to-use menu, good video quality. Some of these items (like wide-angle lens) were much more important than others.
• Set a budget. Ideally, you’d set a budget for your purchase before you started shopping. That’s not realistic. You can’t know how much a dishwasher costs until you actually look at a few. But once you have a sense of the landscape, decide how much you’re willing to spend. If you don’t set a budget to start, it’s easy to succumb to “desire inflation”. When shopping for my digital camera, I had a budget of $300.
• Research your options. Once you’ve created a features list and a budget, search for options that meet your requirements. In most cases, Consumer Reports is a great place to start. Your local public library probably has a copy of the annual Consumer Reports Buying Guide. But don’t discount the web. I often do product research through Amazon.
• Make a selection. Once you’ve done your research, you’ll probably find one or two items that seem most promising. (There’s rarely one perfect choice.) I tend to write down the manufacturer and model number of my top three choices before I move on to the next step. In 2007, I was able to narrow my choices down to two camera models, both of which were within my budget.
• Compare prices. Now that you have a shortlist, begin researching prices. Again, check Amazon. Check other online vendors. Check your local stores. Don’t forget to consider used or refurbished items.
• Make the purchase. Once you find the best source for the item you want, buy it. Be confident that you’ve researched price and features so that you know you’re getting a good deal.
• Protect your investment. The older I get, the better I am about saving warranty information and boxes. (If we had a smaller house, I’d only save boxes for a couple weeks. Because we have space above the garage, I save them forever.) A little foresight when you buy a product can save a lot of headache down the road.

But large amounts don’t just matter when you’re refinancing your house or shopping for a new plasma TV. One of the best ways to discover the power of large amounts is through boosting your income. Whether that’s through negotiating your salary, asking for a raise, or changing careers, a larger income can have a huge impact on your finances.

Remember: Saving money on the little things every day is great, but saving money on the big things can make an awesome difference to your budget.

This is the sixth of a thirteen-part series that explores my financial philosophy. These are the core tenets of Get Rich Slowly. Previous parts included:

• Tenet #1: Money is more about mind than it is about math
• Tenet #2: Goals are the gateway to financial success
• Tenet #3: Spend less than you earn
• Tenet #4: Pay yourself first
• Tenet #5: Small amounts matter
• Tenet #6: Large amounts matter,too

Look for a new installment in this series every Monday through the end of the year.

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Related Articles at Get Rich Slowly:

• Small Amounts Matter
• Do What Works for You
• Small Amounts Matter
• The Curse of a Big-Win Mentality
• How Lower Fees and Expenses with Index Funds Could Mean 33% More to Spend in Retirement

Meanwhile, I was pleased with the stuff I did write here during October, and the contributions from staff writers Adam and April, and from the guest authors. And, of course, I always appreciate your contributions to the discussion.

Here are some of the best Get Rich Slowly articles from the month of October:

• October 1st: Happier
• October 6th: How to stop buying clothes you never wear (by April)
• October 10th: The guilt of wealth
• October 14th: 9 ways to knock the socks off your next landlord (by Baker)
• October 15th: Five steps to six figures in seven years (a guest post from FMF)
• October 17th: What if your high-paying job makes you miserable?
• October 22nd: The paradox of choice and the dangers of perfection

The blog isn’t the only part of this site. If you have burning questions about personal finance, one of the best places to get answers is the Get Rich Slowly discussion forum.

The forum is a great place to chat with your fellow readers. Have questions about emergency funds? Ask! Want to chat about cheap vacations? This is the place to do it. The forums have over 3500 registered users and over 41,500 posts.

Subscribe!
You may subscribe to Get Rich Slowly via any of the following methods:

Finally, you can follow me on Twitter or join the Get Rich Slowly blog network and/or the Get Rich Slowly page on Facebook.

This weblog is a success because of you and your support. As always, I welcome reader contributions, either as ideas for stories, or as guest entries. If you have any comments or requests to improve this site, please feel free to pass them on.

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Related Articles at Get Rich Slowly:

• The Best of Get Rich Slowly: October 2007
• The Best of Get Rich Slowly: October 2008
• Best of October, and How to Subscribe to GRS
• links for 2006-10-03
• Dow 10,000 and Other Nonsense

As those of you who follow me on Twitter already know, it’s been a l-o-n-g Saturday filled with all sorts of misadventures. Murphy’s Law has been in full effect this Halloween. I’d meant to post this month-end garden summary around noon, but now will have to do. In fact, there wouldn’t be a summary at all except that my wife sat down and wrote it for me. Here’s what Kris has to say about the month of October…

October arrived with the typical cold and damp, bringing Portland’s garden season to a close. During the fall and winter we’ll enjoy the hearty foods we’ve packed away from this year’s crops, until by early spring we’re ready to begin anew. We’ve been eating fresh fruit and vegetables from our garden patches since May’s first strawberries. Not bad!

The last of the tomatoes
We harvested the last of the garden produce this month. Rain and wind don’t mix well with ripening tomatoes, so I picked 15 pounds of semi-ripened tomatoes to take inside. Stored in a cool place between layers of newspaper, some of these will turn out to be fairly delicious. The rest will rot.

The cucumber plants coughed up enough for another month’s worth of salads, and the beets were ready for roasting. (In fact, I’m roasting some in the oven even as I write this.) In addition, I tore out the jalapeno plants and dried the peppers in slices in the dehydrator. Some went to our neighbor who loves spicy foods; the rest will go into winter cornbread and soups. 

Usually I collect the fallen English walnuts in our front yard, but the squirrels have been especially voracious this year! And my volunteer vine turned out to be a birdhouse gourd that gave me two mature gourds for fall decorating.

The fruits of autumn
I spent time in the mud ripping out cucumber and squash vines, then the beans and tomato plants, and tidying up the apple trees.  We also dug out the beleaguered gooseberry plants and three poorly-producing 25-year-old blueberries. We invested $84 in five new blueberry bushes of various types and sizes. (We’re trying to stagger the berry harvest so it lasts as long as possible.) As we rake leaves in our yard, we’ll spread them onto the garden bed to mulch the asparagus and keep down the weeds over the winter.

In the waning hours of sunshine, early October in our neighborhood smells of Concord grapes. We wait until the scent tells us they’re ready, then head over to the generous neighbor’s yard to pick all we can use. Our own young vines produced a good crop as well. This year, J.D. gathered about 30 gallons of mixed purple and green Concords. I made juice (22 quarts) and grape jelly. It’s a long day but so worth it every time we open a jar. We also made another batch of applesauce from twenty pounds of fruit brought back from an orchard by a friend and fellow canner.

This summer’s total for canned food: 140 quarts of assorted pickles, apple/pear sauce, juices, jams & jellies, salsa and fruit. My pantry is full to bursting! I love being able to eat this local bounty during our winter, rather than buying produce that’s been shipped from far away. 

In addition to the canned food, the freezer is stacked with berries and assorted sauces, and dried fruits and herbs are stored in a dark and dry place. All this “free food” keeps my grocery spending in check even when we’re not eating directly from the garden. (It’s like a savings account for food!)

Monthly totals
The fall is when I tally the herbs for the year. Our herb garden provides me with sprigs and snips all year. The annual herbs are finished (basil, stevia, cilantro) and others die back until spring (lemon balm, oregano, mint, lavender) but the perennials will keep going for our winter kitchen use (rosemary, chives, bay leaf, sage & thyme). Throughout the summer, I’ve dried lavender flowers, mint and lemon balm, stevia and raspberry leaves for making tea infusions.  Altogether, I estimate that the herb garden has produced at least $50 of harvest.

Here’s the tally for October’s harvest:

• 56 jalapeno peppers @ $0.29 = $16.24
• 18 cucumbers @ $1.29/pound (about 5 cukes)  = $4.64
• 5 bunches mixed beets @$2.99/bunch = $14.95
• ~9.64 pounds of tomatoes @$1.99/pound = $19.18
• 8 pounds grapes from our vines @$3/pound = $24.00
• Assorted herbs, all season $50.00
• Costs: 5 blueberry bushes ($84)

Yearly Totals

Here are this year’s totals through the end of October:

Final word
This garden project is not a formal experiment. Kris and I are long-time hobby gardeners, and we have set ways that we do things. This year, we’re trying to incorporate some new ideas from GRS readers, but most of the time we’ll do things the way we have for nearly 15 years.

We’re not trying to be 100% organic (though we are mostly organic through our normal practices). Nor are we trying to be 100% frugal. Instead, we’re trying to see just what our garden costs and produces based on our normal habits. We hope the results of this experiment will help us find new ways to economize and to improve our crops.

You can read about my goals for this series in The year-long GRS project: How much does a garden really save?

p.s. Happy Halloween!

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Related Articles at Get Rich Slowly:

• The Year-Long GRS Project: How Much Does a Garden Really Save?
• The GRS Garden Project: June 2009 Update
• The GRS Garden Project: September 2009 Update
• The GRS Garden Project: November Update
• The GRS Garden Project: July 2009 Update

When you have a need or a problem, there’s usually a solution that can be bought. Buying a solution is often the easiest and fastest way to solve a problem — but it also can be the most expensive.

When my husband and I were in debt-repayment mode and had our discretionary spending locked down, I began to see that there are alternative solutions to problems that I once thought could only be solved by buying something. Sometimes quality counts, but more often than not, I would choose a solution that required spending more than necessary, when some forethought might have yielded a solution that was less expensive (or even free). Or maybe if I had stopped to think about it, I’d have realized it wasn’t a critical problem, and I could just choose to do nothing about it.

We set a strict budget while we were paying off our debt, so it was necessary to think about alternatives before every purchase to meet our payment goals. The great thing is that it became ingrained in me, and it’s something I continue to try to do. Here are some of the techniques I use.

Repair what you can
Repair what you have instead of replacing it. You can do this with clothes, appliances, furniture, and cars. I know someone who used throw away a shirt when it was missing a button rather than paying to have it mended, or learning how to sew on a button himself.

But even if you’re not apt to go the do-it-yourself route, sometimes paying for a repair is worth it when it’s something that is expensive or difficult to replace. Last year I took my boots to a shoe doctor for the first time. I was ready to replace them, but I thought I’d try a repair shop first, and I was pleasantly surprised. The boots were re-heeled, the leather was conditioned, and they looked good-as-new. It would have been much more costly to replace them.

Delay spending
Put off the purchase. People do this if they lose their jobs or if they live paycheck-to-paycheck and run out of money at the end of the month. I do it as a game when the credit card closing date is coming up, just to keep the number as low as possible.

Simply shelf the issue for the time being. Give it a week or two. (Or 30 days.) You might even think of a better solution during that period.

You also can do this with regular services. See how long you can stretch out time in between haircuts, for example, especially if your cut is low-maintenance to start. Stretching it out just four more weeks in between appointments reduced what I spend in a year by one-third. And you know, so far my hair is just fine.

Rent, trade, borrow, or take
Can you borrow or trade for a solution? If you want a book or a DVD, try out a service like Book Mooch or Swaptree. Try renting tools if you won’t use them enough to warrant owning them. See if friends or family members will let you borrow a tool or appliance (just be sure to send a lovely thank-you note).

Also, don’t forget to check out sites like Freecycle for furniture, appliances, toys, and more. Items are given away for free; you just pay for the gas to pick up your stuff.

Plan ahead
Many times we overspend because we’re pressed for time. Maybe you have to get a last-minute Christmas gift for a picky relative. The mall is typically where we end up in that kind of situation, and it’s not likely that you’ll find the perfect gift at a killer price when you’re in a hurry.

Planning ahead gives you the time to find the perfect gift at a great price, or maybe even free if you’re really creative.

Planning ahead isn’t limited to gifts. You can plan ahead for travel, social events, house guests, and more. You can plan your expenditures for any situation that you know about ahead of time.

Find creative solutions to achieve your goal
There’s usually more than one way to solve a problem or reach a goal. Craving Chinese take-out? Try making stir-fry at home. Want to have a fun Saturday night with your friends? Throw a potluck or host a game night instead of meeting at a restaurant. Bored and feeling the urge to shop? Try reading a book, going for a walk, or doing something creative.

I’ve found the most inspiration from fellow bloggers:

• Instead of completely redecorating a room, try a bit of wallpaper and a fresh coat of paint.
• Rather than buying new furniture, consider how a few yards of fabric might breathe new life into the furniture you already own.
• Hate the fit of a dress, but love the fabric? Consider a refashion.
• Overwhelmed by the expense of baby gear? Find frugal ways to make it yourself.

A quick Google search usually provides new solutions I might not have thought of on my own.

Do nothing
Just ignore the need and try to do without. A lot of times if you simply do nothing, you find it’s not as bad as you thought. The best personal example of this was our decision to do nothing about replacing our second car. We also do this when we’re swept off our feet by fancy kitchen gear, and then realize that our cast iron Dutch oven may not be as gorgeous as a porcelain enamel Le Creuset, but it gets the job done.

Make a habit out of questioning your purchases, and try a quick Internet search to see if there’s a less expensive solution out there.

What about you? What have you done lately to improvise, get by with what you have, or find a cheap solution, instead of buying something new? Share your tips!

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Related Articles at Get Rich Slowly:

• Alternatives to Buying New
• Budget Spreadsheet Corrections
• Confessions of a Car Salesman
• links for 2007-05-30
• One Uncle’s Advice About Money

My wife and I were married a few years ago. I was working at myFICO at the time we got engaged, so I was already swimming in the world of credit, debt, and personal finance.

In fact, Suze Orman was a partner of myFICO, so I was exposed to a lot of her principles. For example, she believes that all couples should go through the prenuptial agreement process, which seems like heresy to most of her viewers. The “pre-nup” has negative connotations for most people, but Orman has a different spin on it — which I adopted.

Her concept is that a pre-nup doesn’t need to be focused on a negative outcome of divorce. Instead, it can be used as an exercise to really talk about money, and especially values around money. Her thinking is that if a couple can get through a pre-nup, they’ll be better equipped to handle financial issues down the road. Orman believes that every couple should have a pre-nup, and that it isn’t a tool just for wealthy people.

So, Molly and I decided to do a pre-nup. We told friends that we intended to do a pre-nup and the reactions were, perhaps, unsurprising. Most looked at me with disdain, as if it were something I was forcing her to do. But we held firm because we knew the data: 80% of all divorces are related to money issues. Over half of credit distress issues come from an estranged spouse.

Honestly, the process was awkward at times. But mostly, it was a healthy discussion about goals, fairness, and respect. It was a chance for each of us to show each our true character. I learned what was important to Molly, and she learned what was important to me.

To be frugal, we had a lawyer friend draft up the standard documents, and then we each hired an attorney to make sure we were covering all the bases.

To those of you who say, “I don’t need a pre-nup to have great communication with my spouse!”, I say this: There’s a value you can’t see until you go through it. You are forced to show more of who you really are, and it’s hard to force that in the courting stage.

In the end, the process was cathartic. Now our money discussions don’t involve communication issues. Don’t get me wrong: Like most couples, we have disagreements about how to spend money! But we feel great about the transparency the pre-nup provided, and the fact that it’s made us better communicators.

Do you have experience with a pre-nuptial agreement? How do you feel about the process? Would you recommend it to others?

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Related Articles at Get Rich Slowly:

• MousePrint.org Exposes the Pitfalls in Fine Print
• How 15 Minutes Saved Me 15% on My Television Bill
• Use a Lease Option to Lock in Low Home Prices
• Success as an Entrepreneur: Why It’s Not About You
• An Interview with Rich Rogers, Cheesemonger

Divorce tends to be emotionally gut-wrenching for the people who go through it (not to mention those around them). But most couples don’t realize that divorce can also be among the most ruinous financial moves anyone can make.

This article struck home for me. No, Kris and I are in no danger of getting a divorce (I love my wife!), but we’re at that stage in life where the people around us are passing through rocky stages of their marriage. Some are even getting divorced.

On Monday I spoke with a friend — let’s call him Mike — whose marriage is floundering. Mike and his wife are wrestling with a variety of issues. The acute crisis was caused by infidelity, but the chronic crisis — the ongoing problem — involves a conflict over money.

Mike and Kathy
Mike and Kathy didn’t talk about money before they got married. They were young, both had jobs, and both spent most of what they made. After they married, they joined finances, as most people do. (For a discussion of this subject see: Which should you choose: Joint or separate accounts?)

Things were fine for a while. But then Mike noticed that Kathy seemed to have a problem. She was a shopaholic, a compulsive spender. Plus, their lifestyle expanded so that they were living paycheck-to-paycheck instead of having a bit of a surplus.

Time passed. Mike and Kathy bought a home. They had two children. Finances continued to be a sore spot — they fought about them often. They never seemed to have enough money to get ahead. It burned Mike up to open the bedroom closet and see Kathy’s wardrobe: dozens of expensive items, many still with the tags. Once, he opened the trunk of the car to discover more expensive items that Kathy hadn’t even bothered to carry into the house.

Slowly but surely, Mike and Kathy fell into debt. They got into trouble on their mortgage. Mike had always handled the couple’s finances, but to “teach Kathy a lesson”, he gave her the checkbook and asked her to pay the bills. It didn’t help. Indeed, their financial crisis accelerated. Their debt soared. Their home went into foreclosure. Creditors began to call. Earlier this year, they actually lost their home.

Things came to a head in September. Other cracks in the marriage forced Kathy to move out, leaving Mike to care for his two sons. “But you know what?” he told me on Monday. “Financially, this has been a real eye-opener. With Kathy gone, I’ve been doing the accounts again. I expected us to lose money, like we do every month. But we had a $1500 surplus last month. $1500!.”

Mike says maybe he shouldn’t have tried to teach Kathy a lesson. It backfired on him.

Four money talks
Mike and Kathy may or may not get a divorce. But one thing’s certain: Until they address their financial issues, they’re going to continue to have problems. But the real time to tackle these issues was before they tied the knot, not ten years into the marriage.

In Ron Lieber’s recent article, he lists four financial issues that ought to be discussed before marriage:

• Ancestry. What is your money blueprint like? What did your parents teach you about money? How your family models money plays an enormous role in your own relationship with the stuff.
• Credit. Even though it’s not romantic, some experts recommend that prospective partners pull their credit reports (and scores) together and discuss the results. On an earlier episode of The Personal Finance Hour, Andy shared that he asked his girlfriend to pull her credit score on their third date! (And as he’ll share in a guest post this afternoon, they also signed a prenuptial agreement.)
• Control. Before you get married, decide who is responsible for which portion of the household accounts. Decide the family financial structure. Know what your budget will be like, and how much each parter is allowed to spend freely.
• Affluence. Finally (and to my mind, most importantly), discuss your financial goals. How wealthy do you, as a couple, want to be? What are you willing to sacrifice to get there? For my upcoming book (Your Money: The Missing Manual), I interviewed my accountant. When they were first married, he and his wife lived like paupers for five years so that they could pay off all of their student loans and set up a solid financial base for the future. They worked together toward a shared financial goal.

Obviously, disagreements over money don’t always have to end in divorce. I spoke to another friend last week whose husband has always been something of a spendthrift. They don’t make a lot of money, but he certainly knows how to spend plenty of it. His bad money habits had caused cracks to form in the marriage. But with some guidance from a church pastor, he’s changed his ways. My friend is optimistic about their future — financial and otherwise.

For more on this subject, check out:

• Ask the readers: How can I get my wife to talk about money?
• Investing as a couple: Draw on your differences
• Ask the readers: What can I do if my girlfriend isn’t serious about money?
• Daily links: Money and relationships (that’s the first time I’ve ever pointed back to a daily links post from a real article!)

More than usual, I’m curious to hear the experiences of GRS readers. Did you and your partner discuss money before making things permanent? How do you handle your finances? Is it effective? Have you been through a divorce? How has it changed your outlook on money — especially when it comes to shared household finances?

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Related Articles at Get Rich Slowly:

• Survey: Money and Marriage
• links for 2006-09-19
• What Do You Want to Learn During Financial Literacy Month?
• 7 Tips for Money and Marriage
• Do What Works for You

I’ve softened a little since then. Yes, I think that people do some stupid things with money, but I’ve decided it’s not my place to judge them. I’ve done plenty of dumb things myself over the years. (Though certainly not on the scale as Dennis Kozlowski, who threw a $2 million birthday party for his wife, a party that featured an ice-sculpture of the Statue of David that pissed vodka.)

All of this is prelude to the first link in our daily roundup. (Why do I still call it a daily roundup? It hasn’t been daily since 2006. It’s weekly, at best!)

The Boston Globe reports that former Boston Celtics star Antoine Walker is broke and in debt. Walker has earned $110 million over the course of his career. According to the article, top professional athletes often have a “burn rate” of $2 to $4 million per year. The mind boggles. This is a fascinating story. (For more like this, check out this fantastic article about how and why athletes go broke.)

In happier news, I love this analysis from C.J. Gill that explains how he got a free Mac Mini. The computer wasn’t actually free, but it saves so much energy over his previous computer (an HP Pavilion) that he’s saving $20 a month! The computer pays for itself in energy efficiency. (I’m sure there are energy-efficient PCs, too. This story is neat not because it’s about a Mac, but because it’s about taking the time to analyze cost patterns.)

Finally, Matt at Debt-Free Adventure has drafted a list of ways to save money when dealing with customer service reps. “While some CSRs are trained to try and dissuade you from your dream of reduced expenses, others wouldn’t mind giving you a break at all…as long as you treated them right! Here are a few tried and true pointers that I use every nearly every day.”

Before I go, here’s a list of money carnivals from the past week. These are a great way to find more info about saving and investing:

• Fabulously Broke hosted the Carnival of Personal Finance #227.
• Tom from the Canadian Finance Blog shared the Best of Money Carnival #21.
• JLP at All Financial Matters hosted the tiny tiny tiny Carnival of Debt Reduction #214.
• The Financial Blogger was home to Carnival of Pecuniary Delights #29.

That’s it for today’s this week’s links round-up. Now it’s time for me to head home. I’m heading out for chicken wings with my wife and her sister. Yum! Have a good evening, everyone.

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Related Articles at Get Rich Slowly:

• links for 2007-05-16
• Return of the Daily Links
• Daily Links: Compound Interest, Web Income, and Happiness
• How to Get Out of Debt
• Daily Roundup: Bringing Home the Bacon Edition

Buying in bulk is great, right? You get the things you want and need, and pay less for them. As an added bonus, you don’t have to shop as often (at least, this is a bonus for me, since I hate shopping).

Because I hate shopping and love discounts, I buy most everything in bulk: toilet paper, frozen foods, light bulbs, even toys. But bulk buying has its risks too, and after years of practicing it, I’m learning to see them.

For me, the three key dangers in bulk buying are:

Making a bad investment in a good product that you need or love. I love a particular brand of gel pen, and I use them daily. They cost about $1 per pen in packs of ten, and about $0.50 per pen in packs of 100. I was at the store the other day, trying to decide how many pens to buy. The decision was made for me by the fact that I am on a cash diet at the moment and had only ten dollars in my purse. Yes, I’m paying more per pen. But the 100-pack of pens is an investment. It ties my dollars up in pens, and prevents me from earning interest on them in a savings account.

Here’s a Wall Street Journal article that makes this point about Forever Stamps (which are also a bad investment, but a fine purchase if you use a lot of stamps).

Buying something you might use but don’t need in bulk. My kids love Puffins cereal, so when I got the chance to buy an entire case of it on sale, I did so. This was in January. We just finished the last box of Puffins. Let me tell you, there have been some scenes around the breakfast table in the past six months.

It turns out no one likes Puffins that much. Buying the cereal in bulk might have saved me a few dollars, but it made my kids unhappy about breakfast. That did not improve our quality of life, which is what frugal living is all about for me.

This bulk-buying hazard is the one I fall for most, because I do “save money” doing it. But it creates a sunk cost. I now have 12 boxes of cereal in my cupboard, and I have to eat them or throw away the money I spent. If I’d “saved money” by buying one box and banking the rest of my dollars, I’d have more money available to buy food the kids and I really want to eat, instead of stoically plowing through another box of Puffins.

Buying things you don’t need or want, simply because they are cheap. The other day, I was biking past Harvard when I noticed a book sale going on in the Yard. I happened to have $20 in my pocket, and was strongly tempted to stop and buy $20 worth of books from their table.

Instead, I decided to take my $20 to a bookstore and buy one book from my 30-day list. I got a book I’d been waiting to buy and knew I would read and continue to use for reference, rather than going for the cheaper books I could buy in bulk. I got fewer books, but more value (and less clutter).

Costco, Target and the other big box stores know that people will buy things just because they’re cheap. When you walk into Target the first thing you see is a large section of items for $1. I used to have a habit of tossing $5 - $10 worth of stuff into my cart: novelty socks, pens, candles, stickers.

When I had a buying mindset, all of these things seemed like great deals. I was getting more stuff for less money. Now I try to avoid getting more Stuff, even when it’s cheap. I buy less in bulk — just like I buy less in boutiques — and I’m watching my savings grow because of it.

J.D.’s note: I’m stupid about buying things just because they’re cheap. Or free. I’m always dragging home free Stuff that becomes clutter. Also, Kris just reminded me that I bought a case of my favorite pens last spring. Photo by Listener42.

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Related Articles at Get Rich Slowly:

• Why Bother With Personal Finance?
• Buying Cheap Spices: Unit Pricing in Action
• The Regrets of Christmas Past
• How to Buy a Side of Beef
• Beat the Market with Lazy Portfolios

The International Museum of Women has just launched their new global online exhibition, Economica: Women and the Global Economy. Economica features slideshows, interviews, podcasts, and more. Here’s a sample of what’s available:

• A slideshow highlighting microfinance in South America.
• An article about the food crisis in Egypt.
• A variety of topics, including business leadership, marriage and money, and family and fertility.

The exhibition includes lists of books and films that explore the role of women in the global economy. (There’s also a discussion forum, though it’s a little barren at the moment.) Finally, if you’d like to contribute to the Economica exhibition, you can. The Your Voices section allows visitors to share their stories with the community.

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Related Articles at Get Rich Slowly:

• Women’s Institute of Financial Education
• 12 Financial Tips for Women
• Daily Roundup: Christmas Eve Edition
• A Working Woman’s Guide to Financial Security
• Investing as a Couple: Draw on Your Differences

The statistics on credit reports errors are staggering. A 2004 U.S. PIRG survey showed that 79% of credit reports contained either serious errors or other mistakes of some kind. 79%? Seriously? How can that be?

I guess it doesn’t help that as of 2006, 27% of adults had never checked their report for errors. Not once. Ever.

Getting your hands on a free copy of your credit report and checking it for errors is one of the easiest ways to help your financial health. Correcting even a small mistake can make a huge difference to your score. A higher score means lower interest rates, insurance quotes, and can even help you land some types of jobs. And it’s never been easier to get a copy of your free credit report.

AnnualCreditReport.com is a government-approved site that enables most people to gain access to their reports within minutes. Under law, you have the right to obtain a free credit report from each of the three major credit bureaus once every twelve months. Courtney and I stagger our requests so that we are able to access a different bureau every four months.

I don’t think people realize just how simple it can be to check your report! Below, I’ve taken step-by-step screen shots of each leg of the process:

Note: Courtney and I have placed a security freeze on our credit reports since paying off our last credit card. Even with a credit report freeze, you can still obtain your free copy through AnnualCreditReport.com.

In the rare case you are denied access…
If for one reason or another you are unable to obtain online access, you still have options for getting your free reports. You can:

• Call 1-877-322-8228 to obtain a copy by phone; or
• Complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

So what are you waiting for? If you’ve put this off in the past, schedule a time to get your free copy and review it for errors! Your credit score and your wallet will thank you.

Special thanks to Andrew Norcross for his technical help in enabling me access to take these screenshots from New Zealand!

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Related Articles at Get Rich Slowly:

• How to Dispute Credit Report Errors
• How to Obtain Your Free Credit Report
• Ask the Readers: What’s the Best Way to Compare Credit Cards?
• Your Credit Report Card
• Daily Links: Back to Work Edition

On today’s episode of The Personal Finance Hour, I’ll join Jim from Bargaineering to discuss personal budgets. What works and what doesn’t? And why are so many people scared of them? (Personal finance writers especially seem afraid to talk about budgets.)

This show will air live at 3pm Pacific (6pm Eastern). It’s much more entertaining for everyone when you call in to participate. If you have some thoughts on budgets — are they good or are they evil? — then join us on the show. (When the show is over, I’ll update this page to give a brief run-down of what we talked about.)

The Personal Finance Hour
There are a few ways you can catch The Personal Finance Hour. You can listen through an audio feed at the show page, or you can also listen through this widget:

We’re also on iTunes! You can subscribe to The Personal Finance Hour as a weekly podcast by following this link (which will open iTunes).

Jim and I do this most Mondays — and we hope you’ll join us. We think this is a fun way to connect with readers and to help everyone learn more about money management. You can catch The Personal Finance Hour live at 3pm Pacific (6pm Eastern) nearly every Monday.

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Related Articles at Get Rich Slowly:

• The Personal Finance Hour, Episode 11: Frugal Weekend Fun
• The Personal Finance Hour, Episode 12: Earning Extra Money
• The Personal Finance Hour, Episode 4: Couples and Finances
• The Personal Finance Hour, Episode 3: Finding Balance
• The Personal Finance Hour, Episode 13: Credit Scores with Liz Weston

Getting started with smart personal finance isn’t always easy. It’s one thing to read about the steps you should take, but it’s another thing to actually do them. Your debt is so overwhelming or your saving goals so lofty that you begin to believe that the only way you’ll ever get where you want to be is by winning the lottery.

Part of the problem is that we live in a society that idolizes the Big Winner. Nobody celebrates the guy next door who bikes to work, grows his own food and cooks his own meals, shops at the thrift store, and gets all his books from the library. That sort of life isn’t glitzy. Yet it’s that sort of life that can (and does) lead to true wealth.

This image was submitted by GRS reader Karen L.

Starting small
I can’t remember the first thing I did when I decided I was tired of being buried in debt. But I do know one thing: It was something small. When I became concerned about my finances, it was months before I had any big decisions to make. But there were tons of small things I could do right away.

It’s true that it’s important to save money on the big stuff, like a home or a car. Any time you make a large purchase, your opportunity to save is magnified. But large transactions are rare. How often do you spend more than $100 on anything?

You have more opportunities to save when shopping for groceries. You can clip coupons or buy in bulk or shop for store brands or compare unit pricing. And you can do it today. Saving fifty cents a week on milk might be inconsequential as a one-time occurrence, but over the course of a year, it amounts to $26. Taken together, many such small economies make a real difference. Small amounts matter.

Maybe you save fifty cents a week on milk by using a cheaper brand, save $4 a week by clipping coupons, save $2 a week by taking the bus to work on Fridays, save $25 a month by dropping to basic cable, save $47/year by canceling your subscription to The New Yorker, and save $100 during the summer months by growing your own vegetables. These are small changes, but these choices alone would save you over $750 a year.

Starting small has an interesting side effect. As you get in the habit of cutting costs on one thing, you find that you can transfer that skill to other parts of your life. One small step leads to another.

An uncertain future
Some folks frown on frugality. They equate it with being “cheap” and consider it beneath their dignity. Others are unwilling to make sacrifices today when the future is so uncertain. They’re not willing to “live like that” when they could get hit by a bus tomorrow. I think this is crazy for a couple of reason:

First, spending is not the same as happiness. Second, most of us are likely to live a long time. Which would you rather do?

• Prepare for a long life by saving and investing, but then die tomorrow.
• Spend money you don’t have now, and then be unable to afford what you need when you’re older.

Recently, I had a chat with an acquaintance who runs an adult foster home. She told me anecdotes about her elderly residents who’ve run out of money. Their quality of life is not high. If you think it’s a burden now to give up your cell phone or to take the bus, try having to pinch pennies on necessities when you’re 70. Or 80. Or 90.

There’s real value in boosting your income — I don’t deny that. But frugality is an important part of personal finance, too. And for each of us it’s different. I might be able to cut back on clothing and transportation, but I’ll probably always spend a lot on food. On the other hand, food may be a perfect place for you to cut costs, but you’re not willing to compromise on your wardrobe.

Frugality doesn’t mean living like a pauper. Frugality is a good thing. Thrift is a responsible choice. When we restrict our spending on the unimportant, we’re able to indulge ourselves on the things that matter most in our lives.

This is the fifth of a thirteen-part series that explores my financial philosophy. These are the core tenets of Get Rich Slowly. Previous parts included:

• Tenet #1: Money is more about mind than it is about math
• Tenet #2: Goals are the gateway to financial success
• Tenet #3: Spend less than you earn
• Tenet #4: Pay yourself first
• Tenet #5: Small amounts matter

Look for a new installment in this series every Monday through the end of the year.

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Related Articles at Get Rich Slowly:

• Small Amounts Matter
• Large Amounts Matter Too
• Do What Works for You
• The Curse of a Big-Win Mentality
• Investing for Your Future

Still, I don’t think all retirement discussions have to induce snores or tears. In fact, when you think about it, retirement — especially early retirement — ought to be something to celebrate. When a person has managed to save and make smart choices, they have a chance to opt out of the rat race and pursue the things they really love.

(Note that some people, such as my wife, are fortunate to work at jobs they love in the first place. They’re already doing something they really love.)

Rather than talk more about the numbers or the various types of retirement plans, I thought it would be fun to have a chatty open discussion about our actual plans for the future. Each of us has a different vision of what we’d do if we didn’t have to work, a different reason for saving. I want to know what you intend to do once you’ve reached that pot of gold at the end of the rainbow.

I’ll go first.

I don’t actually envision my retired life being much different than it is right now. I’d still write — I’d just do less of it. For the past few years, I’ve spent 60-80 hours a week writing. That’s too much.

I got to spend most of September writing just 20 hours per week. With the rest of my time, I worked in the yard, walked around the neighborhood, and read comic books. I have to tell you, that’s ideal. That’s what I want daily life to be like in retirement. And I want to be able to spend several weeks per year traveling with Kris, visiting countries all around the world.

That, my friends, is my ideal retirement.

What about you? What do you see yourself doing in retirement? What does retirement mean to you?

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Related Articles at Get Rich Slowly:

• Ben Stein: Keys to Retirement Savings
• Free Professional Financial Checkup This Friday
• The Cost of Waiting One Year
• Daily Roundup: Retirement Planning, Free Credit Reports, and Structured Procrastination
• Ask the Readers: Pay Down Debt or Save for Retirement?

Instead, I want to shift gears for a moment and talk about a subject with immediate real-life implications: the dangers of perfection.

Good vs. perfect
While doing research for my book (Your Money: The Missing Manual), I re-read The Paradox of Choice by Barry Schwartz. The Paradox of Choice is about how we think that choice will make us happy — but it doesn’t. In fact, too much choice just might turn you into a basket case, especially if you’re a certain type of person.

Schwartz describes his research into two groups of people, Maximizers and Satisficers:

• Maximizers are those who only accept the best. Every time they make a purchase (or do anything else, for that matter), they need to be sure they’ve made the best decision possible. When shopping for shoes, for example, a Maximizer wants to look at all of the options. She wants to compare of the prices. And even after she’s made her purchase, she worries that maybe she missed a better shoe or a better price at another store.
• Satisficers, on the other hand, have learned that, contrary to conventional wisdom, good enough often is. Satisficers have learned to settle for something other than the best. A Satisficer still has expectations and standards, but once she’s found something that meets those standards, she buys it. When shopping for shoes, a Satisficer makes do with a pair that meets her needs at a price she can afford.

Many Maximizers believe that Satisficers are comfortable with mediocrity. That’s not necessarily true. Satisficers are just as interested in quality as Maximizers — but they’re not willing to spend the extra time moving from “excellent” to “best”.

The problem with perfect
As you might guess, Maximizers are not as happy as Satisficers. In his research, Schwartz has found that:

• Maximizers are more likely to regret their purchases despite the fact that they have (in theory, at least) come closer than Satisficers to making the best decision.
• On the flip side, Satisficers generally feel more positive about their purchases. They know they’ve made a choice that met their expectations.
• Maximizers enjoy positive events less than Satisficers, and they don’t cope as well with negative events.

Maximizing and satisficing have important implications in the world of personal finance. Researchers have found, for example, that when an employer increases the number of options for retirement savings, the likelihood that employees will actually save for retirement goes down. Similarly, you could spend a lot of time searching for the bank with the best CD rates or the mutual fund with the best returns. Soon, though, something better would come along and you’d be unhappy. For most people, it makes more sense to make a good choice and stick with it.

Maximizing in real life
I like to think that I’m a Satisficer (and in many ways, I am), but the reality is I’m a Maximizer. Too much choice paralyzes me. Let me give you an example I’ve been saving for months.

Last spring, I got a haircut I really liked. As we were finishing, the stylist offered to sell me some “product”. But when I saw the prices, I balked. I could walk next door to the supermarket to buy “product” for much much less. So I did. But when I got to the hair care aisle, I was greeted by this intimidating sight:

I count at least 49 different options in this photo (and there were more!)

And that’s just a small portion of the hair gels, creams, and mousses available to me. I spent fifteen minutes looking at all of the options (no joke) while Kris did the grocery shopping. And you know what? I still wasn’t able to pick one. I went home without any “product”, and just combed my hair with water, as I always have.

Too much choice is no choice at all. Researchers have demonstrated repeatedly that if you give a consumer a handful of options, he’s happy. He feels in control of his life. But when there are dozens of choices available, he’s all at sea. (This is one reason I’m happier picking from six dinner options at our local Italian place than 120+ options at Claim Jumper.)

Less than perfect
The Paradox of Choice is a fascinating book. Schwartz offers plenty of data and real-world examples (some pulled from his own life) to illustrate how too much choice actually makes us unhappy. In the end, he offers almost a dozen tips for Maximizers that would like to be a little less stressed. Among them are these:

• Don’t sweat unimportant decisions. Did it really matter which hair gel I selected? Of course not. I should have just picked one in the first ten seconds and called it good enough.
• Limit your options. If you’re faced with overwhelming choices, arbitrarily reduce the field. When shopping for a new bicycle, for example, restrict yourself to a certain store or a certain brand.
• Learn to accept “good enough”. If you’re a Maximizer like me, it can be tough to make the leap to the land of Satisficing. But remember: The perfect is the enemy of the good. You’ll be happier if you accept a good option and stop looking for perfection.
• Stick with what you know. Schwartz argues that unless you’re dissatisfied with a product, you should stick with what you always buy. Don’t be tempted by “new and improved” options. Habits make people happy. (My research shows that this last fact is true in many ways.)
• Don’t second guess yourself. Once you’ve made a decision, stick with it. Buyer’s remorse can nag at your heart. Ignore it. Be decisive.
• Embrace restraints. Schwartz argues that it’s possible to learn to love limitations. Limits give us boundaries. They eliminate uncertainty. When we know our boundaries, we can focus on thriving within them.

While it’s true that some choice is a good thing, too much is not. It’s easy to pick the best option from a pool of three, but it’s difficult to find the perfect choice in a pool of thirty. The truth is “perfect” is a moving target. It’s nearly impossible to hit. It’s better to make a solid decision today than a perfect decision next week.

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Related Articles at Get Rich Slowly:

• The Best of Get Rich Slowly: October 2009
• When Consumers Cut Back
• Daily Links: Hermit Mode Edition
• links for 2007-03-10
• Confess Your Shopping Sins with Spendster

In recognition of National Save for Retirement Week, let’s take a gander at some numbers:

• The average Social Security retirement benefit is $1,159 a month, or $13,908 a year.
• According to the Employee Benefits Research Institute (EBRI), approximately a third of the 60-and-over crowd receives a monthly check from a defined-benefit plan, also known as a traditional pension. The average annual benefit is about $18,000.

Put those together, and you come to two conclusions:

1. If you aren’t covered by a traditional pension and choose not to save for retirement, you’re left with just Social Security and an annual retirement income that is not far from the poverty line ($10,830 for a single American in 2009). Not fun.
2. If you’re one of the lucky few (and getting fewer) who will receive a monthly check for life from a defined-benefit plan, those checks combined with your Social Security would amount to an annual retirement income of bit over $30,000, assuming the averages. That’s not a bad income, especially since many expenses really do drop in retirement (though some retirees go nuts with the cruises and RVs). But here comes the bad news: Most pensions don’t adjust for inflation. So an $18,000 benefit today would be able to purchase just $13,274 worth of goods in a decade, assuming a 3% annual inflation rate.

Oh, and there’s another little issue. Social Security and many (if not most) pensions may not have enough money to pay off projected benefits.

The bottom line is this: If you want an above-the-poverty-line retirement, and you want to feel comfortable that it will stay that way for the length of your retirement, then you must save, save, save, and then save some more.

It’s obvious, I know. At least, I think it is. But clearly not everyone is getting the message.

The EBRI reports that “among all families with a defined-contribution plan [such as a 401(k)] in 2007, the median (mid-point) plan balance was $31,800…Among all families with an IRA/Keogh plan, the median value of their plan was $34,000 in 2007…” Keep in mind that those are figures as of 2007, before the stock-market crash last year. So if we assumed that someone had both an average-sized 401(k) and average-sized IRA, then they’d have savings of $65,800 or less. That would be a nice chunk of change to find in the sofa cushions — but it wouldn’t last long as a primary source of living expenses.

How much do you need to save?
In a previous post, I described how you could use an online financial calculator to estimate when you can retire given your current savings rate, how much you need to save now to retire when you want, and the impact of various scenarios (e.g., working part-time in the first few years of retirement, downsizing to lower-cost living arrangements, etc.). As I wrote then, these calculators aren’t crystal balls; the future is just too unknowable. But they will provide a very enlightening estimate of whether you’re on track, and what changes will have the biggest effects on your retirement success.

Furthermore, they show the long-term benefits of saving. Go ahead, run your numbers, and then do it again, but this time assume you’ll save, say, an additional $200 a month. Chances are, you’ll be impressed, especially if you’re on the young-ish side.

Or for a different take, fill out a retirement calculator and assume you don’t save another dime. Then see what kind of retirement you have in store. For most people, it won’t be pretty…and that might provide a necessary kick in the pants.

I’ve confessed before that, despite being the retirement-planning guy at The Motley Fool, I don’t plan to fully retire. Yet I continue to max out my 401(k), year after year. I know there may come a time that I may no longer be able to work, and it’s also likely that I’ll join that Great Tax Shelter in the Sky before my wife. I save now because I want my future enfeebled self and widowed wife to be taken care of.

So do a big favor for your future self and (if you’re the marrying type) your future spouse: Save, save, save, and then save some more.

A stiff upper lip
Finally, on an unrelated note: If you’d like to spend money right now rather than save it, but you’d prefer it goes to a good cause, and you’d like the added bonus of seeing some really horrible collections of facial hair, support this year’s Mustaches vs. Cancer campaign.

Along with five other Motley Fools, I am participating in this two-month mustache-a-thon (much to the chagrin of our female friends). You can sponsor my ‘stache at my profile page. Yes, I know it looks like a balding caterpillar died on my lip. But it’s only been a couple of weeks, and it raises money to help kids with cancer. So give a hoot, support my snoot!

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Whether you should halt your retirement contributions in order to focus debt is one of the most heavily debated dilemmas in personal finance.

Unlike “spend less than you earn” or “track every penny you spend“, there’s no cookie-cutter answer to this question. Variables such as age, career, risk tolerance, and even personality type make each individual situation unique.

You’ll never win a race against high-interest debt
Regardless of your personal situation, there are very few circumstances where high-interest debt should not be the top priority. What’s high interest? Well, that’s another fun question to debate. For the purpose of this article, we’ll assume a broad range of anything in excess of 8-12%.

Once you start trying to race against debt with double-digit interest, you’re destined to fail. It’s risky at best and downright irresponsible at worst.

Let’s be honest. If you’re still relying on high-interest debt, 99% of the time it’s a result of not living within your means. There are rare exceptions, but for most of us (myself included), the issue boils down to spending less than we earn.

On Monday, J.D. wrote about the importance of paying yourself first. Like many, I love this advice. However, I’d like to challenge you with this: Only pay yourself first if you deserve it.

You could spend decades socking away 15% for retirement, but if you are living beyond your means, you’ll still lose. You’ll be tapping your 401(k) for a hardship loan. You’ll be upside down in a house with two mortgages and a HELOC. Even with the best intentions, this is a game that you need to get very, very lucky to win.

I don’t want to rely on luck. I don’t want to race high-interest debt.

For me, having positive cash flow with at least a minor emergency fund is a prerequisite to retirement investing. This proves I deserve to pay myself first. Otherwise, it’s my high-interest debt against my retirement contributions. Not a race I’d like to see.

Ready to rumble
So now where are we?

• Positive cash flow? Check.
• Short-term savings? Check.
• Only student loans and a mortgage…what now?

Now we’re ready to debate! At this point we’ve covered the basics. We’ve plugged the leak in the ship, but still have a bunch of nasty water to bail from the hull.

Once our remaining debt has interest rates in the single digits (setting an exact percentage isn’t the point), the situation becomes less cut-and-dried. There are two schools of thought on the issue.

• The first preaches that this is the perfect time to make retirement a priority. These folks point out that starting the contributions is the hardest step. They show that the earlier we adopt this as a habit, the better our situation is in the long run.
• The second school emphasizes the power of focusing on a single goal with all your energy and passion. They profess that intensity and commitment increase the probability that we ultimately succeed in tackling our financial goals. After all, once you eliminate your debt payments, you’ll have an enormous amount of your income to allocate to wealth generation.

I have to admit, I can see both sides. Like many debatable issues, most of us are going to end up somewhere in the middle. In the quest to find balance for our own situations, there are several common factors that are beneficial to explore.

The 401(k) match
Dave Ramsey suggests going so far as turning down an employer match on 401(k) contributions for a short amount of time (fewer than 18 months) to really focus on your debt. This is where many people draw the line. Actually, that’s putting it nicely. This drives some people absolutely bonkers.

Many exclaim, “But… but.. it’s free money!” That phrase tends to be thrown around a lot. I’m not a full supporter of either side, but I would like to point out that nothing is free, folks. So please stop saying “free money”! Pretty please?

There’s a real and tangible cost to allocating your money in any specific way. There are indirect opportunity costs. There’s the risk that diluting your intensity means you stay in debt longer and thus pay more interest.

Often the math does work in favor of taking an employee match, but that doesn’t make the money “free”. Some 401(k) plans have limited investment options. Or they have vestment periods that stretch out for years. If you aren’t planning to stay with your current employer this could dwindle the value of “free” even further.

Ultimately, there are several reasons someone may decide to opt out of a matching 401(k) program for a short time. Of course, the factors at play vary drastically from employer to employer. Before making a decision either way, it’s important to know as much as you can about your particular 401(k) options.

Other factors
There are a couple other situations where investing may make sense. Consider the following:

• First, you only have a specific limit per year that you can contribute to a Roth IRA. (This is currently $5,000 per year — $6,000 per year if you’re 50 or older.) Once you miss the window of availability, you’re out of luck. Your new contributions go toward the current year’s limit. You can’t go back and make up contributions you missed for the past two years once you are out of debt.
• Second, if you don’t have the discipline to actually apply any new money to accelerate your progress on debt, then don’t halt your retirement. Decreasing your contributions only to spend the difference at the local comic books store (or your vice of choice) may be the single dumbest financial move you can make.

There’s no single answer to this dilemma. In my own life, Courtney and I have chosen to not to invest while still in debt. We live a turbulent life right now, and enjoy the benefits that come with focusing on one financial goal at a time. We’ve also decided to allocate what limited funds we do have into investing in ourselves: training, education, and building a business (our current focus).

Your situation is different. The only thing I will push you to do is consider all your options. Don’t continue making a certain decision just because it’s what you’re doing right now.

Start from a blank slate. Could you benefit from a singular focus? Are you willing to make further lifestyle cuts to increase you current contributions? Examine your options and consider the choices.

How have you attacked this dillemma in your own life?

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A few weeks ago, J.D. asked me to consider writing a post on retirement for National Save for Retirement Week. As it was intended, National Save for Retirement Week made me reflect on the state of my and my husband’s retirement accounts.

Currently, our retirement savings are a tad pitiful. I have a 403(b) through my employer, who contributes to my account whether or not I do. After five years of employment, I’ll be eligible for a match. I also have a Roth IRA, though I stopped automatic contributions when we buckled down to pay off the credit cards and the auto loan. My husband doesn’t have a Roth IRA or 401(k), as it’s not offered through his employer.

Retirement is important to us, but we decided to defer significant saving for retirement until we were out of debt and had saved up for a down payment for our house. But in the spirit of National Save for Retirement Week, I’ve started to question whether that’s the best solution.

Our original plan: House first
Originally, we decided to put retirement savings on the back burner to save for the down payment on our house for a few reasons:

• We want to avoid private mortgage insurance (PMI). If we can put down 20 percent of the purchase price of a home, we’ll can avoid paying PMI, which is an initial premium payment of 1 to 5 percent of the mortgage (and may require an additional monthly fee). We could put down less than 20 percent and cancel the PMI or refinance without it when we’ve built enough equity, but we’d like to try for the 20 percent goal.
• We don’t plan to move from this home, so we like the idea of immediately having a substantial amount of home equity.
• We aren’t eligible for any employer contribution matches. My husband’s employer doesn’t offer one, and I won’t be eligible for another two years. (If one of us could receive a match, we’d contribute enough to take full advantage of it, since not doing so is turning down free money.)
• While we could make penalty- and tax-free withdrawals from our Roth IRAs (as long as we only withdraw the amount we’ve contributed), our down payment savings is safer in a money market account or certificate of deposit, since we know we’ll need the money in the short-term.

Once we saved up for the down payment, we’d turn our attention to maxing out our retirement plans.

Rethinking our savings
Now, however, my feelings are mixed. I’d like to start socking away even just a small amount each month for retirement. Just because we’d only contribute a small amount right now doesn’t mean it’s an insignificant amount. With many years ahead of us before retirement, the power of compounding has plenty of time to make the money grow.

Also, as those who’ve read my past posts already know, I believe personal finance and psychology are inseparable. Besides getting our retirement savings going, there’s a psychological boost to seeing that we are saving for the future every month. If we put just $200 into each of our IRAs starting this month, that will be $1400 in each account before the end of the tax year. I think we have enough room in our budget to come up with a few hundred dollars each month.

Another benefit is that once we’re settled into our new home and can direct our savings toward retirement, it will take just a few clicks of the mouse to increase our contributions. Our accounts will already be open and established, and we’ll already be used to making an automatic contribution. There will be no reason to put it off, no accounts to open, no paperwork to fill out, and no automatic transfer forms to complete. The more ways we can circumvent laziness and inaction, the more likely we’ll follow through with our plan.

Finally, we aren’t getting any younger. The longer we wait, the less time our money has to grow in our accounts. We’ve paid off our debt, we have an emergency fund, and there’s really no excuse to not save something. Anything. If not now, then when?

The new plan: Saving for both
In honor of National Save for Retirement Week, we’re going to take action. My Roth IRA is with Fidelity Investments, so I’ll simply reinstate the automatic, monthly contributions. We also will open a Roth IRA for my husband with Fidelity. I like their no-fee IRA and $200 starting investment (offered if you invest in mutual funds and agree to automatically contribute $200 per month, otherwise there is a $2,500 minimum initial deposit).

That’s the top priority on our to-do list this week. We’ll look at our budget to see exactly how much we can start contributing, and we’ll basically put our contributions on auto-pilot. Next year’s goal: max out both IRAs.

What about you? Do you think it’s a good strategy to build a down payment if it means compromising your retirement savings for a short period of time?

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All week, Get Rich Slowly will feature articles about retirement planning. This morning, I wrote about how important it is to pay yourself first. April and Adam will share their thoughts on the subject in the days ahead.

On today’s episode of The Personal Finance Hour, I joined my co-host Jim from Bargaineering to discuss saving for retirement. We spoke with Jeremy from Gen X Finance. Jeremy is a Chartered Retirement Planning Counselor and the author of About.com’s financial planning section.

Jeremy addressed some specific situations, but he also talked about general principles. He said the biggest mistake that people make is not saving enough. At the bare minimum, he recommends saving enough to get the company match for your 401(k) (if you have one).

Jeremy noted that there’s no golden rule for how much you should save. It depends on what you plan to do when you retire. If you plan to travel the world, you need to save more than if you’re going to stay home and work in your garden.

Another mistake people make is sticking to a default asset allocation. You have to make choices based on your own needs and your own risk tolerance. If you’re over-exposed to stocks as you near retirement, you run the risk of losing a large chunk of your nest egg in a bear market. But if you’re young and scared of the market, you run the risk of missing gains.

Jeremy says you shouldn’t be concerned about picking the right stocks. You should just get started. Save early. Save often. Once you have the habit, it’ll be easy.

(We also talked a bit about caring for aging parents, a topic that actually spurred more interest than I had expected. Many of us are beginning to face this issue.)

The Personal Finance Hour
There are a few ways you can catch The Personal Finance Hour. You can listen through an audio feed at the show page, or you can also listen through this widget:

We’re also on iTunes! You can subscribe to The Personal Finance Hour as a weekly podcast by following this link (which will open iTunes).

Jim and I do this most Mondays — and we hope you’ll join us. We think this is a fun way to connect with readers and to help everyone learn more about money management. You can catch The Personal Finance Hour live at 3pm Pacific (6pm Eastern) nearly every Monday.

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One of the oldest rules of personal finance is the simple admonition to pay yourself first. All the money books tell you to do it. All the personal finance blogs say it, too. Even your parents have given you the same advice.

But it’s hard. That money could be used someplace else. You could pay the phone bill, could pay down debt, could buy a new DVD player. You’ve tried once or twice in the past, but it’s so easy to forget. You don’t keep a budget, so when payday rolls around, the money just finds its way elsewhere.

And besides: What does “pay yourself first” even mean?

To pay yourself first means simply this: Before you pay your bills, before you buy groceries, before you do anything else, set aside a portion of your income to save. Put the money into your 401(k), your Roth IRA, or your savings account. The first bill you pay each month should be to yourself. This habit, developed early, can help you build tremendous wealth.

Why pay yourself first?
If you’re just getting started in the Real World, saving may seem impossible. You have rent, a car payment, groceries, and maybe student loans. Sure, you’d like to save, but there’s just no money left at the end of the month. And that’s the problem: Most people save what’s left over — left over after bills and after discretionary spending.

But if you don’t develop the saving habit now, there are always going to be reasons to delay: you need dental work, you want to go to Mexico with your friends, you aren’t making enough to pay your bills. Here are three reasons to start saving now instead of waiting until next year (or the year after):

• When you pay yourself first, you’re mentally establishing saving as a priority. You’re telling yourself that you are more important than the electric company or the landlord. Building savings is a powerful motivator — it’s empowering.
• Paying yourself first encourages sound financial habits. Most people spend their money in the following order: bills, fun, saving. Unsurprisingly, there’s usually little left over to put in the bank. But if you bump saving to the front — saving, bills, fun — you’re able to set the money aside before you rationalize reasons to spend it.
• By paying yourself first, you’re building a cash buffer with real-world applications. Regular steady contributions are an excellent way to build a nest egg. You can use the money to deal with emergencies. You can use it to purchase a house. You can use it to save for retirement. Paying yourself first gives you freedom — it opens a world of opportunity.

I’ve never met anyone who does not wish they had started saving earlier. Nobody tells themselves, “Saving was a mistake.” No matter what your age, begin saving now. And if you already save, consider boosting how much you set aside each month.

How to pay yourself first
The best way to develop a saving a habit is to make the process as painless as possible. Make it automatic. Make it invisible. If you arrange to have the money taken from your paycheck before you receive it, you’ll never know it’s missing.

Part of your savings plan will probably include retirement, but you should also save for intermediate goals too, such as buying a house, paying for a honeymoon, or purchasing a new car. Here are three easy ways to begin doing this yourself:

• If your employer offers a retirement plan — such as a 401(k) — enroll as soon as possible, especially if the company matches your contributions. Matched contributions are like free money.
• Starting a Roth IRA is one of the smartest moves a young adult can make. These accounts allow your investments to grow tax-free. Because of the extraordinary power of compound interest (and compound returns), regular investments in a Roth IRA from an early age can lead to enormous future wealth.
• Open a high interest savings account at a bank like ING Direct or FNBO Direct. Set up automatic transfers into this account, either directly from your paycheck or from your regular bank account. Treat these transfers like you’d treat any other financial obligation. This should be your first and most important bill every month.

The real barrier to developing this habit is finding the money to save. Many people believe it’s impossible. But almost everyone can save at least 1% of their income. That’s only one penny out of every dollar. Some will argue that saving this little is meaningless. But if a skeptic will try to save just 1% of his income, he’ll usually discover the process is painless. Maybe next he’ll try to save 3%. Or 5%. As his saving rate increases, so his nest egg will grow.

If you’re struggling to find money to save, consider setting aside your next raise for the future. As your income increases, set your gains aside for retirement and savings. Once you’re contributing the maximums to your retirement (and you’ve built emergency savings), you can begin to use your raises for yourself again. Sure, this means your effective salary will stagnate for a year or three or five. But it also means you’ll force yourself to develop the saving habit.

Further Reading
No matter what your age, you should make it a priority to develop a regular saving plan. Establishing this habit early can lead to increased financial security later in life. But even those of us who got a late start should do our best to pay ourselves first. I didn’t begin doing this until just a few years ago. Better late than never.

Though many personal finance books briefly explore the idea of paying yourself first, David Bach’s 2003 best-seller, The Automatic Millionaire is devoted exclusively to the subject. The entire book is a step-by-step guide to developing the saving habit and making it automatic. If you’d like more ideas about how to make this work in your life, this is the place to look. Any good public library will have a copy. Finally, here’s a recent Get Rich Slowly discussion about how much you should save for retirement.

Pay yourself first, my friends. It’s a habit that you will never regret.

This is the fourth of a thirteen-part series that explores my financial philosophy. These are the core tenets of Get Rich Slowly. Previous parts included:

• Tenet #1: Money is more about mind than it is about math
• Tenet #2: Goals are the gateway to financial success
• Tenet #3: Spend less than you earn
• Tenet #4: Pay yourself first

Look for a new installment in this series every Monday through the end of the year.

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