Taking a five day trip, followed by a two day break, followed by a six day trip, all with three children under the age of five, is not a good idea. I officially need a vacation from vacation.

I’m having severe financial troubles and have no clue as to how to proceed. I’m 48 and unable to work due to disability (but I have been denied several times for disability benefits). My husband, who is 43, has been unemployed for a year and a half. He was working at California Closets in the shop previous to that. We have been living on his unemployment check ($1600 per month) and now that has ended. We’ve moved in with my parents and have applied for food stamps. It simply can’t get much worse than this. Oh but yes it can. We have about $10,000 in credit card debt and $2500 in medical bills. (I know, I know…. stupid!!!) We had been keeping up with these payments when he was receiving unemployment but now cannot pay them and are accruing late fees. We can’t even file for bankruptcy because we did that 4 years ago when our business of 10 years (retail bookstore/gift shop) failed. I’m mad at myself for letting things get this bad and I feel helpless and stupid that I’ve made so many poor financial decisions in the past. If you were in my situation, what steps would you take. What should I do?
- Kim

The absolute first thing you need to do is to figure out what work you’re capable of doing. If you’re being denied disability benefits, clearly there is an opinion out there that you are capable of some level of work. Seek out employment services that can help you with this, because it can sometimes be difficult to make a good self-assessment in a situation like yours.

You also need to remember that the debts you have now have no collateral, so not paying them for a while won’t result in repossession of anything. It will result in further damaged credit and a good deal of harassment, however.

You’ve got a rough road ahead, at least in the short term. Patience will be your best friend here.

I bought a house last year with my boyfriend of 3 years. 1 month after closing he was laid off from work. Unemployment insurance gave him enough to pay bills/mortgage. He did not want to share any financial information with me, and I knew he had debts. I offered to help out with budgeting and his general financial well being and he was against it.

I work in a creative field and am lucky to have a comfortable income. Last year I got a significant raise and have been saving a lot, I did not make much money previously. Also I am frugal, coupon cutter, and am upset that my boyfriend did not care about his finances. What should I do? We are not married, and the mortgage/bills need to be paid. How long am I suppose to cover him? He thought we would be married by now, but being laid off sort of paused our lives. Not being able to get married is upsetting to him, making him feel like a failure. I feel I am in a tough situation. Our families act like we are married, but we do not combine finances. I also do not want to be the sole provider. I can afford the total mortgage on my own, does that mean we should keep the house? I did not plan for this at all. I have 2 thoughts: #1-I work hard for my income and do not want to carry him. #2- I get upset that all these fees, interest charges, could be money for saving to have a child, so if I don’t help him out, it would effect me in the long run.
- CM

How long are you supposed to cover him? The answer to that question is the same as another: how long do you think this relationship is going to last?

Your last paragraph seems to hint at some very serious trust issues in your relationship, as well as some incompatible values. If you can’t get those things on the same page, your relationship is not going to be one for the long term, and you’re better off moving on now.

If you are thinking this is going to be a very long-term relationship, then his debts are effectively your debts, because they steer what you’re going to be doing in the future.

If you’re sticking around out of some kind of obligation to take care of him, you shouldn’t. He’s an adult and can make his own choices in life.

You need to answer for yourself whether this is a relationship that is going to last. If it is not, move on.

What proportions are best for floor cleaning w/ vinegar & water? thanks for your advice….using this will be so much better than the expensive Swiffer products & other harsh, harmful & costly products.
- Donna

I usually use equal amounts of water and vinegar, and use full-strength vinegar on tough stains. I do this on both hardwood and linoleum surfaces and I haven’t seen a problem yet.

Considering the huge jugs of vinegar you can get for just a little bit of pocket change, this is a pretty cost-effective way to get the floor clean. You don’t need too much of the liquid as long as you have a good mop to work with.

Actually, that brings up another good point – the better your mop is, the easier the cleaning is, regardless of what cleaner you’re using. I trust the recommendations in this article over at Real Simple.

I am 25, recently married (2 months ago), my wife is 26. I currently work in web development making $44,000 per year (about $2600 per month after tax). My wife is a high school english teacher and unfortunately was part of budget cuts this past school year and is now unemployed. She is collecting unemployment now until we can find her a new job (it may not even be this fall given the job market) So she will be collecting unemployment at about $1860 per month.

My question is what should I do with the money? I’ve contemplated knocking off the car loans to get them done with, but don’t want to reduce our savings too much to do it. What’s your take on the situation?
- Erik

The first thing I would do is make sure you can make ends meet with your current income level, and also with the income level that you’d have if your wife’s unemployment runs out. If you’re not going to be able to make ends meet easily in those situations, I wouldn’t use up the emergency fund too much.

If you do decide that paying off debts is a good move – and it certainly might be, because it will improve your monthly cash flow and your long term net worth if you don’t have to dip into debt in the future – I would pay off the lowest balance one first, because that will provide the most direct benefit to your monthly cash flow.

I’d also encourage your wife to take on any work that would bolster her resume, even if it’s unpaid. Things like working at educational-based summer camps, getting involved with America Reads/America Counts, or anything along those lines can be a real boon. The more experience she gets teaching children and the more things she gets on her resume, the more likely it will be she can find a teaching job down the road.

I am a 20 year old girl living in an apartment in Raleigh NC with my boyfriend. I work part-time as a nanny to pay the bills and he works part-time at a moving company so we have a very modest income and no savings. We have a shared dream of some day, hopefully sooner than later, moving into a moderately sized house on a large area of land where we can grow our own vegetables in a greenhouse and raise a family and perhaps even adopt a few more dogs and some chickens. The problem is is that I have no idea where to start. I’ve been a city girl all of my life and because I am not going to college and I am underemployed, home ownership is still a distant dream. Do you have any tips for me as far as how to become a subsistence farmer with little experience and no money?
- Melissa

Trying out subsistence farming with little experience and no money is pretty much begging for absolute failure.

If you want to learn the ins and outs of small scale farming – and you’re only working part-time – get a part time job for a small-scale farm. Tell them your story and that you’re willing to work hard in order to learn how it all works as something of an apprentice.

I can tell you from experience that if you want to grow lots of fruits and vegetables or raise animals, nothing trumps experience. The more experience you have, the easier it will be to start things on your own without a long series of outright failures.

I work at a relatively stable job and my employer offers a life insurance policy of 6X times my annual salary for just $8.23 per 2 weeks. I plan to purchase this policy as the premium is so low for such huge coverage. However, I fear that this policy would lapse if I get laid off. And so, I wish to purchase term insurance from a 3rd party such as Metlife or such Insurance companies.

Can you offer any thoughts or opinion on this matter? It would really help me.
- Indrajeet

That plan makes quite a bit of sense. In essence, you’re spreading out the risk.

Obviously, the plan offered by your workplace is less expensive than virtually any other life insurance you’ll probably find. It comes with a risk, though – if you lose your job, you lose the insurance. Splitting the policies in this way spreads out the risk.

My only suggestion would be to keep a careful eye on your employment status and get an additional policy if you lose your job.

I’m starting a four-year PhD course in September. I’ve just finished my undergraduate course (graduating with a First) and in total I’ve read over 550 papers (and that’s just the ones I kept track of in my EndNote library!). At the moment I print out most papers that I read, carry them around, read them, highlight bits and make brief notes on them, and then put them in a big pile. I’ve been wanting for a while to make this (a) easier, (b) more environmentally friendly (although I do recycle all of the paper afterwards) and (c) reduce my hugely high printing costs.

What do you think? It’s not necessarily your place to advise I know, but I was trying to apply some of the principles I’ve learnt from your blog, but still don’t know what to do!
- Robin

Before you worry at all about what to buy, make sure that you really understand your need first.

From what I understand here, you’re struggling with the ongoing cost of printing out research papers for your studies. Based on my own experience, you’re probably annotating them in some fashion. You also need the papers to be very portable.

A tablet computer does solve most of those concerns. However, don’t just limit yourself to the iPad. There are a lot of other tablet computers out there (like these). A netbook may also be a great solution for what you’re trying to do.

The real danger I see here – and it’s one that I’m guilty of myself – is seeing a particular gadget or other item and imagining in your head all of the problems that it could solve in your life. The problem with that kind of thinking is that often, you’re not solving real problems, just imagined ones.

Your best bet is to always go through your life and just look for things that pop up again and again that could be done in a better way. If you think to yourself every night that your bed is uncomfortable, a mattress might be a good buy. On the other hand, watching a mattress ad and thinking to yourself, “That looks comfortable… I’d better buy one,” is not a good personal finance solution.

For me, at least, I’ve had an ongoing list of features I’d like to see in a tablet computer, a list I’ve kept for years. These are all things I do all the time that would be massively simplified with a tablet. As the apps from the iTunes Store get more and more robust, I’m beginning to believe that the iPad actually is that device.

In December 2007 I bought a franchise. It was in an area that was a passion for my wife and I while fulling a dream of entrepreneurship. Unfortunately the economy decided to poop on my dreams. Essentially we opened our doors for business in November 1st 2008, and closed them Oct 28th 2009. We filed bankruptcy and our house was lost in foreclosure. That was all settled in February, all except for one small detail. WE have an $80,000 SBA loan held against an investment property that my in-laws own. I could have let that mortgage go and saved our own home in the process but chose to keep the debt and do what I feel morally obligated to do. My in-laws would have had to either pay that debt or lose the rental.

How can I deal with such a LARGE debt?
- Aaron

To put it simply, you deal with it slowly but surely.

Paying off this debt is all about cash flow, period. The less you spend in a given month, the more you have to contribute to that debt.

Right now, you have a handful of major expenses eating up your cash flow. $925 a month for rent? You’re significantly delaying the payoff date of your loan by moving out of your in-law’s house. $1,200 a month for child care? Given the other opportunities your wife would have to save money as a stay-at-home mom (for example, babysitting during the day, preparing home-cooked meals, etc.), is that really saving you money?

What about that $330 a month car payment? Do you need a car that requires $330 a month? Wouldn’t a low-end used car get the job done and let you channel $250-300 more per month into that loan?

If you’re reacting to these comments with defensiveness, you’re thinking about this the wrong way. Paying off a giant debt means making hard choices, ones that sometimes make us uncomfortable. Yet, the debt is also making you pretty uncomfortable, too. You have to answer some hard questions about what’s best for your entire family.

Potential entrepreneurs: Aaron is the face of exactly why it’s so important to have all of your ducks in a row before you jump into business ownership. The more debt you take out at the start, the bigger the risk is, and Aaron’s story shows loud and clear how painful the downside can be.

I recently visited the Verizon store with my husband (a minor stuff hoarder and chronic upgrader) We were replacing the 2nd phone he ruined due to water. (fishing and then walking in the rain). Before we were married, I was fine with dial up internet, one home phone and no TV. Now we have Verizon FIOS bundle with HD, sports and outdoor TV, internet, land line phone and 2 cell phones. Anyway, back at the Verizon store, he wanted a droid because it takes pictures you can send to your email and it is new cool technology. (I suggested he just take our camera with him and he rolled his eyes) With quite a bit of effort, I was able to pull out all the costs from the salesman. It is an extra $10/month just to have the droid, another $30/month to have internet service and it costs to send the photos or text. I went from spending $30/month on all this a few years ago to $250/month with growing costs on all this technology that just makes my life more complicated. I love my husband and want him to be happy and am fine with having these things now. We can afford it but deep down, I have difficulty with my feeling that we are being blindsided and ripped off.
- Laura

You’re not being blindsided or ripped off. It sounds like you have two top-of-the-line phones with unlimited data plans and unlimited texting. Those are all going to cost you – and those are all unnecessary services.

It sounds like your husband has a gadget addiction and, even more worrisome, he doesn’t take care of the gadgets he already has. You’re being blindsided and ripped off, but it’s not by Verizon. It’s by an addiction to gadgets.

You have a choice to make. You can either just sign off on all of this stuff or you can have a sit-down with your husband and make some hard choices together. It’s up to you.

Trust me, though: gadget escalation gets more and more and more expensive. There really is no limit to it except for what you impose on yourself.

Curious if you have ever tried the powdered versions of the homemade laundry soap. I love the homemade soap concept (especially having a 5 month at home, so we need perfume and dye free soaps) but the idea of storing 5 gallons seems like a headache. Seems like I could store a pretty big supply of powdered detergent in a small Tupperware. Any experience on this?
- Jeff

You can certainly make powdered soap, but it takes a bit longer to make.

Just use my homemade laundry detergent recipe. Just use the three solid ingredients:

1 cup washing soda (I use Arm & Hammer)
1/2 cup borax (I use 20 Mule Team)
1 bar soap (I use whatever’s cheap, in this case Pure & Natural)

Grate that bar of soap with your finest grater until it’s basically powder, then put it in a large quart jar along with the other ingredients. Shake the jar thoroughly – for two or three minutes – until everything’s evenly distributed. Keep a lid on the jar and put it in your laundry room.

When you’re about to do a load, use two tablespoons of the powdered detergent. Start filling the machine with water, add the detergent, wait a moment, then start adding the clothes. You’ll be good to go!

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag. However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

I treated my credit card as my emergency fund.

In late 2004, the brakes failed (in a nearly catastrophic fashion) on my 1997 Ford F150. For whatever reason, the brake cylinders chose to collapse as I was attempting to stop at a stoplight. I nearly caused a very large accident, but I managed to get stopped after swerving into another lane and running a red light.

The repair bill was pretty significant – about $300 more than I currently had in my checking account. I remember standing there flipping through the four or five credit cards I had at the time, trying to figure out which one had enough available credit to cover that bill.

Personal finance 101 would have kept me out of this situation, but I didn’t have enough sense to have planned a bit for this brake problem. Instead, I believed that having some credit available on a credit card was just as good as an emergency fund.

That’s just horrible, horrible planning. Here’s why.

Let’s say, on average, I have a major emergency that costs $1,000 once a year in my life. A car breaks down. A job is lost. A family member is ill and you need a plane ticket. There are countless emergencies that can happen in life, so I’m just using that $1,000 once a year emergency as an example.

If you sock away $20 a week into a savings account earning 1% interest, you’ll have that $1,000 once a year when you need it. The brakes aren’t a concern, nor is that emergency flight you have to take. Plus, you’ll earn a small amount of interest on that money – $5 to $10.

If you just spend that $20 a week on something unnecessary – and that’s what you will spend it on, because almost everyone has $20 worth of fat in their weekly budget – when the emergency comes, you’re putting that $1,000 on a credit card. At that point, you’re now making $80 a month payments on that credit card instead of socking it away. Even worse, you’re paying 20% interest or so on that credit card, meaning that over the course of the year, you’ll have to make two or three extra $80 payments just to cover the interest. And while you’re making those $80 payments, you’re not socking away $20 a week for the next emergency, so when that next one hits, you repeat the cycle. You’re giving away $200 a year to the credit card companies and forgoing some savings account interest as well.

We’re not even talking about the extra risks of relying on credit cards. What happens if the emergency hits and you’ve already got a hefty balance on your cards? What if the bank lowers your credit limit and then suddenly your transmission falls apart?

None of these risks – and countless others – apply if you simply have a cash emergency fund.0

My first mistake was not having a cash emergency fund, of course. This put me up for all kinds of risks, ones that came to a head with my own financial meltdown in early 2006 when I could no longer pay my bills.

The second mistake, tied directly into this mess, was carrying a balance on my credit cards. Credit cards are a great tool, but they’re really only useful if you don’t carry a balance forward from month to month on them. If you start carrying a balance, you’re going to pay dearly for that balance in the form of very, very high interest rates.

Add the two together and you’re running on pure borrowed time, hoping that you don’t ever have more than one or two emergencies at once. Because when that happens, you’re going to find yourself in a bad place, with damaged credit, banks harassing you for their money, and a big helping of added stress in your life.

How can you avoid this trap?

The answers are really found in the mistakes I mentioned above.

First, don’t carry a credit card balance. I think credit cards are a fine tool to have if you can use them responsibly, and responsible credit card use means never carrying a balance. How do you do that? Never put anything on that card that you don’t have the money in your checking or savings account to cover.

Second, start building a cash emergency fund. The easiest way to do that is to set up an automatic savings plan. Open a savings account at a particular bank of your choice, then set up an automatic transfer from your checking account to that savings account. $20 a week is a healthy place to start because after a year, you’ll have $1,040 in your account (plus some more thanks to interest). Use that cash when something unexpected gobsmacks you.

The biggest thing, though, is to recognize that emergencies happen – and they happen more often than most people think. Our minds do a fantastic job of making our crazy disorderly lives seem pleasant and ordered. The biggest crisis in the world seems like nothing more than a speed bump after a little bit of time. Allowing yourself to be comforted by this and thus using that comfort as a reason not to build an emergency fund is one of the biggest personal finance mistakes that people make.

I like the way the sounds roll off the tongue and paint pictures. I like reciting them (or pieces of them) to my children. I like the flavor of the words.

How to Adopt an Attitude of Gratitude Lately, I’ve been focused on seeing the good in every situation. There are many situations where it’s easy, but if you look deeply, there is good in every situation. (@ dumb little man)

Wants that Morph Into Needs This is lifestyle inflation and it’s one of the most dangerous opponents people have to building a sustainable free life. (@ personal finance advice)

See The Impact When You Donate To Charity I think the big reason that many people struggle with charitable giving is that it feels like a “give and see nothing in return” exchange. I don’t think there’s anything wrong with wanting to see what your money is going for. (@ christianpf)

I’m So Judgmental. I Want to Conquer This! Any Suggestions? Everyone has their own path. You can’t fairly judge others by the path you’re on. It’s like comparing a track sprinter’s times to that of a cross-country skiier. (@ happiness project)

It’s So Easy to Talk About Lunch I love this. If you want someone to talk, give them something very easy to talk about. Seth suggests talking about what to have for lunch, because everyone has an opinion. (@ seth godin)

Ask Unclutterer: Encouraging kids to help out at home My technique is to do it in very small timed batches. Our kitchen clock has a countdown timer, so we’ll designate a very specific task – “Pick up the Lincoln logs!” – with a very specific time frame – “Can we get it done in five minutes!?” – and then set the timer. The immediate focus and the short term really helps our kids (ages four and two) to take care of their stuff. (@ unclutterer)

What I want to talk to you about today is the difference between gifts and choices. Cleverness is a gift, kindness is a choice. Gifts are easy — they’re given after all. Choices can be hard. You can seduce yourself with your gifts if you’re not careful, and if you do, it’ll probably be to the detriment of your choices.

He goes on, near the end, to illustrate the idea a bit more directly:

How will you use your gifts? What choices will you make?
Will inertia be your guide, or will you follow your passions?
Will you follow dogma, or will you be original?
Will you choose a life of ease, or a life of service and adventure?
Will you wilt under criticism, or will you follow your convictions?
Will you bluff it out when you’re wrong, or will you apologize?
Will you guard your heart against rejection, or will you act when you fall in love?
Will you play it safe, or will you be a little bit swashbuckling?
When it’s tough, will you give up, or will you be relentless?
Will you be a cynic, or will you be a builder?
Will you be clever at the expense of others, or will you be kind?

When I was in college, I took a course on the theory of programming languages – fairly arcane computer science stuff. For some reason, I just got the material. It just really, really clicked in my mind.

At the end of the semester on the day of the final, there were two people (myself and one other student) in the class who had cinched an A regardless of our performance on the final, which was obviously a relief. I vaguely knew the other student, so after the final was over, I caught up with him just to somewhat debrief on the class with someone else who really got it.

What I came to find out is that the other student with an A had put an absurd amount of work into the class. He had studied and studied. He had stayed up late working on every project. He told me, quite sincerely, that he had invested more time in that class alone than he had in all of his other classes combined that semester.

My ability to get an A in that class was a gift. His ability to get an A in that class was a choice.

Every single person out there has gifts. Some of us are very gifted with the ability to make friends easily. Other people have an innate understanding of a particular topic. My mother and my grandmother and my uncle all share a gift for sketching, a gift I simply do not have. They could (and still can, in my mother’s case) sit down with a pencil and a sheet of paper and make an amazing sketch of almost anything you can name. My mother virtually never does this, but on the few times I’ve seen her do it, I’ve been blown away at the quality of what she can produce.

Every single person out there has a life full of choices. You’re choosing what to do with every moment of your life, whether it’s work or practicing the piano or watching The Real Housewives of Duluth, MN.

Quite often, a series of choices can make up for the lack of a gift possessed by another. The story above about the student in my computer science class is a perfect example of this. I find it’s true in my own life, too.

I have always had a very difficult time being social with people I don’t know very well. It is only through a conscious choice to continually work on my social skills that I have been able to engage successfully with groups of new people and build quite a few great positive relationships in my community. By no means am I a social master, but for a very introverted guy like myself, the ability to walk into a community event, greet and be greeted by several people, and usually have one long conversation or two before I ever reach my seat is a sign that a series of conscious choices can make up for a missing gift.

However, the real home runs occur when a person knows their gifts and makes choices to accentuate that gift.

All you have to do is look at the truth of how the top people in any field have reached that point. Yes, they’re resting on some natural gifts, but those gifts are virtually always cultivated by countless hours of practice and other hard choices. Kobe Bryant didn’t wake up one morning being the best basketball player in the world. He has natural gifts, no doubt, but he constantly makes very difficult choices in terms of his practice regimen, his diet, and other areas of his life. The result? Five rings, a pile of awards, a ticket to the Hall of Fame, and more money than he can count.

In other words, people pay money to see the results of gifts matched with choices. The real message here is that gifts are certainly a help, but it is choices that really take you places.

That’s why I’m a firm believer that people should follow their passions. A passion means that you’ll constantly be making those hard choices that build something exceptional. Like that student in my class who stayed up all night working on theory of programming language projects, the results of chasing a passion are usually very strong.

Combine them with a few gifts and you have something amazing. Something people will pay money for.

It’s Tuesday afternoon. What choices will you make today to build that amazing future? Will you choose to spend less money? Will you choose to stay up all night getting that project you’re working on just perfect? Will you go home tonight, pull that canvas out of the closet, and put some paint on it?

The choice is yours.

I bought many expensive (and inexpensive) items without adequate time to enjoy them.

One of the most cathartic things I did in the immediate aftermath of the choice to turn my financial life around was to simply go through our apartment in order to collect stuff to sell in order to give a big initial boost to our debt repayment.

What shocked me wasn’t so much the amount of accumulated stuff, but the amount of stuff that I owned that I had invested virtually no time or energy in. Piles of unplayed video games, some still in shrink wrap. Mountains of nearly-new paperbacks, many with just some sunlight exposure, most of them unread or barely-started. Piles of CDs listened to maybe once or twice. Multiple sets of golf clubs – and piles of golf balls. A large trading card collection and a large vintage baseball card collection, neither of which had been touched in years. A closet full of nearly-new clothes. Pieces of computer hardware uninstalled.

Simply put, there were tons of things that I had purchased and barely used. Why? I had so many things that I could be using that I didn’t have nearly enough time for them all.

Obviously, my situation is a bit extreme, but over the last few years, I’ve been repeatedly shocked to find how many of my friends and family members have done similar things on a much smaller scale. Unused exercise equipment. Unused DVDs. Barely-worn clothes jammed in the back of an overstuffed closet. Video game consoles played for about five hours and then stuck into a closet. One friend had a never-used Dyson vacuum cleaner in the closet that had been sitting there for more than a year.

These experiences reveal several very vital personal finance mistakes.

First, I used shopping as a substitute for actual entertainment and other experiences. Instead of enjoying the things I already had, I devoted time and energy into the acquisition of more things. A much more worthwhile use of that energy would have simply been directed towards enjoying the already-acquired items.

Second, those purchased items, left unused, are an incredible waste of an investment. As soon as most of the items were purchased, they became much less valuable, passing from “new” to “used” in terms of resale value. They then sat around for a long time, doing nothing more than taking up space, not even repaying some of their value in terms of the entertainment or joy they could provide. Even if I had just mindlessly bought a new game when I defeated the previous one or bought a new book when I finished the one I was on or bought a new CD when I had listened to the one I previously purchased a few times or bought a new DVD when I watched the last one I bought, I would have been in much better financial shape. This doesn’t even touch on the fact that I would have been even better off wisely using rental strategies and other techniques to still get all the enjoyment I would ever want with even less financial investment.

Finally, the clutter of unused stuff takes up time, space, and energy. How do you keep 500 DVDs organized? It’s much, much easier to keep ten organized. It takes less time and space. It takes less maintenance to dust them and keep them clean and presentable. The same is true for everything else in your home. The more you have of something, the more time it takes to maintain it – and the more it costs to maintain it, too.

What can you do to avoid this trap?

The first step is to get your shopping habits under control. Eliminate the purchases you’re making that don’t directly address needs. If you’re buying something that you’re not going to go home and use immediately, reconsider the purchase. Consider instituting a “one in, one out” policy for your non-essential items. In other words, if you buy something new, you have to swap out or sell something old to make room for it.

The second step is to seek out less expensive sources for the things that you do actually buy that fulfill needs and direct wants. If you’re a movie fanatic that buys four DVDs a week, subscribe to Netflix instead. If you’re an avid reader, hit the library to get your new release fix. If you’re a gamer, join GameFly. If you like music, use services like Pandora. Join community groups that focus on your particular hobby. Look for online groups that seek out bargains in your area of interest.

The next step? Thoroughly use items you acquire before you move on to another one. If you pick up a book, read it (or at least give it a fair shot) before getting another one. Even better, get rid of the items that you won’t pick up again. Make your collections consist of the ones that you truly love and intend to revisit with some frequency in the future.

Doing this for the things you accumulate will make a tremendous difference in your financial state as well as the space, time, and energy you have to devote solely to maintain your stuff.

I had a child without understanding the financial consequences of it.

When I was in college, one of my closest friends was a young woman whose parents had conceived her at pretty much the last possible moment from a biological standpoint. While she had a great relationship with her parents, I couldn’t help but see that she would be facing end-of-life issues with them at a much earlier point than I would be. Her parents wouldn’t be able to be involved grandparents. They wouldn’t be around to provide support to her during her early stages of adulthood and she’d be faced with helping them through their final years before she even had her own life completely in order.

Sarah and I decided, based on our experience with this friend, to have our children when we were young and to be completely finished with children by age thirty five.

We stuck with this plan, too. Eighteen months after getting married, Sarah was pregnant. Nine months later, we’re holding a baby boy. One that, unfortunately, we were completely unprepared for in a lot of ways.

First of all, our spending was completely out of control at that point. We spent $500 on a crib for the baby. We purchased almost every item you could imagine on the runup to his arrival, including lots of things that we never used. Huge piles of receiving blankets. Bottle warmers. Countless other frivolous things.

The real disaster, though, was our inability to forecast the big increase in weekly expenses. Daycare was a sledgehammer, adding $200 a week to our expenses. Add in diapers, some formula for supplementation, the cost of washing clothes and the cost of buying new clothes every few months or so as he outgrew them, and we found ourselves quickly in the hurt locker.

This situation was made even worse by the fact that we didn’t fully adjust our spending to account for this. Naturally, we ate at home more and we went out less, but even with those savings, we didn’t make up for the financial bomb that having a baby dropped on us.

Why did this happen? We simply didn’t think ahead. At the time of our decision to have a baby, we simply didn’t have the financial maturity to make it work. Rather than seeing the future arrival of our baby as a motivation for getting our financial house in order, we looked at it as merely another excuse to spend money on stuff we really didn’t need.

Children are more than that. Children deserve more than that. They come into the world helpless, reliant on your good judgment and ability to ensure that they’re safe and well cared for. If you’re caught up in other things and unwilling to put forth the effort to make your life stable, you’re not only putting your situation at risk, you’re putting that child’s situation at risk as well.

It was, in the end, my child that pushed me to begin my financial turnaround. I only wish I had made that revelation a year or two earlier.

What can you do to avoid this trap?

The first – and most obvious – choice is to think seriously about having children – and ask yourself seriously if now is the right time to have them. The choice to have children is not an easy one and shouldn’t be taken lightly, nor is the decision of when to have children. Spend some time seriously thinking about the costs – in terms of money, energy, time, and other factors – and whether or not the costs truly are outweighed by the benefits in your situation.

Second, plan ahead for children – and start that planning now if you think there is any chance of having them in a reasonable future timeframe. The sooner you begin to get your own financial house in order, the easier the arrival of children later in your life will be. Get an emergency fund started. Pay down your debts with a particular focus on maximizing your monthly cash flow (meaning pay off the smallest debts first). Invest your energy in building a sustainable career.

Third, use realistic, low-cost solutions for your child. Buy their clothes from consignment shops and Goodwill stores (that’s where we shop now for our children’s clothes for our four year old, two year old, and baby). Use cloth diapers. Buy a reasonable crib for the baby to sleep in. If at all possible, breastfeed and pump instead of relying on formula.

I love the local flavor of an area that I’ve never been to before, even in the United States. The word choices. The accent. The local culture. The food. The selection at the grocery store. It’s all similar, but just a bit different, like a different spice hidden in a familiar dish.

My husband and I bought (what we think) is a starter home last year and we think that we’ll want to sell it in 5-7 years since the public school system isn’t great in the area (no kids yet, but trying to think ahead). Anyway, in case we sell the house for around the same price we bought it, I am thinking of ways to make our money work for us in the next 5ish years to help us with a potential larger down payment. I have about $7,000 in a couple of stocks (Johnson & Johnson and Schlumberger) and have about $3,000 in cash that I would like to put in a Vanguard account (and then plan on adding to it monthly). Since most of this is based on speculation and the future, it is tough to plan. All I know is I want to make this $9,000-$10,000 work to its full potential in the next 5-7 years and was wondering what your thoughts were on the matter.
- Krissy

Well, you have a choice. You can either take on a considerable amount of risk and put it into stocks with the potential of a good return (and the potential of returning nothing at all or losing some) or you can put it into something conservative and lock down a small return.

That’s really the investment choice we’re all faced with. There is no “best” answer. It depends on our goals and our needs and our personal risk tolerance.

The longer your timeframe, the better the stock market option is because it gives you more time to make up for the inevitable bad years (like 2008). Five to seven years is just about the perfect time to go through one bear market and one bull market, and depending on how strong the bull is and how strong the bear is, it could be a net gain or a break even or a net loss. If you can invest for longer – fifteen years or longer – you can ride multiple bears and multiple bulls and, over the history of the stock market, the average bull gains more than the average bear loses. It’s just that you can’t bet on that from individual bears and individual bulls.

If I were you, I’d probably put the money someplace conservative and focus on squeezing a few more dollars from my standard of living.

I am twenty four years old, and I just got married back in October 2009. I am by trade what you would call a “Professional Musician” or “Hired Gun” or “Artist”. I’m a drummer, and song writer. This is all I have done since I was a kid. I have had a record deal, had a national release, and some radio success. The difficulty with being a musician, outside the realm of it being a “hobby”, is that work comes then it goes, and success is not solely based in being good or even great, it comes through connections and who-you-know. Not to mention that living in a town like Nashville where there are a lot of other people doing the exact same things, it makes it even more difficult to get in the door, EVEN if you a extremely talented! My wife has been unemployed for almost a year, but is furiously looking for a new job. I have been playing music and working as a server at a restaurant since my wife and I married, but our lack of income is constantly frustrating! The problem is that if I go get a great paying job or go to school to get a better paying job and then an awesome tour comes up, I have to quit. My heart and all my passion surround playing music, but it ain’t paying the bills? We live off a budget, have some emergency savings, and are paying off the remaining 4,000 in debt we have. Do you have any suggestions?
- Caleb

You’re asking about a field that I know little about aside from some friends that have dabbled in the alternative music scene. I asked them what they knew and they gave me a few things to pass along to you.

First, they suggest that you tour, tour, tour. Play as many live shows as you possibly can, even if they’re free. When you’re there, make sure you have t-shirts and copies of your album and bumper stickers to sell to the people that are there. Gigs build a reputation and keep income coming in, so get as many as you possibly can.

Second, if you’re a drummer, seek out at least a singer and a guitarist you can partner with so that you’re in this together. You’re in Nashville – it shouldn’t be too hard to find others who are trying to find a break. Even if you eventually go your separate ways, you’ll have built a resume. Tour with these people and split the proceeds from the t-shirts and albums and bumper stickers among you.

Third, make sure you do have some sort of album recorded so that you can sell it at your shows, even if it’s recorded in your basement using a laptop and a couple cheap microphones. Learn how to use GarageBand (that was their suggestion for software). Give away some tracks online. Do some online promotion, too, like with a Facebook fan page for your band.

They seem to largely think that if your love is music, then you should be focused on that, especially if you’ve seen some degree of success with it already. Just live as lean as possible for now and see where it goes.

The thing that bothers me most is when I see famous people complaining about how hard their life is when they have everything they could ever want.
- Kathy

What you’ve got to keep in mind is that there is no life without problems. There is virtually no one who does not want something different.

People who have financial wealth have often traded other kinds of riches to acquire it. Perhaps they didn’t build a great relationship with their family. Maybe they broke off their friendships with a lot of people to get where they’re at. Maybe they had to abandon a dream. Maybe they had to work in a field that made them feel empty inside. Perhaps their career path led them to fame that they didn’t really expect which restricts their freedom to just walk down the street when they want to.

No one on this earth has the perfect life. They may have elements of their life that you wish you had in your life, but I’m willing to bet there are elements of their life that you would absolutely not want in your own. I would imagine they feel the same way about you.

It could be that the richest person in your neighborhood looks at a poor but close-knit family and thinks to himself that he would trade all of his riches for that. Meanwhile, the close-knit family looks at the rich man’s big house and the shiny car and thinks to themselves that they would give anything for that.

Everyone has riches in different ways and we all sometimes wish we had more in some areas of our life.

I’m a 27yr old married guy with a 6yr old daughter and another on the way any day now. I’ve never borrowed any money from anybody in my life – not a loan, not a credit card, not a pay day cash advance, nothing. I love it this way – my friends and family have paid thousands upon thousands of dollars over the years in interest payments, while my wife and I have lived relatively debt-free. The problem is, I’m a credit ghost. I’ve tried to get some low-limit credit cards or loans to start to raise my credit score, but no one will approve someone my age who has never had a spot of credit in their life. Apparently, being a 27yr old with no credit raises all kinds of flags in banking computer systems due to the high statistical probability of my being a faked identity trying to pull some kind of scam. I even had to bring my ID, Social Security Card, and Birth Certificate to the bank just to be added to my wife’s 15yr old pre-existing checking account! I want to try and build my credit up a bit because I’m interested in buying a house around my 30th birthday. Do you have any suggestions about what I can do to get started down that path?
- Brad

The first place I would start is at my local credit union. Go there, explain your situation, and see what options they have available for you.

Local credit unions typically do manual underwriting for the credit packages they offer. That means they usually interview the person they’re considering loaning to and figure out who they actually are rather than just relying on a credit history.

Large banks rarely (if ever) do this. They typically run a person’s credit report and if they find a 27 year old with nothing, they don’t offer them credit (especially right now, where banks are being pretty careful).

Head down there. You’ll probably want to take similar identification with you, as well as some proof of employment and a copy of your previous tax return.

My girlfriend and I were talking about saving our money for about a year or so to be able to put a down payment on a house. Over the weekend a friend of ours said she saw people cleaning out a house in the same development as hers so she went online and found that the house is foreclosed and now bank owned. My question is, is buying a house that’s been foreclosed any different than buying a house that has not been? What makes this appealing is that the price on the website says its only $46k. Is this how much it would cost us to own it or does this amount mean something different? We are in the process of acquiring more information but I would like to know if this is worthwhile to pursue. If this is the price and assuming the house isn’t a complete disaster, would buying this house be a recommended course of action? Another bit of information is that our friend bought her house about a year ago for about $128k, to give you an idea of how much houses are worth in this development.
- Andrew

The absolute first thing you need to do is search the public records and find out if there is a lien against this home. Call your county’s recorder for starters to see what you need to do.

You also need to find out how foreclosure sales work in your state, because the procedure varies from state to state. Google will help to give you an idea of the process. If you actually decide to go for it, you may want to seek a bit of professional assistance if you’ve never done it before.

You’ll also want to inspect the property carefully. Sometimes, previous tenants in foreclosed homes will do things like strip out all of the wiring and all of the piping and practically gut the house, leaving the buyer with a ton of work. You’ll absolutely want a careful home inspection before you buy.

You may want to seek out a real estate agent who is familar with foreclosures if this is a new experience for you.

I am 26 years old and have no debt besides my mortgage. I work for a state agency. There is a retirement plan automatically set up for me through SERS, the School Employees Retirement System. On top of this, I contribute 6% of my income to a Deferred Compensation Plan, a 457(b), which is a retirement plan for state employees in Washington. I have been at my job for a little over a year and have contributed around $3600. I have an additional retirement account from an old employer (Simple IRA) that has around $2200 in it. Is it better for me to let the Simple IRA sit (I am not allowed to contribute to it on my own because it is employer sponsored), or roll it over into a Roth IRA? Also, would it be better for me to have a Roth rather than a 457(b)?
- Stacy

My belief is that for almost everyone, a Roth IRA is a better choice than any other retirement vehicle. It’s only topped by retirement plans that offer employee matching (because that’s free money).

Why do I love Roth IRAs so much? I love them because you don’t have to pay taxes on any gains you earn in that account. Since, at the same time, I believe income tax rates are going to go way up, that’s a very good thing. I’d rather pay the income taxes now when they’re low (since Roth IRAs have after-tax money in them) than pay the income taxes later when they’ll be higher (and possibly much higher).

If I were you, I’d roll it over to a Roth IRA if you’re allowed to. Also, I would contribute to your 457(b) up to whatever amount the employer will match and, if I wanted to save more, I would put the rest in the Roth IRA.

My husband and I have two cats that I dearly love and have had about for over 5 years. We rescued one from the pound and another from a friend that couldn’t keep the cat.

The problem is my sister wants to come visit with her family with us. She has asked us to find other homes for the cats but I don’t think that’s easily possible since the cats are not declawed and have a tendancy to shred/ruin furniture… I feel guilty and pulled in both ways. We have promised to not get any more pets in the future but I know our cats could live another 10 years.
- Karen

We were in this exact situation several years ago. We took in a stray kitten (it was a six or seven week old that had been abandoned in a park) and the cat left behind by an elderly neighbor who went to a retirement home, only to find out later that my dad was so allergic to the cat dander that he couldn’t visit us any more.

Our solution was, basically, to patiently search for a good home for both of the cats. It took us multiple years to find homes for them (and in one case, it was pretty much a relative being nice to us), but we did.

Reasons like this are why I’m often hesitant to take in a pet at all, even though I enjoy their companionship. I know there are pet allergies among my friends and family.

My suggestion is to just be patient, but also be diligent in your search for a good home for the cats.

I have a question about contributing to student loan payments vs. saving for retirement. I’m a 22-year old graduate student working towards a masters degree in ocean sciences, and between teaching and labwork, my month stipend is ~$1400 (after taxes). I have $8000 in student loans (down from $13000, yay!), which is my only debt. I also have an emergency fund of $2000, which would cover 2 months of living expenses. Last fall I opened a Vanguard Roth IRA account, which currently is at ~$1350. My monthly expenses are:
Rent: $600 (for southern CA, this is actually ridiculously cheap)
Food $100
Household (toilet paper, shampoo, dish soap, etc): $20
Phone: $25
Discretionary: $60
Tithing: $50
Irregular expenses (textbooks, conference fees, etc): $50 (leftovers go into travel fund, and when I have ~$600, I can buy a ticket to visit home (Alaska))
Total: $905

This leaves about $500 for either paying off student loans or contributing to my Roth IRA. Currently, I’m putting $450/month towards student loans, and $50 towards the IRA. This is mostly because I really want to travel for a few years after finishing school, which can’t be done with student loans hanging over my head. However, I also know that contributing to retirement savings when you’re young will pay off more in the long run, so I’m wondering whether I shouldn’t reduce student loan payments and increase the IRA contributions? (because I’m in school, the loans are in deferment, and most are subsidized, so required payments and interest accumulation aren’t really issues). Such a change would probably mean that I could not reach my goal of paying off the student loans by the time I graduate (ideally in one and half years), and so I would need to work for a year or so before setting off to travel. But I have the travel bug really, really bad, and I don’t want to do this… (The travel itself won’t be very expensive; I’m looking at au-pairing, WWOOF-ing, and participating in working holiday programs.) It also might be difficult to find a decent job if employers knew I was only planning on staying for a year. So I was basically wondering what you think? Also, if you have any suggestions about my monthly budget, that would be cool too.
- Shiloh

Your monthly budget looks fine. I also think your goal of traveling for a while after college is fine, too.

Your student loan load is not bone-crushing in the least. However, it will require $100 or so a month in payments (my back-of-the-envelope calculation) after you graduate, and possibly more if you take out more loans.

Since student loans typically have a pretty low interest rate, if I were you, I’d probably just make sure that I had enough in cash savings to cover my loan payments during my travel period, then focus on retirement savings. In forty years, you’ll be incredibly glad that you made that move, because the $5,000 you put in now will grow to quite a lot – and if you take it out at retirement time, you won’t owe a drop of income tax on it. It’ll reduce your retirement savings burden later in your life, in other words, by far more than you’re actually saving now.

My husband and I are in our late 30s. He began a new job in Febrary 2009. A few months later, we found out that our daughter has a serious medical condition requiring many medications and occasional hospitalizations. My husband has a 401(k) and an ESOP account from his old job. The 401(k) has about $70,000 and the ESOP is worth around $25,000 (we also have several other IRAs, totalling around $20,000-$30,000, plus a 401(k) from his current job). In July 2010, his shares from the ESOP will be “cashed out” by his former employer. We had planned to rollover this amount into an IRA.

My question is: instead of rolling over the full amount of the ESOP, should we take some as cash and put it into our savings? I know we’ll have to pay income tax on it, plus some type of penalty, but it sounds like a good idea to me for the piece of mind of having something in savings.
- Natalie

OK, first, I’ll unravel the acronyms for readers who might not know what Natalie is talking about.

ESOP refers to Employee Stock Ownership Plan. There are a lot of varieties of this, but they basically boil down to a employer-run plan that shares some amount of stock with the employees of that company.

FSA refers to Flexible Spending Account. It’s a tax-advantaged account for people to use with certain expenses that have tax implications, like health spending. Health FSAs are the most common kind.

My biggest question would be whether or not Natalie and family have a firm grip on any future medical expenses for their daughter. I also am not sure if they have any cash savings right now.

If it’s a bleak scenario (more expenses and no cash savings), then I would use this opportunity to quickly build some, even though the penalties will be harsh. The alternatives – taking out debt for future medical expenses and whatever unknowns life throws at you – are just too harsh.

Given your comments, I think the “bleak scenario” is probably the right one, given your mention of upcoming bills. I would lean towards paying the taxes (and any penalties, if there are any) and beefing up your savings for the expenses heading your way. You know there are a lot of bills coming – get through this now and focus on retirement savings when the storm is through.

I currently make about $98,000 at a job I hate. Every time I come into the office the project I work on has some sort of drama and chaos going on which I get pulled into immediately. Without all the details, I know this situation is no good for me. My goal is to leave and work my businesses full time. But, like many I do fear not being able to cover my bills. In addition, even though I am working on living a simple life, I still want to be able to travel with my partner and our kids. We have 4 young children (2 living with us). My partner makes just $18K a year and has not been successful in finding a better job despite her even having more education that me. Clearly, we can’t pay the bills on her salary alone as our $1800 mortgage would take her two months to pay.

Yes, I have a plan. I am paying off some things and making home repairs. In addition, we are getting any medical and dental work that we need done now before I quit. I plan to get a high deductible plan with HSA but I won’t be able to add my partner to my plan like I have her on my current insurance. So she will be uninsured. I hope that my sales cover all my expenses when I quit. I also working to ensure that I work on my business not in it. I think with age I am becoming more risk adverse (I am 30), and making the leap for me isn’t difficult. I just really don’t want my family to go without. Any suggestions?
- Tammy

I think you need to address what your family would actually “go without” if you made this decision? Would they go without food or anything genuinely important? Or is it just a matter of not being able to go on a big trip this summer or next?

If it’s the latter, the value of having a mother that’s not completely stressed out all the time more than makes up for it. Plus, you’ll suddenly have tons of time and energy to devote to making your business work for you.

You have a plan in place. If it’s not going to pull anything truly important – food, school, shelter, clothing – away from your children, go for it. They’ll gain a mother with energy and spark again.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag. However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

A long while back, I reviewed Bob Sullivan’s excellent book on consumer issues, Gotcha Capitalism. In that book, Bob focused mainly on how companies try to “sneak” surprise fees and costs into their products.

I took away a lot of good material from that book, but what I also took away is that Bob Sullivan is a really good writer about consumer issues. His MSNBC blog, The Red Tape Chronicles, is similarly well written. Thus, when I saw that he had written a follow-up book, again focused on consumer issues, I had to pick it up.

Stop Getting Ripped Off focuses on the same types of issues that Gotcha Capitalism did, but instead of focusing on the specific “rip-offs,” Sullivan instead looks at some of the reasons of why these ripoffs are even possible. Why are we even in a position to be taken advantage of to begin with?

Let’s dig in and see what he has to say.

Part I | Why Consumers Get Screwed
I covered a bit of what Sullivan has to say in this section in my earlier article on money and basic math. To put it bluntly, Sullivan’s argument here (and I think he’s spot-on in some ways) is that companies get away with giving customers raw deals because they have a pretty good profile of many of the foibles and flaws of their customers.

For example, many customers are math-phobic and afraid to or don’t know how to figure out for themselves if it’s really a good deal or not. The companies also deeply understand behavioral economics and psychology and have a pretty good grip on how people react in certain situations – and try to create those situations to get a gut reaction that’s good for their business. Sullivan also looks at the “Stuart Smalley effect” – in other words, people just accept some degree of being ripped off because they don’t think it’s really that big of a deal. Another painful element is that quite often people are willing to believe in things that simply are too good to be true.

What causes companies to take advantage of such things? Greed. A lack of regulations or laws preventing it.

What can we do to fight back? Get good at basic math skills. Focus on the numbers above all else and don’t worry about the ads or the sales techniques. In other words, keep our eyes on the ball.

Part II | Stop Getting Ripped Off – One Deal at a Time
In this section, Bob covers a wide range of specific areas where the principles he talks about in the first section are at work: checking accounts, credit cards, car buying, home buying, cell phones, cable and satellite television, student loans, insurance, and even workplace compensation.

For each of those topics, he works through how companies use the tactics from Part I to give you a worse deal. For example, he talks about how no-fee checking accounts stick tons of potential fees on the account, then make it very easy for people to overdraft and make other such mistakes by giving them a debit card and not encouraging people to manage their own register. The bank makes their money back and more on the average customer who, because they’re not strong on math, overdrafts their account or bounces a check. The penalties are strong but not enormous, so many people just shrug it off due to the “Stuart Smalley effect” from the previous chapter.

Bob applies similar logic to each of the areas mentioned above and offers a few solutions for each. So, for example, he recommends not using your checking account for every purchase and instead focus on trying to use cash as much as possible. You should also try to pay all of your bills in one batch after payday so you clearly know what you have to spend on your bills and what you have left.

Part III | How to Pitfall-Proof Your Finanaces, Past, Present, and Future
This is the section of the book that I feel sets Stop Getting Ripped Off apart from Sullivan’s earlier book. Here, he sets the foundation for how to protect yourself from such things over the long term with a five step plan that takes a person from paycheck to paycheck to a secure financial future.

His first step is to build a small emergency fund and start a bit of retirement savings. In truth, he almost has a zero-th step – you’ve got to cut your spending, period. If you’re spending what you earn, you will never, ever get ahead and you will always be very prone to anything at all going wrong in your life. The first move to make when you do that is to just start socking away cash in a savings account so that when an emergency happens, you can deal with it. Any emergency fund is better than no emergency fund, but if you can start getting a month or two of living expenses built up, you’ll be much more secure.

His second step is to save for retirement and, with the remaining money, start paying down debt. He suggests just making sure you’re in your 401(k) (or equivalent) plan at work and that you’re getting whatever money your employer offers as a match – and if they don’t offer such a thing, opening your own Roth IRA (I have mine through Vanguard). He also strongly encourages coming up with a debt repayment plan.

His third step is to keep rolling on your plans: an emergency fund, retirement, and debt repayment. You should shoot to build an emergency fund that will sustain you for six months, with about six weeks of it in cash and the rest in a broad stock market index fund. He also recommends building your retirement savings with strongly conservative investments – don’t put it at risk with stuff like international stocks.

His fourth step is to start saving for major purchases, like cars and so on, once you’re debt free. You do not want to just continue a debt cycle, especially when you’ve eliminated all of that debt and have a huge monthly cash flow. This is also the perfect time to start investing for yourself with the aim of eventually living off the income from those investments.

His final step is to not escalate your lifestyle. When you get a raise, don’t start buying stuff – instead, channel that raise into your wealth building. Keep saving for your big purchases.

I’d say I’m basically in the fourth step. I’m saving for everything I buy in the future and I’m nearly debt-free (just my mortgage at this point).

Is Stop Getting Ripped Off Worth Reading?
If you’re earning a good income, but you often feel like you’re just being nickel-and-dimed to death and you’re struggling to get anywhere, Stop Getting Ripped Off will be an absolute home run of a read for you.

Sullivan’s advice, though, seems to assume a fairly good income to begin with, so if you’re struggling to earn much more than minimum wage, this might not be the book for you.

The strength of this book is how Sullivan transitions escaping from the nickel-and-diming to a lifetime of financial security. It really is a journey, and Sullivan captures that very well in this book.

The book opens with a chapter on debt repayment. In my original draft, this chapter was in the middle of the book and the book actually started with the second chapter, What’s Missing?, which focuses on the fact that we all have problems in our lives and that success comes not from laying blame on those problems but from accomplishing what we can in spite of those difficulties.

Why talk about debt first, then? The real reason is that overwhelming debt is incredibly scary. It’s the most challenging and frightful topic I discuss in the book. My book is largely optimistic and forward-looking – debt, on the other hand, causes people to feel fear and hopelessness. I know – I’ve been there. I open the book with this little anecdote from my own life:

I began to quickly realize that the pile of bills I just received not only wouldn’t be covered by the current balance of my checking account, but that my next paycheck would not cover them either – and that was if I spent absolutely nothing on food, gasoline, or anything else. I sat there completely stunned for a moment; then I got up and went into my son’s room, closed the door behind me, and sat down in the rocking chair across from his crib. He was so tiny lying there, less than six months old, and sleeping so peacefully there without a worry in the world. As I watched him lie there, gently breathing, emotions poured through me. Guilt. Shame. Embarrassment. Pain. I was failing this wonderful little boy, this child who had already brought incalculable joy into my life. He relied on me for everything, and because of my poor decision-making and my selfishness, I was letting him down.

That’s an incredibly hard thing to write even in your own journal, let alone in a book that hundreds of thousands of people will read, a book that has copies sitting in most of the bookstores in the United States right now.

Long time readers will recognize that I’m essentially retelling the story I talked about in an earlier post, The Longest Night (in fact, my first draft largely was a quote of that post).

When I’ve discussed debt repayment in the past, I’ve usually stated that the first step of the process is to come up with a debt repayment plan and sell off items that you’re not actively using in order to start funding that plan and get the creditors off your immediate back.

What I really neglect to say in those articles is something I cover intensely in the book: if the people in your life that you’re financially responsible for aren’t also on board with this plan, you’re wasting your time. To put it simply, if you can’t get your partner on board, the absolute first step you need to undertake is fixing your relationship with those people, because such a relationship based on divergent goals and behaviors isn’t working.

I was extremely lucky to find that Sarah was a more-than-willing partner in getting our financial lives straightened out. I originally wrote a description of how exactly we came to be on the same page that was excised from the book in later drafts, but I’ll share it with you here.

For us, this meeting of the minds was quite straightforward. We set aside an afternoon and simply went through all of our finances together. We talked about our dreams and our goals. We looked at our full debt situation seriously – nothing hidden or secretive – and we came to some very strong conclusions about what we needed to do with our money in the future. Our only real difference of opinion was how far to take our cost-cutting measures and over the following months we worked through those on a case-by-case basis.

The key to success wasn’t in that first meeting, though it did lay the groundwork. Our success was built on discussing and revisiting and refining all of this over time. We talked about what didn’t work just as much as we talked about what did work.

Another key was recognizing that we are both flawed people who make mistakes. Neither one of us is going to be perfect and a mistake isn’t a reason to argue or disrespect each other.

Much of the rest of the chapter focuses on what I would describe as the “nuts and bolts” of debt reduction: coming up with a debt repayment plan, reducing interest rates, and snowflaking are covered, among other topics. This is the type of basic personal finance stuff that shows up in almost every personal finance book. Why? It’s vital information to those struggling to overcome debt.

Yet, the idea that this book somehow focuses heavily on debt repayment strategies is basically false. In fact, debt repayment is scarcely mentioned again in the book. It’s merely one tool among many for building the life that you want.

I picked up the book, read it twice, and set aside a weekend to get started. It really works! I feel like I’m getting so much done now that it’s crazy.

I guess my question now is what comes next? If I’ve learned anything over the past couple of years it’s that everything in life is a journey and there is no end point. Where did you go after discovering Getting Things Done in terms of your time management?

I thought long and hard over the last couple of weeks about Calvin’s email. What comes next after you get GTD and have started to incorporate the ideas into your life?

My first big realization was that Getting Things Done is somewhat akin to getting a set of really good tools. In itself, Getting Things Done doesn’t solve any of the problems in your life, just like a pile of tools won’t create a armoire or fix a bicycle. What it does do, however, is give you the tools to really start that journey. That journey is going to be quite different for everyone because we all have different circumstances, dreams, and goals. A woodworker is going to use a hammer differently than a homemaker will, for example, but it’s a valuable tool for both of them.

I tried to isolate some of the key ideas and directions I went in after really understanding Getting Things Done for the first time. Here are what I consider to be five of the most important ones, things that everyone can take up for further reading and ideas.

Simplifying everything
One of my biggest realizations came about when I began to see how full my calendar was every day and how many things were constantly filling my inbox. The sheer deluge of stuff was often overwhelming, leaving me with only small amounts of time on the periphery of each day for personal growth and other such concerns.

To put it simply, I had too much to do and too many things going on.

My solution was to simply pare back on the less important things in my life. This not only meant involvement in fewer activites, but it also meant paring down my possessions as well, because the more possessions you have, the more maintenance and upkeep is required, from dusting to keeping up maintenance schedules.

What really mattered to me? My family. Reading and learning new things. Building a writing career. Some avenues of community service. Once you get beyond that, everything else is pretty secondary.

So I started trimming back on those things. I chopped some social events from my schedule. I sold some of the items that I had built up but scarcely had time to use. I stepped back from some community responsibilities. I started buying less stuff and reusing more things. These choices left me more time for the things that mattered most to me.

Key Reading on Simplification
For me, the most valuable book I read in terms of thinking about how to simplify my own life was Voluntary Simplicity by Duane Elgin, which I reviewed in detail a few months ago.

The entire point of the book is that you don’t have to overconsume in areas that are not important in the larger scope of your life. It forced me to think of the impact of each of my choices in terms of time investment, environmental impact, social impact on those directly around me and those not directly around me, political impact, and so on. What I often found is that our actions have many, many costs that often fly directly in the face of what we profess to hold most dear. From my review:

For me, this was one of the most thought-provoking books I’ve read in the past five years or so. It made me think deeply about a lot of the assumptions I’ve had in my own life and made me question many of my personal choices. It actually helped me move forward in my personal finance progress because I started to question things at a deeper level than I had before. Why am I actually earning this money anyway? What impact does this choice have on others, and how does it echo back to me? Something as simple as buying a gallon of gas has an impact on many levels, an impact that bounces back in many different ways (not just environmentally, but economically and politically and socially). The same goes for buying a disposable diaper and tossing it in the trash when it’s used up.

That idea has constantly led me to strive for simplicity in almost every aspect of my life, from food cooked at home with fewer ingredients to a personal calendar that’s not quite as overstuffed as before. Every choice you make has costs, often far beyond your initial reaction to the choice.

Learning how to critically review and revise my life progress and plans
Initially, I struggled quite a lot with the idea of a “review.” I understood that I needed to look for holes in my system of keeping everything organized. What caused me difficulty was some of the higher levels of reflection. The connection between enormous lifetime goals, which felt very vague, and my activities for the coming week, which felt very tangible and real, was a difficult connection for me to make.

I soon began to realize that a big part of this challenge was figuring out who exactly I was and what I truly most wanted out of my life as a whole. It’s very easy to claim something like “I want to be a good father” as a life goal, but what exactly does that mean? And, perhaps more importantly, how does something like that begin to reflect in shorter-term goals, all the way down to next actions.

It is that bridge between the next action and the lifelong goal that is really key to living the life that you want. It is well worth devoting a couple hours per week to working out the specifics of that connection, including specific goals with shorter terms and next actions you can take to move you in that direction.

It’s not easy – or at least it wasn’t for me. The ability to state a goal, refine a goal, break it down into smaller goals, break those down into smaller actions, and keep up with all of it is a truly key part of an organized life, but it’s not a part that comes naturally to me in any way.

Key Reading on Self-Reflection and Evaluation
David Allen’s less-heralded follow-up to GTD is Making It All Work, which focuses almost entirely on the items I talked about above (I reviewed Making It All Work in 2009). In fact, Allen might as well have called the book GTD Philosophy and Techniques for Introspection, because that’s the focus – and it also explains why it’s less-heralded than its predecessor.

I like to think of the two books as addressing the same problems on different levels. Getting Things Done is like a toolbox. It gives you everything you need to sculpt your life in the way that you want, but there are no real ideas or thought exercises on how exactly to shape that big chunk of clay that is your life. Making It All Work is more like an art instructor or a well-written book on art technique and philosophy that takes you from having a bunch of tools and a big pile of clay to having a sculpted life, from the rough formations you make out of the clay to the finest detail work.

Once you’ve really mastered the basic GTD tools, I’d argue that Making It All Work is a more useful read because it focuses on what you can really do with those tools.

Getting my money under control
Setting and reaching such personal goals is a powerful step towards personal freedom, but if you don’t have financial resources to achieve those goals, they don’t really matter. Thus, hand in hand with the idea that you’re getting your time and your priorities in order is a need to get your money in order.

How is that important? Take, for example, my lifelong goal of being a writer. You don’t just wake up one morning and decide to become a writer if you have a bevy of personal responsibilities on the table (like children, for example). You’ve got to develop a plan, and one major component of that plan is financial stability.

Obviously, this element was the genesis of The Simple Dollar. It was my journey in getting my financial house in order that started this site, but even then, the genesis of my change was a realization that I needed a strong financial backbone to be able to achieve the things I really wanted in life. That meant making some hard choices.

Key Reading on Money Management
The single most vital book I’ve ever read on personal finance covers these issues almost perfectly. Your Money or Your Life by Joe Dominguez and Vicki Robin is an absolute home run of a book, one of the ten books that changed my life (along with GTD).

What’s in this book that sets it apart from the rest? Rather than focusing on the mechanics of investing or the principles of saving money, Your Money or Your Life focuses instead on the deep connection between your financial health and your life choices. To put it simply, the more money you spend, the more restricted your personal choices become. A huge mortgage makes it much more difficult to quit your job and do something different. Life routines that result in a constant outflow of money keep you from taking the leap into something you deeply value.

This general theme – personal finance not as an endpoint but as a means to an end of building the kind of life you want to live – is something that my book, The Simple Dollar: How One Man Wiped Out His Debts and Achieved the Life of His Dreams, focuses on.

Developing and improving specific skills
The inevitable result of reading and following GTD and continuing along on the journey presented in that book and the ones above is that you begin to realize that many of the goals you desire for yourself – the elements of the life that you dream of having in the future – rely upon building specific skills along the way.

One of my lifelong dreams has been to play the piano. My vision of the future has a piano in our home and includes my own ability (and, hopefully, my children as well) to sit down at that piano and play a song.

That kind of goal isn’t reached without acquiring skills. The beautiful part of GTD is that it streamlines your time and information management to the point that you have room in your life for such skill acquisition and the ability to manage it through to the point where you’ve acquired the skills that you want – or that you need – to build the future that you dream of.

The first step, of course, is identifying those skills, which is exactly where Making It All Work and thinking about long-term goal setting comes into play.

Key Reading on Skills
What comes next after you’ve identified skills that you need to acquire? Further reading on that specific skill. Lessons. Education.

Online communities are invaluable in this process. Seek out an online community that’s strong in a particular area and simply ask what these experts did to acquire their skill – and what they would suggest to an unskilled newcomer. People are almost always thrilled to help someone who admits that they’re a novice and treats them like an expert.

Another good one-stop reading on skill acquisition is Scott Young’s article on learning a skill in three months. While the timeframe of many skill acquisition goals will be longer than that, the principles still hold for virtually anything you’ll teach yourself.

Getting philosophical
The final element of thought that GTD inspired within me is to simply address the big question of why I’m on this earth to begin with. What is my purpose in life?

When you start following that path, you quickly get into spirituality and philosophy, areas that address that subject deeply and seriously. This is really a very open-ended path, but I would suggest, more than anything else, reading opposing viewpoints and sticking to things that are fairly classic in that they’ve survived some degree of a test of time. In other words, avoid brand new commentaries and philosophies, at least at first, because you don’t have enough background to really judge them. Stick with the classics, in other words.

Philosophy and theology do not have to be dry, either. I find that focusing on how the things I read really apply to me and to the world I see around me really brings these elements to life. I also find great value in reading things that contradict what I think or, alternately, two books that present very different viewpoints.

Where does all of this lead? For me, it just leads to a deeper understanding of why I’m here and where I’m going with my life.

Key Reading on Philosophy
The first book I would start with would be Bertrand Russell’s History of Western Philosophy. Read it with an eye of looking at your own life and experiences in the world. Keep track of the specific things that intrigue you, excite you, and make you think away from the book. Follow those areas.

I wound up following a theological path that, at one time, had me considering seminary or some form of religious study. I’m not sure that’s exactly the place I’m at right now. However, I will say that this line of thinking has convinced me that one of the core values of my life is helping others, and I think that’s a big part of where my motivation for The Simple Dollar comes from. Yes, reading philosophy led me here.

Where will it lead you?

One Year Ago (July 18 – July 24, 2009)
Ten Unusual Ways to Improve Your Appearance of Confidence That Really Work I often use these tactics in social situations where I don’t really have my bearings. They really, really help me.

Over-Saving for Retirement? Yes, you can over-save for retirement. It’s an unusual situation, especially considering that many people under-save for retirement.

To Close or To Not Close a Paid-Off Credit Card? The answer isn’t as immediate and straightforward as you might think it is.

Resetting the Scale Lifestyle inflation can be an incredibly expensive problem if you let it get out of control. The best solution is simple: reset the scale.

The Cost of Free There is no such thing as a free lunch. Someone is paying for it somewhere. It might be you (in a way you don’t even see).

Two Years Ago (July 18 – July 24, 2008)
Nine Ways the Status Quo Bias Is Costing You Money – And How to Turn That Ship Around We have a strong human tendency to keep things the same. The problem is that tendency often costs us a ton of money.

Lifestyle Choices as a Hedge Against Inflation If you’re stressed out about inflation’s possibilities, the best thing you can do is become as self-sufficient as possible so that the rise of inflation doesn’t hurt as badly.

Why I’m Not Panicking – And You Shouldn’t, Either I wrote this early in the ‘08 financial meltdown and I still stick by it. Panic does nothing good.

Shared Dreams: How My Wife and I Got on the Same Financial Page The key? Constant conversation. Honesty. Not being afraid to criticize each other – and harshly, at times. Understanding that we’re both human.

Reflections on Abandoning the 9 to 5, Four Months In I really should update this post sometime in the near future. Some of this stuff holds, but two years in, my perspectives have changed.

Three Years Ago (July 18 – July 24, 2007)
Dealing With Those Piles Of Old Baseball Cards In Your Closet Unfortunately, there’s about a 90% chance of those cards not being worth the cardboard they’re printed on.

How To Set Up Multiple Savings Account Funds Within ING This is exactly how I save for different specific goals. I just set up a new account for each one.

Going Into Debt To Invest Money? This is almost always a terrible idea unless you’re getting debt at such a low interest rate that you can put it away risk free and make a profit.

Does Tiredness Make You More Susceptible To Unnecessary Spending? Yes. In other words, get a good night’s sleep before you make buying decisions.

Renting to Get Richer? It’s certainly possible. It depends heavily on the specifics of your local housing market.

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

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

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

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

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

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Homemade pizza is a big hit at our house (here’s a picture-filled post about our homemade pizzas). We all love our every-other-week-or-so homemade pizzas where we often experiment with ingredients and enjoy from-scratch crusts.

The problem with pizza, though, is that it’s not very portable. It doesn’t make the best picnic food (unless, I suppose, you order from Pizza Hut and take it to the park with you, but then you lose control over the ingredients and the cost).

Our family’s solution is to sometimes make calzones instead of pizzas. For us, a calzone is essentially an inside-out pizza – we just take the ingredients of a pizza we want to make, wrap it in pizza dough, and bake it. It comes out much like a sandwich, which is very portable, indeed.

This time, we made enormous calzones! (You don’t have to make them this big, of course.)

My intent was to show us eating these at the park, but the weather unfortunately didn’t cooperate at the last minute. We served the calzones with apple slices.

We ended up making six calzones that were approximately that size (two of them were somewhat smaller, about 60-70% of that size). I was only able to eat roughly half of that calzone for dinner. My wife, who is currently breastfeeding and who hadn’t eaten since a very small lunch, ate about 3/4 of one and gave up. Our children split the smallest one and that was about all they could handle.

In other words, this batch of calzones I’m about to describe fed two adults and two children for dinner, two adults and two children for lunch, and two adults for lunch again. Ten meals, in other words. Calzones are great meals to make in larger batches because they’re very good when reheated.

So how did we make them? The first step, of course, is to make the dough.

If you wish, you can always buy pre-made dough at the store. However, making your own homemade pizza dough is so easy, you shouldn’t waste the money on it – homemade dough tastes better, costs a pittance, and is healthier, too, because you don’t have the oils and extra ingredients and preservatives that large food manufacturers toss into the dough.

Here’s how I make the dough:

Four ingredients, plus some water.

4 1/2 cups flour
1/4 cup extra virgin olive oil
2 teaspoons yeast
1 teaspoon salt
1 3/4 to 2 cups water (depending on air moisture in your area)

Heat up the water until it feels warm to the touch, then mix in the yeast, stir, and let it sit for fifteen minutes. Meanwhile, mix the flour and salt together in a bowl. Add the liquid to the solid and mix them thoroughly with your hands (or with a mixer) until it’s all consistent. Then put the dough ball in a bowl, cover it, and put it in a warm place for two hours or so to let it rise (or, if you’re doing it in advance, freeze the dough ball or let it rise in the refrigerator for about 24 hours).

That’s it. Here’s my dough ball.

It hasn’t risen much – it will roughly double in size before I need to use it.

Next, we mix the stuffing. You really can use pretty much anything you can imagine as a calzone stuffing. Here, we’re using cooked broccoli (about a pound), 3 cups shredded mozzarella (we grated ours, you can see the cheese grater in the picture below on the right), 2 cups shredded chicken, and about 1/2 cup pesto.

We actually have much more shredded chicken than we’ll actually use – about two cups’ extra. If you want to get a good amount, you’ll just want to cook one large breast and shred it. We cooked three medium breasts and shredded it all. Why? The breasts were on sale and shredded chicken breast goes good with tons of different recipes and in salads, too.

What happens next is complicated. Take those four ingredients, put them in a bowl, and mix them together. Your mixture is done.

I then took our big ball of freshly-risen dough and split it into six pieces, with two of them being a bit smaller than the others (for a variety of calzone sizes).

After flouring down the table, I got to work. I took one of the dough balls and rolled it out on the table until it was pretty thin and wasn’t rolling well any more. The circle was about the diameter of a fork (or a bit more) and between 1/4″ and 1/8″ thick (half a centimeter or so).

It does not have to be anywhere near a perfect circle. Just get it something that roughly approximates a circle and you’re good.

Next, just take a healthy spoonful of the mixture and put it on one half of the rolled-out dough, leaving a good lip around the edge of it. I also sprinkled a bit more cheese on top.

I put just a bit of water around the entire lip of the calzone, then folded it over to create a pouch with the stuffing inside of it. I then pressed down on the edges of the calzone so that the wet dough would stick together (and spread out a bit), then I rolled up that edge. This keeps the contents from spilling out in the oven.

Like I said, the ingredients above made six of these. Once they were done, I took two baking sheets, put about a teaspoon of olive oil on each one, and spread the oil all over the sheets (to prevent the calzones from sticking). I put the calzones on the sheets…

… made a few diagonal slices on top of each one, brushed the tops with a bit of olive oil, then stuck them in the oven at 450 F (230 C) for 18 minutes, rotating the pans halfway through.

And you have calzones!

Our total cost for materials for this recipe was $9.30, with roughly a third coming from the chicken alone and most of the rest from the pesto and the cheese. The broccoli cost about $1 and everything else was fractions of a dollar.

This recipe made ten delicious meals for my family, which averaged out to $0.93 per meal. That’s a great price for a delicious calzone!

Not only that, this meal is really, really flexible. You can pretty much put in any ingredients that you wish. You can put in all of the traditional pizza ingredients. You can put in nothing but vegetables. You can put in whatever produce is on sale at the grocery store. It almost all works.

Unsurprisingly, this is another big hit at our house, since it’s essentially an inside-out pizza. Everyone loved it and all leftovers were happily consumed.

I focused entirely too much on what other people thought of me.

Throughout my teen years and adult life, I bought many, many things with an eye almost exclusively on what others thought of me. My clothes. My education and career choices. My gadgets. My housing. My automobile. My golf clubs. My meals.

I believed that somehow I could create a more positive image of me through others by buying things or doing things that they approved of. If I lived in the right home, I thought others might think of me as successful or as a family-oriented person. If I owned the right gadgets, people might see me as tech savvy and affluent. If I spend money in front of people from my home town, they might see me as some sort of great success.

All of it was a gigantic waste of money.

The only people that put any stock in such frivolous things are the people that know you only in the most tenuous of fashions because that’s all they know about you. If you’re going to build any sort of relationship with someone, it’s going to be based on who you are, not what kind of stuff you own. If there are people out there who genuinely believe things like, “I won’t be friends with someone who doesn’t have a $3,000 golf club or a $750,000 home,” then their values are so warped and misplaced that you will never be able to please them. Don’t bother.

That’s not to say it isn’t worthwhile to think about others, but most people make up their mind about you based on other things. Are you kind to others? Do you engage them politely? Do you listen to what they say? Are you clean and not offensive to others? If you want to build a strong social network, those are the things to focus on, and those things don’t require an outlay of money.

This isn’t a call to ultra-frugality, either. Spend money on what you value, not what other people value. I buy automobiles based on reliability and gas mileage and safety, not how they look in our driveway or whether the neighbor will be impressed. If I want to build an actual relationship with my neighbor, I’ll go over there and say hello, not buy a car to impress. If I don’t want to build a relationship with my neighbor, why would I possibly care at all what he or she thinks of my car? Now, if I really got a lot of very personal value out of a luxury car purchase, I might choose to purchase one, but that’s not where my values lie. Neither side of that decision has anything to do with my neighbor.

“But what about your reputation?” Most of the things that can be said about you that can really hurt you or build a positive reputation about you are based on the actions you take, not on the stuff you own. You can own all of the nice cars and homes and boats you want, but if you hit your spouse, people won’t like you. You can live in a shack, but if you spend countless hours building a great community softball league (and keep yourself clean and somewhat presentable), people will love you. You can own a BMW and wear a $3,000 suit, but if you’re rude to your neighbors, they’ll help you build a bad reputation. You can drive a used Toyota and wear $2 Goodwill pants, but if you’re willing to lend a hand to help your neighbor re-shingle their roof, they’ll speak positively about you in the community.

What can you do to avoid this trap?

To put it simply, don’t waste a single, solitary dime on a purchase meant to impress others. Such purchases don’t pay off because they don’t improve who you are. Focus instead on building you into a great, friendly, happy person – and most of the methods of doing that don’t cost a dime.

Instead, spend your energies actually building real relationships with people. Instead of spending two hours picking the “perfect” handbag to drive the other women crazy with envy or spending three hours at the golf store trying to pick out the driver that will let you dominate the boys, spend that time helping out a neighbor, connecting deeply with someone important to you, or working on some project that will make your life less stressful or improve your life quality (which will make further interactions much easier and much more positive).

Stuff doesn’t make a person.

I blamed others for the challenges in my life.

If you want to find scapegoats in your life, almost everyone can find a lot of them.

I was born with legal blindness in my right eye, deafness in my left ear, and a nonfunctional thyroid. I spent much of my childhood with various sorts of surgeries, surgical recoveries, and illnesses, leading me to less cultural and social exposure than I might have otherwise had. I spent much of that illness time reading, so I skated through most of secondary school without learning any study habits, which made college rather challenging at times. I chose not to follow my dream career path in order to earn more money.

All of these things would be extremely easy to change into an excuse for not doing the best that I could do. For example: My childhood doctors exacerbated my health problems. My parents didn’t expose me to any sort of culture. My advisors in high school pointed me down a career path I should not have followed. My teachers didn’t teach me any study skills. My bosses created a work situation that I was unhappy with and ate up my time and energy so that I couldn’t follow my dreams or ideas.

Guess what? In every single case above, I was the key to solving the problem.

I spent an awful lot of time in my life blaming others for the fact that my good life wasn’t better than it already was. All that did was give me an easy excuse to not work my tail off to overcome the obstacles in front of me.

Take my medical conditions, for example. My lack of hearing in my left ear is the result of having a completely destroyed inner ear – there’s literally no bone structure in there. Sometimes, in social situations, I simply cannot hear people sitting on my left. For the longest time, I would dole out blame for that – it’s their fault for not talking louder, it’s my doctor’s fault for not diagnosing my ear problems.

All those excuses are is a crutch to excuse me from solving the problem myself.

Today, if I want to participate in a conversation, I make a point to try to sit on the left side of that person. If I can’t hear what’s being said, I don’t blame the other person for speaking softly – I ask them to repeat it. If it’s in a noisy room, I apologize and simply say, “I’m sorry I can’t hear you. My hearing isn’t so good. Could we go over here where it’s quieter? I’m interested in hearing what you’re saying.” Guess what? Almost everyone I’ve ever met will happily accomodate these things.

Even more important, it’s not their responsibility to know that I can’t hear them. It’s my responsibility to make sure that I can hear them.

Let’s look at my teachers, for another example. In high school, I rarely had to put forth any effort at all. When I reached college and faced some of the more difficult classes, I was in trouble. I had no real idea how to study.

At that time, rather than simply saying, “I’ve got to learn how to study,” I would mostly just say things like, “No one ever taught me how to study.” I’d beg for grades and try to make an excuse out of my situation. Sometimes it would work – usually, it did not. I struggled mightily during my second and third years in college, permanently damaging my collegiate GPA. During my final years in college, especially my final one, I actually learned how to study and made dean’s list with a very difficult courseload. Yet, I still wanted to blame others for my poor GPA. It must have been the fault of my teachers.

Over and over again, my willingness to blame others for the challenges in my life delayed creating solutions to those problems. That blaming enabled me to keep on making the same mistakes as before and keep on repeating the actions that led to the things I was unhappy about to begin with.

What can you do to avoid this trap?

Here’s the real truth of the matter. No matter how unfair the situation, you are the solution. Using the cause of the problem as an excuse not to solve the problem doesn’t cut it. In fact, it usually just prolongs the problem and makes it worse.

Whenever things are not going the way you want in your life, ask yourself what you can do to make the situation better or change the context of the situation so that the problem isn’t as devastating. If you’re overweight, don’t blame the food companies and keep eating unhealthy stuff. Take action to toss out the unhealthy stuff and replace it with vegetables and fruits.

Whenever you hear yourself blaming someone or something else for a problem, stop. Blaming others for your problems is an incredibly pernicious habit. Yes, there are bad things in life. There are bad things in everyone’s life. The people that succeed are the people that don’t waste their time looking for someone or something to blame, but instead look to themselves for a solution to the problem.

Remember my complaint about soda about a month ago? It turns out that there was a labeling error. Apparently some bottles that contained “lemon soda” were mislabeled “lemon sour.” I’ve yet to receive a written response from the company, which may contain vouchers or some similar material. I’ll keep you posted.

After following your thoughts and advice, I am proud to say that I have eliminated my personal debt. My partner has made great strides in her debt, and now has about $50,000 worth of debt (car loan, consolidation loan, and credit cards).

It’s a nice problem to have but we really are not sure where to go with this. Thanks for your reply and help.
- Kate

I’m not entirely sure I agree wholly with either idea.

The big question I would have is whether or not you have a cash emergency fund sitting there so that if something bad happens, you’re able to just deal with it. If you don’t, then go for the first option.

Now, another key question: how high interest is that debt she has? It seems like it would be fairly high interest. If it’s above even a few percent, I would put paying off that debt as a higher priority than flipping properties.

I like option one much better, with the caveat of an emergency fund.

I’m my mother’s health care proxy and executor of her estate. I finally was able to nail her feet to the ground and talk about what her wishes were, but also what her estate entails. Right now she is 56 years old, with an ok paying job. I figure she makes about $40,000 a year, give or take, and has health care through her job. My dad is passed, so it is just her. She told me she has about $20,000 in cash, about $5,000 (yeah, that’s five thousand) split between three retirement accounts, and her house. She has a small home improvement loan on the house, I believe it is $10,000. The house is not in good condition. Looking at other real estate in her area, I am guessing that it would sell for $70-$90k. That is it.

Do you know of anything that I can do to help my mother not have to move in with us? Taking on an extra job or doing more is beyond her. Do you think it is wise to plan that she is going to be moving in with us? How can I convince my husband of this, if it does indeed come to pass – which I give a much higher possibility to, after talking to her.
- Susan

This is the tough spot that parents put their children in if they don’t adequately save for retirement. I see people in my own life following this path – and what’s going to happen in fifteen or twenty years is that they’re going to become burdens on their children whether they want to be or not. Save for retirement, folks, so this doesn’t happen to you.

Right now, your mother needs to budget starkly regardless of what she winds up doing. She needs to shore up every dime she can for retirement coming down the road, period.

Most likely, one of two things will happen anyway. Either she’ll keep working until she starts sliding downhill with her health (in which case, you’ll probably have to jump in to care for her) or she’ll retire before that and need a place to live.

It really, really depends on your mother’s character. Is she going to continually hint that she should take care of you? Or will she have a stiff upper lip and attempt to find her own solutions (low income housing, etc.)? If it’s the former, you’re going to have to make a tough call.

I’m a 25 year old IT consultant living in Chicago. I’m a computer science graduate, and I have a job where I make great money, live frugally (as much as you can in a high-cost city), save heavily and invest smart (automated, low-cost index funds). I’ve maxed out my Roth IRA for the last 3 years since being in the work force, and have maxed out my Simple IRA contributions last year and this year. I’ve already got about $50k in retirement accounts, and about $25k in more liquid savings. So, financially, I’m doing very well, and I’d like to thank you for getting me off on the right foot.

My question for you and your readers is this — am I crazy for doing this? My close friends and family are concerned about my safety and the impact this could have on my career, whereas I think that it will give me enough experiences to be a much better person and employee in the future.
- Stephen

You are absolutely not crazy for doing this. If this is a dream you have and you have the financial ability to do this for a while without any other life responsibilities, go for it.

It sounds like you know what you need to do to prepare so I’ll trust your preparations for the trip.

As for whether you’ll regret it later, my guess is that you won’t. This is the type of thing that will cause you to grow as a person. It will lead you down a completely different path in life.

What do you think you’ll regret more in twenty years: not doing this motorcycle journey or not working at an IT job that you hate? If you have the financial means right now to choose either path, the choice is probably pretty clear.

I’m 28, my husband is 33 and we’re expecting our first child. I’m trying to figure out how to invest our money, so would like your input on this.

Also, what do we do with the $33K in savings? It’s in a savings account – really really small APR – but it is our emergency fund. Is there a better way to keep it liquid but in a higher investment?
- Kris

I would get out of that policy. You shouldn’t be putting $500 a month into a policy that’s only returning 2%. Replace it with a term policy (because you’re going to be parents), take what you get from cashing the policy in, and invest it.

Where should you invest it? In that mortgage, if nothing else. That’s going to be earning you a lot more than 2%.

I have more to say on where you could invest it, but Kris had a second question that focused more generally on parenting issues.

As an addendum, the biggest thing we are saving for is private school tuition for our unborn child. We’re approximating $20K per year for tuition alone, not including if we have another one. We’d stop at two kids, which would be $40K per year. Private school is not an option for us – we need to figure out how to save for that. We managed to save $20K last year, which would be tuition for one, but two? Yikes.

What other advice do you have for impending parenthood?
- Kris

Something else to consider: why not just keep the money from the insurance as cash in a savings account and then sock it away in your child’s 529 when he/she is born, as a great way to start the child’s college savings? That way, you’d have a heads-up on the private school expenses right away, if that’s the route you’re choosing.

I’m not sure what you mean by saying that private school is not an option for you – I’m guessing you meant that public is not an option. I would suggest that you research that very carefully before you make a $20,000 a year decision. Depending on the region of the country where you live, the gap between educational results in public and private schools isn’t very large at all (virtually nil in some areas). Public school quality varies incredibly from state to state and municipality to municipality in the United States. There are many public schools that are far better than private schools (particularly some magnet and charter schools). Of course, you may be making that choice for religious or cultural reasons, which is a different story entirely.

The best thing you can do for your child is encourage them to have a strong work ethic and give them enough of a mix of independence and guidance so that they have a sense that they can do anything for themselves. They’ll make something of themselves if they have that.

My fiance has some stock options with his company that we will likely be cashing out soon, in two installments. The first, which we’ll have in a couple of months, will be about $250k (about $150k in pocket after the cost of the stocks and taxes). The second installment is a bit of a mystery at the moment, and could range from $162k to $480k (and we won’t really know where on that spectrum it will be for probably a year, maybe longer). I have $100k in student loans, as well as a $20k car loan, and about $10k in credit card debt. He has about $6k in credit cards, $37k on his two cars, and a $170k mortgage. Altogether we’ve got about $343k in debt (YIKES!). Our household income is around $200k, and our savings is virtually nonexistent ($16k in his 401k but that’s about it). We’re youngish (late twenties, early thirties).

My question is, keeping in mind that we’re not sure what the total amount will end up being, what’s the smartest thing to do with that money? I think we should put it all towards debts, and invest whatever is left over from the second payment, if any, as part of our retirement fund/nest egg. Being debt free would put about $4500 extra in our pockets each month, most of which would go straight into savings. My fiance thinks we should pay off just the credit card debt and one or two of the cars, and then invest everything else, with the intention of paying off our debt in 10 years with the interest we accrue on the investments.
- Stacy

I agree with your plan. If you don’t have any burning goals in the near-term future, shoot for complete debt freedom.

The reason is simple: cash flow. With no debt, you don’t have the payments hanging around your neck. If one of you lost your job, you wouldn’t have to make bone-crushing choices. If one of you chose a different career path, it wouldn’t be devastating to your life. If you had a child and one of you decided to be a stay at home parent, you wouldn’t be gripped by debt.

Investing that money (probably in stocks) wouldn’t help your monthly cash flow and would put that balance at risk in whatever investment you chose. If you chose a very low risk one (like cash or bonds), it’d earn a much lower rate than it would if you paid off debts.

Get rid of the debt. Enjoy the freedom.

I know you don’t like to talk about politics, but I can’t figure out for the life of me where you stand politically.
- Carmen

I don’t care much for national politics. Rather than solving problems, both sides are mostly focused on grabbing pork for their constituencies and blaming everyone else for everything in a nonstop rush to re-election. You can’t even try to do something different because the tide is completely against you. Raise an issue no one wants to talk about (because it might scare some voters) and you get ignored with the idea never getting out of committee. Points are scored and ratings are grabbed not by making good points, but in painting the “other guy” as some sort of demon. Until there is serious electoral reform and very strong term limits, this will never change, and good luck to the politician who stands up for term limits in Congress.

I vastly prefer local politics, where people actually sit down and discuss things. Real problems are solved. Roads are built. Schools are built. Fire and police protection is organized and provided.

I care about solving people’s problems. I care about respecting other viewpoints than my own. I care about spending serious time thinking about the best way to solve a given problem. I don’t care for having to be in lockstep with someone’s philosophy. I don’t care for insulting people you don’t agree with when they’re merely trying to solve problems in a different way than you are.

Those things only happen on a local – and sometimes a state – stage these days. That’s where my heart lies. Sometimes I like solutions that would brand me a “conservative.” Sometimes I like solutions that would brand me a “liberal.” To be honest, I could care less about either one of those labels as long as people are sitting down together and honestly trying to solve people’s problems and are willing to listen to one another.

What are your thoughts on Soda? I know that in addition to personal finance you are also a fan of eating well, and healthy. I was wondering if you own or have considered a Sodastream type device to make your own carbonated beverages? The cost justification seems like it could work out over a period of time. I am wondering if it is worth the initial investment or if I should forgo this type of device altogether. Your insight is greatly appreciated.
- Del

I enjoy an occasional soda – and sometimes use it as an ingredient in a mixed drink. I don’t drink it daily or even weekly, however.

I think if you drink a significant amount of soda, you might be able to save money with a SodaStream type of machine. The best way to do that is with a simple cost analysis – what would the annual cost of each option be based on your soda habits? Will you continue that habit in the future?

There is potential there to save money. There’s also potential in saving money by simply drinking less soda and keeping it in the “treat” area rather than the “major expense” area.

My husband and I bought our first house back in 2009 and recently received our $8,000 check, which has been sitting in savings while we debate what the wisest way is to spend it. We’re both fairly conservative with our money so our first instinct is to use it to either pay off his student loans (~$16K at 8%) or pay off my car loan ($12K at 5%). We’re leaning towards paying my car loan because it wouldn’t take as long to pay it off entirely and, despite having a lower interest rate, it’s the higher monthly payment (I believe this would be the snowball method). However the other consideration is we really only have a couple thousand in savings, which is less than the emergency 6 month supply everyone advises. Is it better to pay off debt then build up savings, or should we keep it in savings and just pay our loans as normal? Is there a wiser course of action we haven’t considered? We both work very good jobs and otherwise have a modest amount more income than needed to cover our needs, so we’re hoping to knock down our debt quickly and build savings before working towards more fun goals of improving the new house.
- Amanda

I usually encourage people to have about two months’ worth of living expenses in savings for every dependent in their household. I’m assuming you don’t have kids, so I would keep four months’ worth of living expenses (your family’s take home minus whatever you save each month) in a savings account.

Compared to the importance of having that, your interest rates are fairly low. I would put the priority on the emergency fund. I know that it can be tempting to put it towards debt rather than having it sit there, but it’s that very moment when you use it for something else that you find you really need it.

As for which debt to pay off first, you’re really fine going either way. There are good reasons for paying off each of them first, so go with the one that feels right to you.

You’ve said that you’ve received some really creepy emails in the past. What’s the creepiest thing ever sent to you by a reader?
- Carl

Photoshopped pictures of my children and my wife take the cake.

I have also received a very sincere invitation for an affair from a woman that I believe lived pretty close to where I do. I didn’t follow up, so I don’t know specifically.

I receive all sorts of crazy on a daily basis, though. Those are the ones that stand out in my mind.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag. However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

I spent more than I earned and made up for the difference with credit cards.

It started in college. The bookstore offered a discount on textbooks if you signed up for a card. I signed up. Later, I used that card to buy video games, starting with The Ocarina of Time.

When I graduated from college, I had a small amount of credit card debt – nothing unmanageable.

Next came our honeymoon, a year later. I financed most of our honeymoon to London, Edinburgh, and Inverness on a credit card, nearly reaching the credit limit on that card.

When we returned, we furnished our new apartment with a new card. I bought some golf clubs and a bunch of electronics. I began to settle into a routine of buying books every week.

I remember buying a $500 crib for my son on credit in late 2005, going home, and attempting to pay bills. There was less than $500 in my checking account then and I really didn’t think anything of it until later on. I just kept rolling on.

The end result? By April 2006, I had accumulated around $20,000 in credit card debt. The monthly payments on that debt were actually higher than our rent. When you add car payments and student loan payments on top of that (as well as all the regular bills), we simply did not have enough money to continue to make ends meet.

The tricky part about this mistake is that it was actually just a series of small mistakes that I didn’t bother to fix. Every time I used credit to pay for something I couldn’t afford, I could have just said no. Every time I went through with buying something unnecessary, I could have been more frugal in other areas of my life and just paid for that indiscretion.

I didn’t do either one. Instead, I kept buying things that I couldn’t really afford. As the debt built up, I found that I could actually afford less and less because of the growing monthly bills, but it didn’t keep me from racking up more debt.

Why did I buy? There was a mix of things going on. Poor impulse control. Career-related anxieties. Lots of stress. All of these things were solvable on their own and buying things I couldn’t afford was merely a short-term salve for them. It was easy to forget that pain if I could go home and read a new book or play a new game for a while.

What can you do to avoid this trap?

The solution is simple: never, ever put a balance on a credit card that you can’t already afford to pay at the end of the month. The moment you do that is the moment you’re financing a lifestyle that’s beyond your means.

If you’re already in a situation where you’ve built up a large deal of consumer debt, start getting rid of it now. Yes, this means you’ll have to live quite a bit below your means for a while. The first place to start is by selling off all of the stuff in your closets and on your shelves that you never look at or use. If you have a CD or a DVD or a video game or another item that you’ve not looked at in more than a year, sell it. Use that money to hammer the debt. When you’ve done that, focus on minimizing your monthly spending – here are 100 such tactics – and roll the money you’re saving into a debt repayment plan.

Finally, deal with the other problems of your life head-on. Start wiping away the stress and the concerns. Focus on fixing broken relationships and moving on from ones that can’t be repaired. Deal directly with the things that are bothering you. Seek professional help if you cannot. Eliminate the stress and clear your mind to make better decisions with the resources you have.

Just remember that you can do this – and don’t beat yourself up over every mistake. Success isn’t perfect and it doesn’t come in an afternoon.

That means it’s time to come up with an indoor solution. That means, of course, that it’s time for an elaborate blanket-and-chairs fort in the living room.

Live Within My Means? How? It’s not too hard to live within your means if you just follow one rule: spend less than you earn. The hard decisions of what to cut are up to you. (@ studenomics)

With perspective, it’s normal to feel an emotional attachment to your possessions For me, perspective was the real key to this. I’ve reached a point where, if I have too much stuff, I recognize that I don’t have the time to adequately spend with any of it. That’s a problem – it takes up money and space and gives me no positive value in return. I focus on keeping my stuff down to the items I have time for and actually bring positive value into my life. (@ unclutterer)

Future Proofing Your Passion The message here is that the way to keep your passion alive is to keep your life simple so your passion isn’t strangled by the life clutter. Good message. (@ 43 folders)

Cheap Wedding Ideas On A Small Budget My wife’s family has something of a tradition of having all of the closer family members (siblings, parents, and often aunts and uncles) pitching in to help with catering, decorating, and so on so that the wedding can be done at a low cost. I think this is a brilliant idea. (@ the digerati life)

Worth More Than Money: Taking A Detour on the Road to Riches Everyone’s path to where they want to be is different. (@ get rich slowly)

Are Your Financial Habits Just Bad? I think this article hints at the real truth: bad financial habits often arise from a life that’s got other concerns – too many activities balanced with exhaustion, for example. (@ wise bread)

What To Do With a Pile of Change? I liked that the answers here didn’t just immediately revolve around the typical responses of what to do with a small windfall. (@ frugal dad)

The Clean-Slate Guide to Simplicity I think that sometimes a clean slate is the best solution to fixing the problems in your life. (@ zen habits)

I had originally planned on doing a Chicago-themed follow up to last year’s article, Frugal Vacation Notes: Great Free Things to Do in the Dallas/Fort Worth Area. However, as the long weekend rolled on, I realized that several other things popped into mind that were worth noting rather than just pointing out free or inexpensive things to do in the city.

Instead, here are six useful things I learned about an inexpensive and still very enjoyable vacation over the last several days.

It’s all about the people.
Most of the enjoyment you experience on a vacation will be generated by other people, regardless of whether you’re traveling in a large group or by yourself. It is those human interactions, whether with people you know and love exploring a new environment or with people you’ve newly met, that add the spice and enjoyment to almost anything you do while on vacation.

It is out of recognition of this that we often schedule our vacations so that we can visit friends and family that are spread across the United States and elsewhere. Yes, it’s enjoyable to see and experience things on our own, but the opportunity to see and experience those things with people you love and care about – as well as the people you just happen to meet during the trip – adds something incomparable to the trip.

Try scheduling vacations where you travel to visit others, even staying in their home. Similarly, offer your home to people you know who are traveling to your area. Doing this not only saves money on lodging, but adds some great additional flavor to your vacation.

Don’t overload your days.
It’s easy, when visiting an area, to come up with an enormous list of things to do and schedule each day tightly with tons of activities. Avoid that temptation at all costs.

Instead, try to underschedule days, giving activities plenty of time and room. This allows you to spend extra time at a museum if you wish, or enjoy extra innings at a particularly exciting baseball game without throwing your scheduling way off pace. This also saves you money because you’re not investing in the cost of extra activities and travel to get to them.

You can have a list of “floating” activities that you can get to if you happen to have time on one of the days. We usually schedule one or, at most, two events per day, giving them each plenty of overrun time. If it turns out that an event ends quickly or isn’t appealing, we have a few ideas already floating around to fill in the rest of the day.

Keep the “peak-end rule” in mind.
Whenever a person thinks about a significant event in their life, they usually first remember the “peak” event that occurred and generally reflect on the event based on how it ended. For example, my immediate memories of the trip to Chicago center on the day I took my son to his first major league baseball game (and the harrowing trip away from the ballpark) as well as the wonderful steak dinner at my cousin’s home the final night.

What’s amazing is that this same “peak-end rule” works with almost every vacation I’ve ever taken. Sure, I can remember more things about each vacation if I stop to think, but my first reaction to each vacation usually involves a single peak experience and a sense of how it ended. I could make a long list of these, actually.

Keep those principles in mind when you plan your vacation. Don’t try to fill every day with the best possible activities – you won’t savor or remember them. Instead, make sure you have a “peak” experience – the biggest and best thing you want to do – and a good “end” experience, meaning you close out the vacation with something very pleasant and memorable.

Most of your best memories will come from unplanned things.
My strongest single memory from almost every vacation I’ve ever had was from something completely unplanned – sticking my feet in some frigid water with my sister-in-law in Victoria BC, walking with Sarah along a desert path to look for petroglyphs in Arizona, climbing a tall hill overlooking the city in Edinburgh, and, this last time, getting lost on foot in Chicago and meeting some interesting people while doing it.

This is yet another reason not to overplan your vacations. Allow some time to simply wander in interesting areas to see what you find. Don’t use your GPS to find a specific location and just drive there – use it to just browse what’s nearby.

What you find is often far more interesting than the hyper-planned stuff.

Make one meal a day special.
In the past, I’ve vacationed with people who desire to eat exquisite meals three times a day. What I found was that at the end of the vacation, I had just gained a bunch of weight and I didn’t remember most of the meals we’ve eaten.

If you love a great meal on your vacation, that’s wonderful. Just don’t overstuff your days with them. Have one great meal a day, then eat healthy minimalist meals at other times during the day when you’re hungry. This will not only help you to feel better when you’re on vacation, but will allow you to more deeply enjoy the great meals you do have instead of merely having them be the ordinary thing.

On our vacation, we simply ate many meals at my cousin’s home, aiding her in preparation and some ingredient buying.

Take a backpack wherever you go.
Water bottles. Granola bars. Raisins. Sunscreen. We never left our cousin’s home without a backpack containing these items. Often, the pack included sandwiches and a GPS unit as well.

Why have these items? The biggest reason is that they simply save money, keeping you from hitting a vending machine or something similar to sate your thirst or hunger while out and about. It’s also convenient, as you can just sit on a bench and pull a sandwich and a bottle of water out of your pack at lunch time instead of having to locate a restaurant or some other service to provide you expensive items.

This left us more time for exploring interesting things and more money was left over after the trip was finished.

I chose a career path for the money instead of one that matched my passions and skills.

During my high school years, I felt fairly certain what I wanted to do with my life. I wanted to be writer, preferably a science fiction writer. I was absolutely enamored with the novels of Kim Stanley Robinson, Robert Heinlein, Philip K. Dick, Samuel Delany, and countless others who made a life out of meshing scientific progress with imagination. I dreamed of going to college, majoring in English literature, and minoring in mathematics and another science or two.

My high school English teacher encouraged this dream. Virtually everyone else looked at me as though I walked out of the insane asylum. They pointed to the low average income of an English teacher. They told me that was a waste of a perfectly good mind.

In short, I was convinced by everyone around me that the measure of a person’s worth and intelligence was how much they managed to earn.

By the time I actually went to college, I settled on a life sciences major, which led me to at least some lucrative opportunities. As time went on, I added computer science as well because I showed a knack for computer programming.

In short, because of the incessant drumbeat I heard for money, I chose an educational and career path that I knew directed me away from my passions. I did have some degree of talent, especially in the computer science classrooms, but I wouldn’t spend my odd hours writing code. I would spend my odd hours reading and writing, both fiction and non-fiction.

I did get a good-paying job out of college, but as that job became more and more consuming, I felt my life dreams of writing slipping further and further away. I slid into something of a personal malaise because I wasn’t chasing my big dreams any more. I tried very hard to put a bandage on that with material things.

Putting a bandage of material things on top of a personal wound doesn’t help in the long run.

What I wound up doing is spending an awful lot of my free time for years channeling my energy into what I felt was fruitless writing because the act of writing felt good to me. I’d share my writings, watch them fail, and become convinced that by my career choice – seeking the better paying job – I’d lost my chance to follow my real dream. That’d just make the malaise – and the spending – worse.

The long term effects of this showed up in my career and in my finances. I began to feel very burnt out on my actual career. At the same time, I would try to cure this feeling of failure and burning out by buying stuff that I didn’t really need or didn’t have time to really enjoy. This brought me deeper and deeper into credit card debt and deeper and deeper into a sense that I couldn’t escape.

The solutions were right in front of me, but I didn’t see them.

First of all, I could have just majored in what I wanted to in college. Yes, this might have meant foregoing income, but it would have also meant following my passions and dreams instead of walking away from them. Alternately, I could have double-majored in a way that allowed me to follow my dream and still follow a lucrative path, too, if the dream didn’t work out.

Later, I could have focused on actually trying to launch writing as a side career instead of just writing aimlessly and somehow stumbling onto the success of The Simple Dollar. I started The Simple Dollar not as some sort of aim of finding a new career, but because I loved to write and I knew I was going through the same financial issues that a lot of people my age were going through. My target audience at first was, quite literally, my friends who were also struggling financially. I stumbled into this, period, and it took me many years of wandering for it to happen. Putting some aim into that dream would have made all the difference.

I didn’t do either of these. The only reason I’m writing for a living right now is pure, simple luck, albeit luck that had a place to sprout because I actually was attempting to write in some fashion.

The real lesson here is that happiness doesn’t come from money. As long as your basic needs are met, additional money does not bring happiness. It brings some material luxuries, but it also usually brings additional problems, too. The only way additional money helps is if you use it wisely, enabling you to … well, frankly, chase those dreams and passions you have.

What can you do to avoid this trap?

If you have a dream so strong that you stay up all night involved with it, give chase to that dream. Passion like that makes up for a lot of ground in other areas, because so many people out there are just clocking their nine-to-five with little real passion at all. A lot of people get by on skill or on the fact that their job mostly just needs a warm body that can follow instructions. The people that succeed, though, are the ones that mix passion with a little natural talent – but the passion and the time are the biggest elements (just ask Malcolm Gladwell). This doesn’t necessarily mean you have to throw ambitions for a high-income career away – double major and balance the two, or get a degree in a profitable area, live lean for a while, then go back to school to focus on the less-profitable passion. Or, better yet, just try to get your foot in the door without the degree (if you can). Money will come to you because passion is one of the few things worth paying for in life.

If you’re already in a career that’s taking you away from your passion, spend your free time chasing that passion with all your… passsion! Toss off as many of your extra activities as you can and focus your energies in your free time on making a go of that passion. It might require taking classes or it might require just “woodshedding” for a while (in other words, practicing a skill you love until you’ve acquired a high degree of proficiency). Don’t abandon that dream just because the circumstances of your life aren’t helping you with it. Instead, create a flowerbed upon which it can grow, a flowerbed created out of the excess time and energy in your life when you’re not working at that job.

I financed an unnecesary lifestyle in college with extra student loans.

My first few years in college were supported by a collection of scholarships that covered my tuition, room, and board. However, it was up to me to come up with the means of supporting myself over my final two years in school. As is the case for a lot of college students, that meant student loans.

Up to the start of that first “loan year,” I was very conservative with my money in college (for the most part). I had lived in the dorms most of the time and also spent a year living in an apartment with several other people, which reduced the rent for each of us down to a pittance.

So, when it came time to take out student loans for that first year, I took the advice of my financial aid adviser and did the calculations to see how much money I would need to live for that coming year. The number I came up with was pleasantly small and so I felt confident that I would be able to survive on the tiny living stipend I expected from my loan.

What surprised me was that one could easily take out a much larger stipend than I could ever possibly need. The financial aid office allowed me to apply for a loan that gave me a living stipend somewhere around five times what I actually needed to live on, which escalated the total of my student loan for that year by more than $10,000.

I thought about all the stuff I had done without over my years in college. I’d lived in some awful places. I’d held back on buying a lot of things that I wanted. And here, I thought, the college was practically giving me a bunch of money to do with what I pleased. I could have that stuff – I didn’t need to live hand-to-mouth any more.

So I took it all. I took out the maximum possible loan both years, adding somewhere around $25,000 to my total student loan bill.

The consequences of that were painful. My repayment period was ten years and the interest rate on the debt was around 7%, so my extra money alone caused me to have an extra $300 month payment every single month for the next ten years.

When you’re freshly out of college with your first post-college job (meaning that it’s fairly low salary) and considering marriage, an extra $300 per month out of your monthly cash flow quite simply hurts.

The long-term effects of this debt were painful. That unnecessary $300 a month coming out of my take-home pay meant that I was trying to do all of the things I wanted to do with even less money to work with. I was left with a choice of living fairly lean or to make a financial mistake that would compound this one, take out more debt to continue an expensive lifestyle (and I’ll discuss this mistake later on).

I really was offered two great solutions to fix this problem – and I failed to take on either of them.

First, I could have kept my spending within what I was used to in college. I could have taken out a much smaller living stipend when I was there and gotten by doing all of my shopping at Goodwill and Fareway. This would have worked just fine, as it took care of all of my actual needs as a college student.

Later, I could have kept my post-graduation spending in check and paid down that student loan debt. Again, this would not have impacted taking care of my needs or even many of my wants – after all, I did have a good full-time job. I could have easily become more picky about my clothes and my food and bought many other things that clearly fall under “want” instead of “need.”

In both cases, I chose to spend that money with reckless abandon, which eventually brought me to the brink of financial ruin.

What can you do to avoid this trap?

If you’re a student, take out the minimum amount you’ll possibly need on your student loans. Don’t be afraid to shop for clothes at Goodwill or buy your groceries at the low-end grocery store. Get your entertainment fix by participating in on-campus events and community events. Focus on the relationships you build, not the specific things you do or the stuff you accumulate.

If you’re out of school, focus on debt freedom as a very early goal in your life. Cash flow is so important with regards to achieving your goals and having a big monthly debt payment just clogs up opportunities. Pay it down as quickly as you can, even if it means delaying some of your goals. Your ability to easily achieve those goals will be amped up incredibly high through freedom from debt.