For quite a lot of us, though, public transportation isn’t an option. Even those who have a public transportation line near their home often find themselves without a place to depart that’s anywhere close to their place of work.

That leaves the door wide open to another option: carpooling. It’s one Sarah used for several years with great success.

When we moved to our current home, both Sarah and I had about a thirty minute commute to our respective jobs. The house we selected was pretty close to a midway point between our places of employment.

Both of us looked for coworkers who lived near us that we could carpool with to save money. I didn’t find one. Sarah did.

Sarah started carpooling with a much older fellow who was very close to retirement, and they carpooled together almost every day for the last two years of his working career.

After the first year, Sarah sat down and calculated how much money she saved due to carpooling. According to her best estimates, she saved about $1,200 a year.

Not only that, carpooling saved her time, too. She would spend a significant portion of most of the rides doing additional work, which would free her to spend more time with the family at home. Every other day, she could get an hour of work done that she would otherwise be doing at home.

That time would often result in better meals prepared at home, preparation of leftovers for lunch the following day, more effective creation of grocery lists, and other such little things that would save us additional money beyond mere carpooling.

If you can find three or four people to carpool with, even better. That reduces your driving time (and wear on your vehicle) even more and adds more “backup driver” redundancy to your carpool.

How much can this save you? It depends on how you calcuate this, but when you add up all of the little costs, every mile you drive costs you at least $0.50 in fuel, maintenance, wear and tear, depreciation, tolls, and other such factors. If you’re commuting 10 miles each way every day, for example, that’s $10 a day, whether you directly see it or not.

Carpooling spreads out that cost. If you’re carpooling with two other people, that cuts your annual commuting days down from 240 to 80 (approximately). If you’re commuting that ten mile stretch mentioned above, you’re saving $1,600 a year just by carpooling.

That can be an enormous savings. That’s half a year’s worth of car payments on a reliable used car.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere. Images courtesy of Brittany Lynne Photography, the proprietor of which is my “photography intern” for this project.

What do you do when you have a family commitment on the same day as something you’ve been planning to do with a friend for months? What if the two events are two states away from each other?

My solution right now involves a one-way flight and an extremely tightly booked day after my family commitments are complete. Family comes first, of course, but some creative thinking (and a bit of hyper-rushed travel) can make everything work.

Q1: Using wedding money wisely
I am getting married in June (huge wedding, not our choice!) and we conservatively anticipate receiving about $15,000 in gifts from our family and friends. In the past year, we have moved across the country to be closer to family and have finally in the last 6 months or so settled into our new routine. We bought a home, actually the one that we were renting. The owner wanted to sell and offered us first chance, she gave us owner financing, and counted all of our rent as a down payment. The house is livable but needs significant updates to all of the bathrooms and the kitchen. I found employment, but have significant travel everyday. Because of this, we had to trade in my car and get something more reliable for the winter weather and the route that I drive.

Our debt is as follows:
Student Loan 1: 10,000 @ 8.5%
Student Loan 2: 10,800 @ 6.8%
Student Loan 3: 7500 @ 6.8%
Car Loan: 14,000 @ 4.99%
Mortgage: 143,000 @ 5%

I am the breadwinner, my salary is $43,000. My fiance works part time at a university and is going to school for his master’s degree (free while he is employed there). We live off of my salary and save his. We do have an emergency fund saved up ($1000) and then other money in an online savings account for any other life events (approx 15,000). I pay $1000 a month towards debt (not counting the mortgage), which is the minimum on everything except for the SL at 8.5%. We have lived very frugally for the past 4 years and will probably always do so.

My question is: should we use the wedding money to pay down the loans as much as possible, or should we put that into savings and use it for repairs on the house? I feel guilty using the money to pay down the debt, but I know it’s probably the better choice for now and repair/update the house at a later time. I would love to buy new bedroom furniture (everything we have are hand-me-downs and nothing matches, plus we need a new mattress) and possibly renovate 1 or 2 of the bathrooms. It is MY student loan debt, but I’m also supporting the whole household. My fiance is fine with paying off the loans, but I’m feeling guilty.
- Marjorie

It really depends on how urgent the updates you need to make are. You say the house is livable, but that it needs updates. Is this for the purposes of decor? Or are there really important functions missing?

If it’s mostly decor, I wouldn’t make that a high priority unless you’re looking to sell the place fairly soon. I’d pay off the debt first.

If you’re in a position to sell soon or these repairs will make a significant functional improvement, then I’d go for the home repair.

Q2: Percentage of savings for retirement
We often hear of retirement savings goals such as: if you begin saving for retirement at age 20 you should strive to save 10% of your gross salary, if you begin saving for retirement at age 30 you should strive to save 15% of your gross salary, etc. When you think of the percentage of savings, should this be for a pre-tax account such as a 401K, a 457, or a pension plan or a post-tax account such as a Roth IRA? Or is it a combination of both?
- Kelly

Those numbers are very simplified “rules” for people who just want a quick answer without digging in deeper.

If you want to break down those numbers, my impression is that they assume you’re talking about an equal mix of pre-tax and post-tax savings. I would assume that of any simplified numbers bandied about for retirement.

I would never bank my entire retirement plan on such a number, though. Use some retirement calculators and get a strong sense of what you need for retirement.

Q3: Asking for wedding money tactfully
My fiancee and I have been dating for ~4 years. We both went to college and thanks to incredible parents, both managed to graduate without student debt. We’ve had our small debt struggles with credit cards, but we’ve got our act together for the most part. We currently rent in a not-too-desireable part of town, and as we both have fairly entry-level positions, it’s difficult to save the kind of money necessary to make a down payment on a house in a better area.

Her sister, who herself has been through 2 weddings, reccomended that for our wedding, we should ask for ONLY what we ABSOLUTELY need for our registry and ask for the rest in cash to put towards a home. This struck me as great advice, as in our 4 years together, we’ve accumulated more than we need without registering for things like tortilla warmers or color-coordinated coffee makers. However, I’m stuck trying to figure out how to ask in a classy, tactful way that doesn’t come off as a charity case. Do you have any reccomendations on how one might go about mentioning, on an invitation or otherwise, that this is our gift of choice?
- Pete

There is no real classy, tasteful way to say “give me money.” Not only does saying so imply that you’re expecting a gift, it’s also implying that you’re dictating what type of gift to give.

The best thing you can do is say nothing at all about gifts in the invitation. Set up a simple registry at a common place like Target. Then, tell your innermost circle that you’re hoping for money to help for the down payment. The word will get out to a lot of people.

Then, just be happy with the gifts you receive. After all, people are giving you things. If you don’t like them, return them and use the store credit on essentials, then bank the money you saved on essentials.

Q4: What to do with savings?
What should I do with the money I have in my savings account? I know it is low yield to keep it in a “high yield” savings account, but I am already maxing out my contributions to my IRA. Should I invest it? Where should I invest it if I do?
- Shelley

It depends on how much risk you’re willing to take on and how “locked down” you’re willing to allow that money to be.

Savings accounts don’t offer a great return, but there’s virtually no risk involved and you can take your money out as you please. With other investment options with a better return, you tend to lose one or both of those things.

For example, with stocks in large blue-chip companies, you take on risk in exchange for a higher average return. With a certificate of deposit, you lose the ability to take the money out freely for a somewhat higher return. With real estate, you lose on both counts but have some very nice long-term potential with the money.

The real question to ask yourself is why you’re saving this money. If it’s still more or less an emergency fund, leave it in the savings account.

Q5: Self-employment advice
My husband is about to graduate from grad school and will be self-employed upon graduation. I am wondering if you have any good resources for self-employment, and especially regarding affordable health insurance options for the self-employed. He is currently getting health insurance from his school, and I am on my employer’s policy, but I too would like to make the switch to self-employment (most likely working with my husband) within the next few years, or even being a stay-at home mother if we are able to afford it. We live in an expensive part of the US, and want to watch our expenses as much as possible. Going without insurance is not an option for us–I had a very expensive health situation over the last 5 years that has proven to both of us the need for good insurance. My health issues have recently been resolved, so I do not have any pre-existing conditions anymore. My husband has been healthy since I have known him.
- Catherine

I would start with the National Association for the Self-Employed when looking for options. There are a lot of options out there, and those options vary wildly from state to state.

I explored the options available in Iowa several years ago and we made the decision to stick with my wife’s work insurance for as long as she continues to choose to hold that position. Prior to that, I worked at a job with mediocre health insurance, so we were already using her insurance.

That’s not to say there aren’t good options available for the self-employed – there certainly are. I found the most luck starting with the NASE, though.

Q6: Retirement Roth versus 529
We are hesitant to put money into a 529 fund for our daughter when retirement amount may still not be enough. There are no loans available for retirement, as they say.

A Roth is almost as good as a 529 – except you can’t take the earnings out tax free for college, and it counts as income for the child – so no financial aid can be obtained. The upside is it can be used for school (I will be over 59.5 when daughter enters college) or retirement – whichever is needed more.

Certainly we could look for ways to save and afford to do both 529 and Roth, but I am not sure my family feels that is the way they want to live. We already do live fairly simply, but we could do much more. It might not feel like a positive to them, so I plan to identify areas one by one and see how far I can get them (and truth be told- myself) to agree to change.

Any advice?
- Oswald

You’ve basically summed up the benefits and drawbacks of a 529 versus a Roth for education. It’s flexibility versus better tax benefits.

If you’re asking which is better, you need to sit down and assess what your retirement looks like if you put all of your Roth money towards your child’s education. Assuming you do that, do you like your retirement picture?

If you do, I’d put that money into a 529 instead and then benefit from the taxes. If you don’t like that picture, then I’d try to balance it, probably committing more toward the Roth knowing that it’s more flexible.

Q7: Repayment troubles
I wrote to you last spring about advice regarding student loan repayment and starting a new business. Since then, I’ve moved to Canada, gotten married, and started my business, which I now work on full time. I have a steady client base, and am planning to expand more this year. I make approximately $300-$500/month at the moment.

Thanks to the low cost of living in our city as well as a wedding gift from my parents, we’ve actually been able to save nearly $30,000 in the 7 months we’ve been here. I have started to make payments on my student loan debt (all from law school) of $145,000. However, my husband’s contract may be ending at the end of June. I’m not sure if I should continue making payments on my loans or if we should continue to save for our potential “emergency” (unemployment). If we continue to save and defer the loans (the loans are currently on forbearance/income-based repayment, although I’m still trying to pay down interest), we’ll probably have approximately $35,000 saved by the time his contract ends.

My questions are the following: Should I stop making payments on my loans for now? Should I try to find some sort of part-time job to add to our emergency fund/throw at the loans (keeping in mind that most jobs here require you to be bilingual in French and English, and while I can speak French proficiently, I’m not bilingual)?
- Monica

My big question is whether or not you’re going to stay in the area you’re in when your husband’s contract runs out in June.

You seem to be in Quebec. Does it look likely that you’re going to be leaving Quebec at that time? Is your client base local or is it internet-based?

If you can retain your business through this transition and your business is growing, I’d put all my efforts into building it. You already have a start, after all. If you’re going to lose that base, I’d get a part-time job as soon as I could to get more short-term cash on the table before you leave.

Q8: Windfall options
My wife and I were gifted $15,000 by my grandmother recently and have a couple options. This is half of what we make in a year together so it would be easy to blow it on a bathroom remodel, but instead, I’d like to do something smart. We have only two debts: my wife’s $8,000 student loan and our $132,000 mortgage. The loan could be paid off instantly and the $150 to $200 we pay on that monthly would be freed up and that would be wonderful, but I could also refinance the house. We have a 4.875% rate, but rates are even lower than that at the moment. Our current mortgage payment is $1,004. But even if we only shave $50 off our monthly mortgage payment, that seems like it would add up to a whole lot more saved in the end compared to paying off the student loan, no?
- Charles

The question is would you honestly save that extra $50 a month, or would it end up being spent on something unimportant?

The best thing you can do right now is put yourself into a repayment plan that will take you to debt freedom the fastest. Refinance not into another 30 year, but into a 15 year or something. This would actually raise your payments a bit, but it would get you in a far better position sooner rather than later.

If I were you, I’d pay off the $8,000 debt, then refinance into a shorter term mortgage with a much lower rate. You’ll probably not see much change in your monthly payments for now, but you’ll be free from debt a lot faster.

Q9: Debt snowball or not?
I’m pretty new to your site but I have enjoyed it for the last couple of months. I have a couple of questions for you. My wife and I, along with our 4 young children have recently started on Dave Ramsey’s plan. We are currently on Baby Step 2 (debt snowball). We have approximately $14,000 in CC debt, and about $4,500 in student loans, along with about $4,000 left on our van payment.

I have also been trying to save a little money for different expenses I know we will have at some point (future car, car/home maintenance, etc). This is where my question comes in. Is it wise to do this while going through the debt snowball? Or since I already have the $1,000 EF in place, should I be putting every other possible penny towards the debt?

I mentioned the $4,500 in student loans my wife and I still have. I also have about $40,000 in other student loans but I do not have to currently pay on them because of the income based repayment plan I am on. My wife makes decent money but it is all “under the table”. So they only look at my salary when calculating my monthly payment. I am hoping to get through the debt snowball in about a year, then build up the EF to about $15,000 then try and payoff the $40,000 extra in loans I have. The loans are accruing interest but I am not obligated to pay anything on them unless our household income jumps. My wife plans to go back to teaching in 3 or 4 years so at that point I would have to pay at least something on them. My other question is would you stick with the plan I have in place as far as paying the loans back, or would you lump them in to the debt snowball?
- Andreas

First of all, you need to be very careful with “under the table” income. If the IRS hears of it from anyone – and there are a lot of people out there who quietly report such things – you guys will be in a world of hurt.

That being said, I would lump all of your debts into the debt snowball. If the interest rate on those debts is higher than the ones you’re currently paying, then I would make extra payments toward those student loan debts.

Eventually, you will have to start repaying them, and if you can keep that interest in check now, you’ll be better off for the long haul.

Q10: Prioritizing reading
I know you’re a voracious reader like me and I’m going to guess that you have a long list of books that you want to read like I do. How do you prioritize them? How do you decide what needs to be read next?
- Ivan

I keep a stack of about ten or fifteen books on my bedside table or on the front page of my Kindle. These books are ones that have been on my mind lately that I’m wanting to read. I rotate books in and out of this grouping pretty regularly.

When I finish a book (which happens once or twice a week), I just look through the books that are right there and pick the one that intrigues me at the moment.

That’s really all there is to it. I don’t really prioritize beyond that, but I’m usually happy with what I’m reading.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

For many semesters, I would catch a bus at about 7:48 AM or so. It deposited me right in front of one of the buildings where I would have a class at 8 AM at between 7:55 and 7:58 AM, giving me just enough time to stroll into the classroom, sit down, and open my notebook just as the professor began talking.

Later on, I would stand outside of that apartment building to catch the 7:37 AM bus, which would deposit me about two blocks from my work at about 7:55 AM or so, causing me to walk in the door about 8 AM. On days where I got an early start, I would catch the 7:07 AM bus (getting me there at 7:30) or even, on occasion, the 6:37 AM bus (getting me there at 7:00).

The best part was that the bus ride enabled me to do things like read a book or listen to NPR or an audiobook on my way to school or work. I did this virtually every morning and evening. I’d just carry a book in my bag and when I got to the bus stop, I’d pull out the book and start reading. When I got on the bus, I’d stick my finger in place just long enough to show the driver my pass, then I’d keep reading until it was time to pull the “stop” cord and get off at my destination.

On my way home, the bus stopped right by a grocery store, so I could stop there and pick up food. The bus ran roughly every fifteen minutes in the afternoon, so I would return to the bus stop and there’d be a bus along pretty quickly to get me if I made such a stop.

It was also far cheaper than driving myself to school/work. I paid about $79 for a six month bus pass that covered all rides, which is less than I would have paid just for the insurance on a car.

Time passed, though, and when I found myself making a good income, I convinced myself I needed a good car, too. I “bought” a truck (I no longer really think of it as “buying” something if you’re carrying a big debt on it) and, soon after, moved to an apartment outside of the range of the bus system.

Suddenly, I was free. I could go to work whenever I wanted! I could come home whenever I wanted! Freedom!

That freedom cost me about $250 a month in car payments, about $40 a month following the vehicle’s maintenance schedule, about $50 a month in gas, about $70 a month for auto insurance, and another $12 a month for parking.

$422 a month, down the tubes. Compare that to the $79 every six months I was paying for that bus pass.

Even if I just bought the vehicle and let it sit there, driving it rarely, I would still have about $335 a month in extra spending. In other words, it would have been cheaper to buy the vehicle, let it sit in the parking lot, and ride the bus to work than it would have been to drive the vehicle to work.

Unless you’re in a very unusual situation, where the cost of public transportation is really high or the price of gas and parking is really low, riding public transportation to work is going to be saving you money over driving to work.

That’s not to say that you must take public transportation every day. Ride it four days a week, then take your car the other day and do all of your lunchtime and after-work errands on the day you take your car. That way, you save money from the public transportation on the days when you’re just commuting, but have the flexibility of the automobile on the other days.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere. Images courtesy of Brittany Lynne Photography, the proprietor of which is my “photography intern” for this project.

Every day, do two things. One, tell your spouse that you love them and tell them something specific about them that you love. Two, spend half an hour doing something that helps them in some way and expect no compliments or comment from it – do it just because you care about that person. This works better if you focus on something that you know will really matter to your partner. For instance, if your partner loathes doing the dishes, just do them without comment once or twice a week.

Do these two things every day and you’ll be surprised how much better your relationship goes.

Money Lessons Learned from Traveling Well For me, money is better spent on experiences than stuff. (@ saving advice)

Can Money Buy Freedom? It can do that only in a limited sense. On some level, you have to choose to be free from the things that worry you. You can be rich and still be depely worried (and controlled by) lots of things. (@ get rich slowly)

Beware the Entrepreneur’s Recoil If you succeed at something, you tend to become more risk-averse and that often leads to undoing what made you succeed in the first place. (@ jonathan fields)

How to Get the Most from Your Gym Membership & Avoid Burning Out I usually have two things that keep me from really hitting a home run at a gym. The first is the soreness that comes from a period of not exercising. It goes away in a few weeks, but it’s hard to get through. The second is injury and convincing myself to return to the routine after recovering from a minor injury. (@ len penzo)

The data it produces is really accurate. We’ve measured this ourselves by checking the gas mileage manually by calculating it from the odometer and gas receipts and comparing it to the data in the car.

It’s often a competition between Sarah and myself to see who can get the best gas mileage over a given trip. Not only is it a bit of friendly competition, the reward for it is that we save money over the course of that trip.

For example, I managed to drive an entire three hour car trip while keeping the fuel economy average over 50 miles per gallon. I did this by utilizing lots of little tricks along the way, and doing so saved us several dollars in gas while only eating up a few more minutes of driving.

Sarah, on the other hand, managed to drive about fifteen miles while keeping the fuel economy average over sixty miles per gallon. She was aided by wind, which was blowing strongly in almost the perfect direction for her route, but it was still quite impressive. It added maybe thirty seconds to the drive but saved her about $0.50 in gas.

If this sounds like hypermiling, you’d be right. Although we don’t go to the extreme measures often advocated by hardcore hypermilers, we do try out the techniques.

The real impact of doing it is that several techniques for improving our fuel economy have become completely second nature for our driving. Here are some of those techniques that you can easily translate to your own driving. They might add a minute or two to your drive, but they’ll save you enough money along the way to make up for it.

Stick close to 55 miles per hour on the open road. This seems to be the sweet spot in terms of speed. If you go much faster than 55, your fuel efficiency starts to decrease. If you get much above 65, it decreases rapidly, somewhere in the realm of about 1% fuel efficiency lost for every mile per hour you’re going over 65.

When going through stoplights, accelerate slowly and coast. Rather than accelerating strongly out of a light, racing up to the next light, and then hitting the brakes, instead accelerate slowly out of a light and when you see the light turning red half a block in front of you, let off the accelerator and just coast until you need to stop. This minimizes your gas usage and gets you to the stoplight with plenty of time to spare.

When going down a hill, lay off the brake. Let your car accelerate a bit naturally, then use that extra acceleration to coast for a while when you get to the bottom of the hill.

When going up a hill, lay off the accelerator. Many people hit the accelerator when going up a hill. Don’t do it. Instead, let your speed go down as you’re climbing the hill, then slowly bring it back up when you get to the top. Often, hills link into each other, so you’ll often use the speed from the previous hill to climb the next one or get your speed back from the previous climb when going down the other side of a hill.

Things I don’t recommend that you might see as gas mileage tips include rolling through stop signs and overinflating your tires. The former is simply begging to get into an accident, while the latter tactic makes it very easy to blow out a tire.

Making a few little changes to how you drive can save you a surprising amount of fuel without adding much time at all to your trip. I’ll happily arrive a few minutes later if I’m saving a few bucks in gas.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere. Images courtesy of Brittany Lynne Photography, the proprietor of which is my “photography intern” for this project.

At first glance, one might think we were going through some sort of economic crisis. After all, this is the exact same kind of cutting back that I regularly suggest to people who are finding themselves in a financial pinch.

We actually made these decisions based on time, not money.

With each one of those spending cuts we made, we realized that we simply weren’t getting our money’s worth out of the item.

With GameFly, I recognized that my time playing electronic games was actually pretty small, and most of that time was actually spent at my computer. We would get a game in the mail, it would get played an hour or two on the day it arrived, then it would usually sit for a long time and eventually get mailed back.

With Netflix, we had a very similar problem. The disks we’d get in the mail would sit for a month or so until we could find a great evening to watch that film.

With the magazines, we realized that some of our magazines were consistently going unread. We’d end up with a pile of unread magazines, then one day we’d just flip through them, tear out a piece or two that we wanted to read, and toss a pile of magazines.

With the other items around our home, we just got rid of items that we didn’t use.

In each case, we cut our spending on an item that we didn’t use enough to justify the cost.

Over and over again, though, I see people having a challenging time making that justification or, in many cases, never bothering to make that justification at all.

My own original experience with Netflix is a perfect example of this.

About eight years ago, I opened a Netflix account. Sarah and I used it like crazy for several months, then the usage dropped off. It reached a point where we would have a couple of Netflix envelopes on our DVD player for weeks, almost gathering dust. Why didn’t we cancel? We liked the convenience of having the movies available if we did decide to watch them. We ended up keeping the account until our 2006 financial meltdown, and only resubscribed a few years later due to the availability of streaming and a large backlog of children’s movies that our kids wanted to watch.

The natural counterargument that many people have when they hear about such changes is that we’re losing some degree of convenience or joy by making these changes. In fact, we actually have great alternatives to each of these if we were to use that service.

For example, the reason we had GameFly is so that I could try out new video games if I wished. However, at the rate of one per month, it’s actually less expensive to just keep trading games at the local used game store. If I end up keeping a game for two or three months (as would happen), I’m far ahead simply trading games.

With Netflix, if we decide that we want to watch a particular movie that’s not on streaming, we have lots of options to rent that movie, from Redbox to Amazon Instant Video. Considering that we’re looking at most one rental a month, it’s far cheaper to just rent them individually.

The same concept is true for the magazines. If I just bought a weekly magazine at the newsstand once a month when something interested me, it’s still far cheaper than the cost of the subscription.

A subscription can save you money if you use it consistently, but if you’re not using it consistently, you’re better off just buying or renting individual items when the opportunity comes up.

In the end, it’s all about time. If your interests are such that you’re actually devoting a lot of your time to a particular hobby, a subscription service might make it worthwhile for you. If you’re doing it mostly for the convenience of the one time every month or two you actually end up using it, drop the subscription and find another option. Your wallet (and your clutter) will thank you.

For example, let’s say you’re matching the extra weight that a friend of mine (who we’ll call Cathy) carries in her car. She consistently carries (mostly) unused car seats in the back seat of your car, plus she hauls around a box of books in the trunk along with a few other excess items. The sum total of that extra load is about 70 pounds.

That means, depending on the model, Cathy is burning an extra 0.7 to 1.4% in gas just due to this extra weight. Let’s say it’s 1%.

If her car gets 20 miles to the gallon with the weight in it and she commutes, putting 20,000 miles on it per year, she’s burning 9.9 extra gallons of gas per year just due to carrying the extra junk.

Say goodbye to $33 or so a year in just fuel costs, Cathy, never mind the additional wear on all of your car’s components.

Even a slight difference of just ten pounds can have a real financial impact. Let’s say you’re driving the same car Cathy is, where you’re getting 20 miles to the gallon and you’re driving 20,000 miles per year. That 0.15% in additional weight is eating up 1.5 gallons in gas per year, costing you about $5 in additional fuel along with slight additional wear on your car.

The message here is clear: get the excess weight out of your car.

How can you do that? Simply make sure that you’re not carrying anything unnecessary in your trunk or your backseat. Evaluate what’s in there and get rid of the things that you don’t need to be carrying back and forth.

I’m constantly amazed at the things people carry in their trunk, from huge assortments of shoes to large gun cases. These things add weight to the car and you pay for that weight directly at the fuel pump and indirectly whenever you get maintenance work done on your car or need a repair done.

There’s only one exception to this rule that I’ve found. If you’re seeing any chance of icy roads, it’s worthwhile to have extra weight in your car because it improves your traction and keeps you safe. I often carry that extra weight in the form of sand bags or rock salt, both of which can help you in a rough winter situation. The extra safety is well worth losing a few percent in fuel efficiency for a season.

Aside from that, you’re only saving money and helping your automobile’s lifespan by reducing the load you’re carrying. If you’re not hauling it around for a purpose, don’t haul it around.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere. Images courtesy of Brittany Lynne Photography, the proprietor of which is my “photography intern” for this project.

Sarah and I attended a Super Bowl party yesterday hosted by a couple who have two giant Saint Bernards as pets.

I love the dogs. They’re like children in a very big body. They want to hug you and play with you and they wear themselves out from all the excitement.

Q1: Vacuum sealed bags
I was wondering what your take on vacuum seal bags is. We have 2 freezers and stock way up on meat and frozen vegetables when we catch a really good sale. Especially since we live way out in the boonies with the closest store being 17 miles away. My question is, with the price of the vacuum seal rolls (we make our own bags) how much are really saving by doing this. I do wash, sanitize and re-use the bags until they get too small to use. So, I get 3-5 uses out of each bag depending on what the size of it was to begin with.
- Megan

I used a vacuum sealing system for a while. I found that they merely make it possible to store food in the freezer for just a little while longer than ordinary Ziplocs. Eventually, the freezer burn gets to the vacuum sealed stuff, too.

Dollar for dollar, I’m pretty happy with the gallon freezer Ziploc bags that we use. We get at least a dozen uses out of them (using masking tape for the labeling) and there’s no equipment.

The only disadvantage with freezer Ziplocs is that the food doesn’t stay protected from the freezer burn for quite as long, but if you’re reasonably consistent about eating your frozen goods, it’s not a big deal.

Q2: Boardgame with new couple friends
You’ve probably run into this, so I figure I would ask you. My wife and I play board games and card games with each other quite a lot and we also play with other friends. We’re going to have a couple over soon that’s open to trying some games, but have never played anything other than things like Monopoly when they were kids. Do you have any “go to” games for this situation?
- Shawn

My default games for these situations is either Ticket to Ride or Settlers of Catan. I usually bring them both out and give a one-sentence explanation of each, then let them decide.

However, I throw that out the window if I know there’s a game that will really fit the other interests of the people involved. For example, my wife has a friend who is really into the “zombie apocalypse” subgenre, as is the friend’s husband. We’re already planning on inviting them over to play Last Night on Earth after dinner.

Remember that you never want to overwhelm someone with a game if they’ve never played many games. Some games are just more complicated than others, and when in doubt, go for the one with simpler rules.

Q3: Investing for house down payment
I am 26 and my soon to be fiancee and I want to buy a house in 5 years. We are debt free, already have an adequate emergency fund, and I recently got a raise from 62k/yr to 85k/yr. I had been saving $100/month for the down payment, but that’s not nearly enough and I intend to take the difference in my paychecks and put it all to saving for this goal. I have been using SmartyPig to save for this, but the interest rate of 0.7% is bumming me out. Would you recommend investing in bonds? I know bond duration should be less than my investment time frame, but I’m also concerned about the tax implications (as I’ve never invested in bonds, and only know that they are less tax efficient than stocks). I already max out my Roth IRA contribution in an aggressive portfolio, and I contribute another 5k/yr to a similarly aggressive portfolio at my employer (no match there, sadly). Is there any tax sheltering I can do for my house down payment saving? I know IRAs allow you to withdraw for a first time home purchase, but I’m concerned about losing out on my retirement goals if I do that (plus 5k/yr is not enough to get me where I need to be for this down payment). Am I worrying too much about taxes and should just go for a short- to intermediate-term bond index fund at Vanguard (where my Roth IRA is)?
- Rick

I think you’re worrying far too much about the taxes here.

The real reason people worry about tax sheltering is that they’re trying to minimize their total tax bill taking into account a lot of years. For example, they might want to pay minimal taxes on their investments in a year where they earn a lot of income from other sources, and pay more of the tax load in a year where they earn little income from other sources. Eventually, you do have to pay the income tax on your investments – and it’s only on the gains, anyway. If you invest $100,000 and earn a 2% gain on that investment and find yourself in the 25% tax bracket, you’re talking about only $500 in taxes.

It sounds like you’re looking at a fairly short term period where you’re worrying about this, and it doesn’t sound like you’re expecting significant changes in income during that period. The only real advantage that such tax manipulations might get you is if you think you won’t be prepared to pay such an amount one year, you expect huge changes in how income taxes are assessed, or you think you might see a big income bump. If neither of those is true, you have very, very little to be worrying about.

Q4: Roth IRA versus Roth 401(k)
My employer gives the option to contribute to a regular 401K and/or a Roth 401K. I currently contribute 14% to the Roth 401K, 0% to the regular 401K, with my employer matching the a percentage of the first 6%. My employer matches the first 4% and I currently do not contribute to a Roth IRA. My yearly contribution comes out to about 12,000.

Should I instead be contributing in the Roth 401K up to what my company matches, then maxing out the Roth IRA at 5,000, and then anything leftover going back into the Roth 401K?

The past couple of years I have put any increases in my salary straight to retirement contributions. I should be on pace to be able to max out the Roth 401K and Roth IRA contributions within the next 4 years so it’s more of a short term problem for me.
- Sully

The first thing I’d do is make sure I was milking every single drop of possible employee matching, as the value of that blows away any tax benefits you might get.

Once that’s covered, I would max out the Roth at $5,000 and contribute the rest to the normal account. This diversifies you in both pre- and post-tax retirement savings, which hedges your bets against whatever may come in terms of taxation changes.

You seem to be completely on the right path here. Good work.

Q5: Hedging bets for retirement
My husband (31) makes $120,000 and I (26) make $70,000 per year, so we are well over the income limit to contribute to a Roth IRA. We would like to take advantage of the Roth accounts at least in part to hedge our tax burden in the future. Currently my husband contributes the max in a non-deductible, traditional IRA and I contribute 5% of my income to my Roth 401k. My employer matches that 5% dollar for dollar and has a discretionary extra contribution which has been 10% of my salary per year for a number of years. Since all of my employer’s contributions are pre-tax and we are not eligible for Roth IRA or deductible traditional IRA accounts as it stands now we are only contributing 5% of my income on a Roth basis.

Should we put more money in the Roth 401k or convert some of the money in the traditional IRA to a Roth in order to hedge our tax bets for retirement? Additionally, would it make sense at all to convert the traditional IRA to Roth since we are already using after tax money to fund it, even though it is treated as pre-tax? That seems like we’d be paying taxes twice on the money.
- Kendra

Converting a traditional IRA to a Roth IRA more or less means that you’re paying the income taxes on the money now rather than at retirement age.

By paying now, you’re providing yourself some level of tax-free income in retirement. If you can shoulder that tax hit now, it can be a good idea.

I usually recommend that people do as you suggested and hedge their bets between pre-tax and post-tax (Roth) retirement investments. This way, you’re spreading out your taxes between now and retirement since you don’t know for sure which point will have the higher tax rate.

Q6: Multiple savings “funds”
One thing that I’ve noticed through reading your posts is that you mention you several ‘funds’ that you put money back into. Savings, emergency, appliance replacement, etc. My question is: how do you manage these various funds? Do you have multiple bank accounts, one bank account and a spreadsheet showing the balance on each fund, multiple piggy banks, etc? That’s one of the biggest problems we’ve had when it comes to allocating money to specific funds. No matter what method we try, it takes more time to put money in each one, or maintain the balance in each one.
- Calista

I do use multiple savings accounts for this. I handle all of the transfers automatically from one bank which makes the automatic transfers really easy from their online banking servies.

ING Direct, to name one specific bank, also allows you to open as many savings accounts as you wish under your name and handle them all through one login. You can set up all kinds of transfers using their service – it’s one I’ve used for years.

It really comes down to how convenient your bank’s online services make such tasks. If you have great online services, this type of thing can be really easy.

Q7: Extra mortgage payment impact
I have a $107,895 mortgage that I have 23 years left to pay on (it is a 30 yr mortgage) at 5.5% interest. If I make two extra payments a year (that go to principle only) how quickly can I get it paid off?
- Leona

For starters, I’d highly suggest playing around with a mortgage calculator like this great one at Bankrate.

As for your specific situation, the exact answer depends on when exactly you started paying your mortgage off and exactly how long ago that was. I guesstimated that your original mortgage was for $120,000 and you’re just a little over seven years into the mortgage.

Given that, making two extra payments a year would shave just a bit under six years off the end of your mortgage. For just making 17% in extra payments, you’re shaving about 25% off the length of your mortgage. That’s money ahead, no matter how you slice it.

Q8: Car selling advice
My husband recently bought a new car, and now we’re in the process of getting his old car ready to sell. We’ve checked the Kelly Blue Book value for it, which says in its condition, we should be able to fetch about $3,500 for it in a private sale. Neither one of us has sold a car before, and we’re not sure how to go about doing it. What would be the best places to list it? How should we go about negotiating? Should we start at $3,500, higher or lower? We both find it hard to believe we could sell it for so much just because it has so many miles, but it’s in pretty good condition otherwise. Plus, we have proof for why we would ask that much; it’s not like we pulled a number out of nowhere. We need to get at least $2,000 out of it because our emergency savings recently took a hit when we had a plumbing emergency, and that will get us back to where the savings needs to be at, but is going down all the way to $2,000 ridiculous when supposedly we can get $3,500 for it?
- Tessa

First of all, the Blue Book value of a car is what you should consider a reasonable selling price for the car. It’s not a guarantee or anything at all. In order to sell a car, you have to have a willing buyer for the price.

My suggestion would be to define what you consider to be the minimum amount you’d sell the car for, then add at least 25% of that price to the car without exceeding 10% more than Blue Book value. If you exceed Blue Book value by too much, very few shoppers will bother looking at your car.

Pricing a car fairly high gives you plenty of room for negotiation, and buyers that can negotiate the price of a car down some is more likely to buy it. Just don’t put it so high that you scare away people to begin with.

Q9: Dodgy mortgage lender behavior
A few years ago I fell behind on my mortgage. My mortgage company was “good” enough to restructure the mortgage even though it took almost 2 years to get everything settled with them. The initial lapse was my fault, but it took them 9 months between 2 separate decisions to let me restructure the mortgage. The whole time they’re adding fees. The original loan amount was $169,000. I had paid on it for 2 years when this happened. Now the loan amount is $203,000 and I can’t get any information from them about why this is. I’ve called a number of times over the past 6 months, each time they promise to send me all the information, and I never get it. Is this illegal what they are doing since they can not provide me with the information?
- Mark

If I were you, I’d contact a lawyer.

My initial impression is that you’re dealing with a financial institution that’s struggling in some fashion or another. The current climate of the real estate lending market is a mess, and some companies are not handling it well.

$35,000 is a significant amount of money. A decent lawyer should be able to help you resolve this situation.

Q10: Going back to school
I currently have a student loan of $14,700 at 4.5% fixed interest rate. I have a master’s degree in marine biology and work in my field, but my salary is quite low. I’m playing with the idea of going to nursing school in the fall of 2013, which would give me job security and a better income (very important in my rural area). I love my job, but I want to go in a different direction. Nursing school tuition would be about $11,000 (3 semester program, since I already have a degree), would require increased use of my car, and because it’s an accelerated program, I would not be working. Of course there will be books, and normal living costs as well. I’m wondering if I should save every penny for nursing school, or pay as much of my loan down as possible?

I pay $200/month to my IRA. My minimum student loan payment is $132 (I have no other debt). Right now, I can probably pay about $350 towards that loan monthly. Is it best to pay off this loan, or save for school, and thus decrease the amount of a second student loan that I will need in the future? Should I decrease my IRA contribution and put it towards my loan?
- Erin

If I were in your shoes, I would continue the IRA payments and the minimum student loan payments for now and save as much as I possibly could to have a fat chushon in your savings account for when you start school.

Having that cash in your savings account will make it much easier to make ends meet during this period of reduced income. That’s really the key – you need to make sure you’re still paying your monthly bills. Your best friend is improved cash flow and access to an easy cash reserve, and since the first doesn’t really seem possible, your best bet is to maximize the second.

I would also look into forbearance on that student loan for any period where you return to school. If you can eliminate that monthly payment during your crunch time, all the better.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

I can speak from experience on this topic.

The very first car I owned was a 1985 Buick Skyhawk. It was a rusty old beast that a friend of my parents had basically abandoned. He had driven it practically to death and it needed several repairs to become road worthy, so I invested some significant time and quite a bit of savings into that car.

I loved that car and the sense of freedom that it represented, but I didn’t have a clue about how to keep it running. Once I had the thing working, I pretty much drove it into the ground. When it stopped running once, I took it to a garage where a guy showed me that my fluids were basically sludge.

That got me to regularly replace my oil and transmission fluids, but most of the rest of the maintenance was lost on me.

In college, my wife-to-be Sarah was driving a van when a master timing belt blew out. It turned out that the belt was about 25,000 miles past time for replacement according to the maintenance schedule. This resulted in us spending a night in a very tiny town in the middle of nowhere.

Rather than looking at the schedule, though, I just kept adding things like this to the “checklist” in my head. Whenever I would go to a repair place, they’d just tell me something else to worry about and I’d try to remember it – and usually fail.

It wasn’t until 2006 or so when I really began to recognize that the maintenance schedule in the glove compartment was really useful. It’s just so simple to schedule an appointment every two or three months, get the next line in that schedule filled in (usually, it’s every 5,000 miles on newer cars), and be on your merry way.

It’s also far cheaper, less stressful, and easier on your time management, too. It’s just better to drop maybe $20 or $30 every few months and maybe an extra $100 to $200 a year on maintenance on your vehicle than to watch something blow out a year and a half later, causing you to lose hundreds out of pocket on repairs and likely find yourself in a real pinch in terms of getting to work or getting to other life responsiblities.

With our two newest vehicles, we’ve followed that maintenance schedule in our manual to the letter. Every item has been handled right on time, within a few hundred miles on either side.

Guess what? We’ve had no significant breakdowns of any kind in years. No emergencies, no unexpected smoke from under the hood, no thousand dollar towing and repair bills.

It’s just been regular maintenance and cheap, worry-free driving.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere. Images courtesy of Brittany Lynne Photography, the proprietor of which is my “photography intern” for this project.

Each of these ten books contains some powerful ideas that made me rethink some aspect of my finances, my career path, or my other personal choices that impacted these things. Each one of these is a powerful and useful read, and I highly recommend that everyone read most of the books on this list. They’re presented in no particular order after the first one.

Your Money or Your Life by Joe Dominguez and Vicki Robin
This is the personal finance book that turned my life around. It’s as simple as that.

I picked up this book at the library when I was struggling with figuring out what to do next. I had come to the realization that I was in real financial trouble, but as for coming up with a plan and really understanding how money fit into my life, I was lost.

This book isn’t really about how to invest your money or what specifically to do with your dollars. It’s much more about figuring out why you earn money and why you make the choices you make with it. It forces you to think about your finances in a completely different way.

I read this book in mid-2006. Since then, I have paid off almost $300,000 in debt and am currently debt free. It took a massive mental shift for that to happen, and I attribute much of it to this book.

The Total Money Makeover by Dave Ramsey
If there’s one single book I’d suggest for dealing with the challenges of debt, it would be The Total Money Makeover, without a doubt.

It does the things that people seriously in debt most need better than any other book. It provides an incredibly straightforward plan for escaping from the pit of debt and it provides forceful cheerleading to go right alongside that message.

Never Eat Alone by Keith Ferrazzi and Tahl Raz
Never Eat Alone addresses the challenges of building a social network, but it adds two ingredients to the mix that Dale Carnegie and the like are missing.

First, Keith is pretty obviously an introvert, and the book is written from that perspective. There are many elements of this book that may seem obvious to a strong extrovert that aren’t as clear-cut for introverts. This made the book click for me.

Second, a big part of the book is service oriented. If you want to achieve something in life, help others. It’s as simple as that. This is the way I tend to view the world, and it’s a perspective that’s been reinforced over time.

Born to Buy by Juliet Schor
This book, more than any other, really opened my eyes to the impact that marketing has on all of us, starting even before birth and really picking up during infancy. Our brains are just inundated with marketing messages all through life.

If you doubt the power that such messages have, this book is an essential read. I would encourage anyone with a child – or anyone even considering having a child – to pick this one up, read it thoughtfully, and reflect on it deeply, not just in terms of your child but in terms of the impact on your own life.

Confessions of a Public Speaker by Scott Berkun
I consider public speaking to be one of the two most valuable career skills a person can have. If you can present your ideas clearly to others, you’re going to do well.

This is, far and away, the best book I’ve ever read on the art of public speaking. It includes every tactic I’ve ever used successfully in getting myself up there on a stage and includes countless more useful ideas and anecdotes for making that challenging process work.

The Bogleheads’ Guide to Investing by Taylor Larimore, Mel Lindauer, and Michael LeBoeuf
This is the single volume I’d recommend for anyone who wants to know more about investing. It tackles investing from the basics (getting your personal finances under control, because the less you spend, the more you can invest) through to almost every investment topic an ordinary individual investor would want to know about.

What sets this book apart is the consistent ideas and tone. The key idea, really, is inexpensive and simple diversification. You want to be invested in a lot of things so that if one thing collapses, you’re not completely bankrupt, while at the same time you don’t want it to be overly complicated so that you can’t really understand what’s going on.

The “Bogleheads” lay it all out clearly in this book. It can be a challenging read at times, but it’s a consistently worthwhile read and one that will really help you solve your investing problems.

Getting Things Done by David Allen
What’s the other valuable skill, the second career skill I alluded to above? It’s time and information management. You need to be able to utilize your time effectively and know how to tackle the genuinely important things (and toss the rest).

That’s exactly what this book does. It offers up a number of incredibly powerful principles for getting the multitude of things you need to get done in your life finished. It goes beyond that and offers a complete system for using those principles, but honestly, it’s the principles that really make this book.

This book changed how I organized my time in such a drastic fashion that I was able to launch and build The Simple Dollar while working full time at a demanding job and spend a ton of time with my family to boot.

EntreLeadership by Dave Ramsey
For many people, entrepreneurship is the most powerful route there is to financial success and personal fulfillment in life. I’ve read many books on entrepreneurship, from the “idea in your head” stage to the thriving business stage, and none of them work nearly as well as a single guide as this one.

EntreLeadership does just what I describe above. It takes a person from an idea for a business to the point where the business is large enough that delegation needs to happen. It offers tons of ideas and food for thought during that entire process, and does it in a readable and comprehensible manner.

Raising Financially Fit Kids by Joline Godfrey
This is the single best handbook I’ve yet found for taking on the challenge of teaching children about money. It’s also one of the most well-worn books on my shelf, simply because I’m raising three children of different ages.

This book offers real parenting tips for children in each age group, offering up countless ideas for introducing kids to money and giving great suggestions to the common struggles that parents have with their children and money at each age level, from very young children to young adults. I anticipate I’ll be using this book for many years to come.

The Millionaire Next Door by Thomas Stanley and William Danko
The final book on this list works well for one reason alone: it completely debunks the ideas most people have about what it means to be rich.

The guy in the Armani suit with the sportscar is probably broke. The ordinary looking guy in the reliable automobile is probably the millionaire. Why? People who have spending habits that lead them to buy the flashy things rarely are on a path to financial success.

The book backs up insights like these with extensive interviews and research, creating a fascinating and eye-opening study of what wealth actually looks like.

If you read these ten books, you’ll have a much deeper view of your money, your career, and the financial world around you.

Usually, it lists the mileage at which I should get my next oil change (according to them) and often lists the approximate date at which I should reach that mileage.

The only problem is that, without fail, that mileage revolves around getting an oil change every 3,000 miles. An oil change that often just isn’t necessary. It’s akin to getting an annual checkup at the doctor every six months.

Let’s just say I tear that sticker off.

We’ve all heard the mantra of getting your oil changed every 3,000 miles. It gets repeated to us every time there’s an ad for motor oil or oil change services.

That actually might have been true thirty or more years ago, when engines were built very differently than they are today.

However, the reality is that most of today’s car models require oil changes every 5,000 miles, and some models require it even less frequently than that.

The information you need is (again) in the owner’s manual for your car. It tells you the exact number of miles recommended for your car between oil changes. For most modern models, it’s 5,000 miles between a change.

So, how much does that save you?

Let’s look at a 120,000 mile life span for your car. I have a pile of coupons for a Jiffy Lube oil change (including oil) for $29.95, so we’ll use $30 as a base price.

With an oil change every 3,000 miles, you’ll have to change the oil 40 times. That’s a total cost of $1,200 over the car’s lifespan just for oil changes.

With an oil change every 5,000 miles, you’ll have to change the oil only 24 times. That’s a total cost of $720 over the car’s lifespan just for oil changes.

That’s a savings of $480 just by cutting out unnecessary oil changes.

Not only that, oil changes every 5,000 miles put you in line with the rest of the maintenance schedule (also found in your car’s manual) in most modern cars. If you have an oil change every 3,000 miles, you’re going to be very out of whack with that schedule, causing you to either delay other maintenance (risky) or get oil changes even earlier (expensive).

Take a peek at your car’s manual and see what it says about oil changes. You might just find yourself ripping that little sticker off, too.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere. Images courtesy of Brittany Lynne Photography, the proprietor of which is my “photography intern” for this project.

1. Mortimer Adler on drudgework
I don’t think it’s necessarily a bad idea to work simply for the money sometimes.

“Work that is pure toil, done solely for the sake of the money it earns, is also sheer drudgery because it is stultifying rather than self improving.” – Mortimer Adler

However, if you’re doing that, your mind should be focused on what’s next. If you go to a job that’s just for a paycheck, then go home and don’t push yourself for something more, you’re just always going to have that same kind of job.

2. Shawn Achor on the secret to better work
The secret? Being happy about what you’re doing.

I find that when I’m enjoying what I’m doing, the work does tend to be more enjoyable and the work product is better.

3. Robert Bly on work and vacation
I tend to think that vacation is work. If you do nothing but work, you’re going to burn out on it.

Many people boast of going years without a vacation. But this is a sign of trouble — not commitment. – Robert Bly

I’m almost certain that a worker who works 48 weeks a year and enjoys 4 weeks of leisure produces more than a worker who works 52 weeks a year.

4. Morning sun
It doesn’t matter the season. I love the sight of the rising sun in the morning.

It comes up at different angles. It comes up on warm days and cool ones. It’s just always there, hanging in the sky.

Thanks to James Jordan for the image.

5. David Allen on keeping ideas in your head
This is the key idea behind how I manage my appointments and other key pieces of information.

First of all, if it’s on your mind, your mind isn’t clear. Anything you consider unfinished in any way must be captured in a trusted system outside your mind, or what I call a collection bucket, that you know you’ll come back to regularly and sort through. – David Allen

I get them out of my head. If I leave them in my head, I will almost always forget about it. If I write it down in a consistent place, all I have to remember is to regularly check that place.

6. What Should I Read Next?
This site actually does a really good job of suggesting another book to read based on the last one you’ve read.

I typed in several of my favorite books just to test it out and, each time, I found a list of results full of books I’d read and liked mixed with books that, upon researching them, looked really interesting.

Try it out. You might just find something great to read.

7. Thoreau on industriousness
It’s not enough just to work hard. You’ve got to work smart, too.

It is not enough to be industrious; so are the ants. What are you industrious about? – Henry David Thoreau

If you’re not working toward something for yourself, you’re working solely for the cash and you’ll probably never make significantly more than what you’re making now.

8. Blue sky
A blue sky doesn’t reveal a season. It could be cold. It could be warm.

All it does is draw you outside into the fresh air.

Thanks to Kevin Dooley for the picture.

9. Thomas Jefferson on meeting your fate
You’re far better off pushing forward to an answer (whether you like that answer or not) than you are just dithering.

If I am to succeed, the sooner I know it, the less uneasiness I shall have to go through. If I am to meet with a disappointment, the sooner I know it, the more of life I shall have to wear it off: and if I do meet with one, I hope in God, and verily believe; it will be the last. – Thomas Jefferson

Simply waiting means no resolution. Simply waiting means you’re not moving on with your life.

10. Ella Fitzgerald sings “Mack the Knife” and seems to forget the words
She’s an amazing singer, but what makes this amazing is that she seems to lose track of the words about halfway through the song, so she ad-libs by beboping and making up words.

Most people would just lock up in this situation. Ella is a master performer, so she just keeps going and still makes a very enjoyable performance that puts a smile on your face.

Simply put, we’ve started tracking the data.

We watch for the price of gas on that sign each time we drive by it, then we mention whether it has gone up or down recently.

We remember the record prices we’ve seen (sadly, he’s so young that the lowest price he can ever remember is $2.97 a gallon – I remember my parents getting almost hysterical when prices inched vaguely near a dollar a gallon),

We also talk about whether or not the price is low enough right now to stop in and fill up.

We’ve even started tracking and recording this data a bit.

We do the same thing when we see gas stations in other towns, comparing them to the prices at home.

It’s a fun little economics game, but it has some real value, too. I’m cluing him in on many of the things he needs to know in order to maximize his value at the gas pump when he’s old enough.

If you can save $0.10 per gallon of gas, filling up a typical sixteen gallon tank saves you $1.60. Do that consistently and you’re talking about a significant difference in your annual fuel bill.

So, how do you shave off that $0.10? There are a few things you can do to make sure that you’re putting the least expensive fuel option into your tank.

For starters, know what your car needs. Very few cars need the premium fuel or can even utilize it to any degree of effectiveness. Take a peek in your car manual (see, there it is again – your manual is really useful) and see what type of gas is suggested. Most modern cars simply suggest using 87 octane gasoline, which is the “cheap” stuff at the pump in many states. Choose the gas type that’s cheapest at your pump that meets the minimum suggestion from the manual.

Never drive significantly out of your way to get cheaper gas. My rule of thumb is that I have to be saving at least a dollar in my tank for every mile out of my way that I drive. Since my vehicle has a sixteen gallon tank, I’m looking for a savings of at least $0.07 a gallon for every mile out of my way that I drive. Why? Even in perfect traffic, that’s still two miles (one each way) of driving in town, which will take at least five minutes with the risk of significantly more time, plus the gas you use to make that extra jaunt, just to save $1. You’re quickly getting below a rate of $10 per hour in savings.

Don’t be brand loyal until you’re familiar with the prices in your area. For the most part, the gas stations in your area are going to be pretty consistent with each other. If there are one or two stations that are a bit lower, they’re going to consistently be a bit lower. Spend some time studying the prices in your area, particularly along your commute, so that you know what the prices are, and consistently visit the station with the lowest prices.

After a while, you’re going to regularly find yourself using a single station or two, so get a rewards credit card associated with that station. Use it only for gas there. Typically, rewards cards associated with gas stations have really nice rewards, but only on gas bought at the stations in that chain. So, don’t use the card for anything but gas, and pay the balance in full each month. This will often get you a very nice price on gasoline.

You should also check your local warehouse club for gas offerings. The local Sam’s Club in our area offers gas prices substantially below other chains if you’re a member. Since we are, we often utilize Sam’s Club for gasoline.

If you’re a commuter, shaving a bit off of the price of a gallon of gas can help a surprising amount over the long haul. It’s one of those little changes you forget about until you find yourself breathing easier with regards to your finances.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere. Images courtesy of Brittany Lynne Photography, the proprietor of which is my “photography intern” for this project.

These are wonderful dreams. I enjoy taking little steps toward them because, honestly, I usually enjoy the process.

Yet, when I step back and look at the broader scope of my life, that’s not what’s really important to me.

First and foremost, my family (and I consider my closest friends a part of that) is the single most important thing in my life. Bar none. Secondary to that is learning new things and, hand in hand with that, sharing what I’ve learned.

Almost every other interest and passion I have in my life is secondary to those things.

I’ll give you some examples to illustrate what I mean. Anyone who has read the site for very long knows that one of my favorite pastimes is playing board games and card games. I love playing games with other people across the table from me.

Yet, when I dig deep into it, it’s not really about the games. I do enjoy them, don’t get me wrong, but what I love about them is that it gets people I care about around a table engaging in a shared experience.

If you asked me what my favorite memories of board gaming are, they revolve around people. I think of playing Old Maid with my children. I think of playing Risk Legacy with my wife and three of my closest friends in the world. I think of sitting in my friend John’s living room, playing Descent with him and another of my closest friends.

Another great example comes from reading. If a friend or family member really enjoys a book, I’ll almost always give it a read. Why? Beyond merely being a good book, it becomes a shared experience with that person.

So let’s bring this home: what does this have to do with personal finance?

Personal finance is all about goals. If you’re not selecting a goal – whether it be freedom from debt, saving for an abundant retirement at age 70, or something else entirely – you’re either already incredibly rich (and you probably got there due to goals) or you’re spinning your wheels. Progressing toward a better and more secure financial state is something that pretty much every reader of The Simple Dollar shares.

However, goals are useless if you don’t feel completely motivated to move forward with them. You might desire a change in your life, but unless you’ve reached a point where that change feels vital to your future existence, it’s not going to happen. If you’re not getting out of bed with the feeling that today you’re going to move toward that goal, you’re probably not going to move toward that goal.

So, what is it that’s truly important to you? There is no right or wrong answer. It’s a matter of simply figuring out what’s truly important to you.

Here’s an example. I have a friend who dreams of being a sports announcer. He talks about it a fair amount. However, he also has a wife and a child at home. Recently, he told me that he thinks his sports announcing dreams are going to go on hold for a while. I asked him why, and he told me that chasing that dream requires a level of time and commitment that he can’t give to it right now. He had realized that his family was more important to him and he was sticking with the things that motivated him deeply every single day.

Does that mean that he’s abandoning the dream? Not entirely. Instead, he’s finding new ways to channel that passion that’s more in line with the rest of his family. He’s gotten involved with youth sports, assisting with the production of videos and other materials for other parents. This allows him to follow his passion while also being involved with his children. In fact, he’s starting a small video production company as a side business, where he creates professional videos highlighting a team and sells them for a reasonable fee. Several youth sports leagues are going to partner with him, so all he has to do is hire a few people to film the games, then edit them at home. He can film his own child’s games himself and involve the family in the production process at home.

Spending time with his family is the most important thing to him. Because of this activity, he’s spending time with them, earning some money on the side, and showing his children an entrepreneurial spirit along the way.

I can tell a very similar story about The Simple Dollar. My motivation to change my financial habits came from my oldest son. My motivation to write about it was many-fold: I enjoyed writing (value #2), I wanted to share some ideas with my friends and family (value #1), and I hoped to earn some money on the side to make our financial journey better (value #1), plus I would be able to involve my wife and my children in the process (value #1).

My dreams of making a living from writing didn’t start happening until I oriented them around what truly mattered to me. The same thing is true of my sports announcing friend.

So, what’s important to you? I think the easiest way to identify those core things that are important to you is to evaluate what you actually do over a long period of time. I’d focus on activities outside of the workplace, because we all need to earn a living, unless you’re already doing a job that’s key to what you value.

What do you spend your spare time on? I spend mine with my family and close friends as much as I can, and when I’m alone, I read and learn things. I bridge the two by finding ways to express what I’ve learned. This is what I enjoy doing.

My personal finance success came entirely from those things. My family inspired me to make changes with my money. My desire to read and learn educated me on how to do it. My desire to share what I learned launched The Simple Dollar.

You can follow a similar path with what you value the most. The key thing is to always remember that, no matter what your goals are, a solid personal finance foundation makes it all much, much easier to achieve.

Along the path from home to preschool is a gas station. That station has the lowest gas prices within about a ten mile radius, so it’s the one I tend to use regularly.

Right next to the gas station is a free air pump, which I use about once a month or so. After I fill up, I drive over to the air pump, pull out my air gauge, check the pressure in each tire, and fill it up to the maximum recommended pressure as suggested in my car’s manual (see – there’s that car manual mentioned again).

Quite often, I’ll stop there before dropping off my daughter. She’ll get out of the vehicle with me, talk to me while I’m airing up the tires (she doesn’t quite have the finger strength to actually air them up, though we’ve tried), and often she’ll help me pull the air tube around to the proper position so that I can air up each tire.

It’s a bit of father-daughter bonding, sure, but it’s also saving me some money and subtly teaching her about a really valuable tip for auto maintenance.

I actually learned about this tip the hard way, too.

I used to just get my oil changed at a full-service oil change place that would air up your tires for you each time. I always felt that was good enough.

In 2006, though, I started getting really into measuring my vehicle’s fuel economy and figuring out ways to reduce it. I got my oil changed on a very hot day late in that summer, and by early December I was due for another oil change.

On a very cold morning, one where I intended to actually get my oil changed and my tires inflated that evening after work, I started to pull out of my driveway when one of my tires went “pop.”

This caused me to spend most of an hour getting the spare tire on, which meant I was a bit late for work.

That evening, when I stopped by the oil change place, they noted that the spare tire was on the vehicle. They noted that the air pressure on all of my tires was almost dangerously low. They also looked at the other tire that was sitting in the back and told me that it was fine and that likely it had been pushed off by bumping into a curb or something.

That’s one way that airing up your tires can save you money and time, but that’s just one.

The biggest reason to do it is that adequately aired tires save on your gas mileage. It’s pretty clear-cut, actually.

Every psi that any one of your tires is below the recommended maximum costs you 1/8% of your fuel efficiency. So, if all of your tires are 4 psi below the recommended maximum, your fuel efficiency goes down 2%. If they’re 6 below, you lose 3%.

Let’s say your tires are running 6 psi below the maximum. That’s a 3% reduction in your fuel efficiency. Your 25 mpg car goes down to 24.25. Over just 1,000 miles, that means your car is using 1.2 gallons more in fuel than if you had maximized your tires’ air pressure. That’s $4 gone, right there.

If it takes you 5 minutes to air up your tires, that simple move is saving you money at a rate of $48 per hour of effort. That’s well worth it.

All you need is to keep a tire gauge in your glove compartment and know what the maximum PSI is for your automobile (it’s in your manual). Fill your tires up with air once every month or two – it’ll just take you five minutes. Doing so will keep your tires at the maximum recommended pressure, maximize your fuel efficiency, and keep your tires on the rims (although that only happens if you neglect it for too long).

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere. Images courtesy of Brittany Lynne Photography, the proprietor of which is my “photography intern” for this project.

What does our version of a Super Bowl party look like?

It’s a potluck dinner. The game is on in the background, but largely ignored. People sit around and play board and card games.

This year, my parents are actually going to babysit our children so we can do these things without children (meaning less distraction and less concern about child-unfriendly topics of conversation).

Q1: Repeatedly failing to achieve goals
All the time, I set these powerful goals for myself. I’m really inspired to get out there and start taking action on them. Then, about two weeks later, the fire just dies out and I stop making any progress on the things I want. I’ll sulk on it for a while, then set new goals and start off like gangbusters again, only to fail again. How do I break out of this cycle?
- Leon

First thing: stop making multiple goals. Focus instead on just nailing one goal at a time.

Second thing: stop making sweeping life changes to achieve your goals. Instead, focus on one manageable thing that will move you towards that goal. Work on nothing but that one specific thing for a while until it becomes second nature. Then, move onto the next specific manageable thing.

For example, if you’re trying to lose weight, pay off all of your debts, read a lot more than you were reading, and redo the entire interior of your house, pick one. Say that you pick weight loss. Focus wholly on eating no junk food for a month and replacing it with something healthy, like carrot sticks. Ignore the rest of it. Don’t even think of them as goals.

Q2: Handling bill collectors
I am working part-time (less than 20 hours a week) and currently seeking more gainful employment. I don’t make enough to get by and rely on help from others to pay my bills right now. I’m truly broke (like using coffee filters for toilet paper broke). I have debts that are in collections, and I can’t make payments on them. Is there something specific I need to do in regards to those accounts? Should I call the agencies and tell them there is no way I can make payments right now, or will that just encourage them to begin harassing me again (at the moment they seem to have given up on getting anything out of me)?
- Kevin

I’m not sure using coffee filters as toilet paper is a highly cost-effective solution unless you have a lot of coffee filters bought in bulk and no toilet paper on hand, in which case it’s a financial delay tactic of questionable hygiene.

The honest route is to contact the agencies and tell them that you can’t pay right now. Make it clear that you do not have adequate employment.

At the same time, however, I do encourage you to negotiate with them. Use your employment situation as a tool to play hardball. Tell them that you’re willing to pay a much smaller amount and suggest one. Debt collectors typically buy debts from large companies for pennies on the dollar, so anything they get from you is likely to be a profit.

Q3: Rethinking mortgage payoff goal
Our situation is this: We have ~153k left on our mortgage and we pay $320 extra each month. We also save $500 each month in a fund that we plan to use as a down payment for a new house. Our current house is pretty small. We have a toddler and another baby coming soon, thus the saving for the next down payment. The down payment fund has around 26k in it. In addition to the down payment fund, we have around 40k in cash.

The way I see it we have three options:

1) Continue on as we’ve been doing. Pay the extra $320 on the mortgage each month and save $500 for the next downpayment.
Disadvantage: Much more interest payments because of the longer loan. House not paid off until March of 2028.
Advantage: More liquidity, next down payment is not tied to current house.

2) Stop saving for the next down payment and divert that $500 to the current mortgage, so we’d be paying an extra $820 each month.
Disadvantage: The money isn’t liquid and if/when the value of our home continues to drop, the money is tied up until we can sell the house.
Advantage: Our house would be paid off in October of 2021, by my calculations, with far less interest payments.

3) Stop saving for the next down payment AND empty the next down payment fund to quickly lower our current mortgage down to 127k.
Disadvantage: Money tied up in the house AND we lose the liquidity of the next down payment entirely.
Advantage: The mortgage would be paid off 14 months earlier, August of 2020, with even less interest paid.

One idea in this whole situation is that if the mortgage is paid off, we don’t really need to worry about the next down payment. Once the mortgage is paid off, we can aggressively save for the next house and we would certainly have some equity in our current house, even in spite of the horrible market. What are your thoughts?
- Brian

It depends on whether or not you’re underwater on your current house, which I’m not exactly clear on. Do you still owe more than your home is worth?

If you do, then you’re going to have to get your mortgage down to the break-even point before you do anything else.

If you’re not underwater, then I would make minimum payments on the debt and start stockpiling for the next down payment.

Q4: Handling extra cash
I have a friend who I have sort of “taken under my wing” in terms of finances. He does fine with his money, he just isn’t very organized.

Background: He is single, early 30′s, base pay about $50k. He has no debt, old car, rents an apartment, probably has $30k in a cash cushion, and at least partially funds IRA/401k every year. He may move to another country in a few years, either with his job or to start a different career.

The question: He just received a gross bonus of about $140k, after taxes about $80k. He went ahead and fully funded 2012 401k with that (in his words, $13k to 401k), so that leaves about $65k to work with.

I am meeting him for dinner next week to help brainstorm about what to do with that $65k in his situation. He says he doesn’t want a new car at this point (he can walk to his job, weather-permitting, and I think he just doesn’t care about his car/cars in general).
- Andrew

Your dinner should be focused on what his goals are. What does he intend to do with his life in the future? Does he want to start a small business? Is there potential for marriage in the future? What about home ownership? These goals have different investment paths.

He may also want to consider using it to fund a Roth IRA for the next several years so that his retirement savings get a giant boost. That really depends on what other retirement savings he’s got to this point.

If he doesn’t have a goal, then he should sit on that money. Since he has a cash cushion, I would suggest that he puts most of it somewhere where he can largely forget about it for the time being, something that has some risk but also has some potential for a decent return. I’d probably put it in a very broad stock market index fund.

Q5: Paying taxes at year end
My husband did our taxes this year, and in the end, we owe the federal government money. It’s mostly due the unforeseen consequence of using an education award from my service with AmeriCorps, which pushed us into the next highest bracket. Is there any way for you to outline the process of repayment to the federal government? What are our options? Luckily it’s not an earth-shattering amount, and we’ll be able to cover it, but I am curious if there is a way to set up a payment plan or something like that. How would you avoid a windfall like this in the future, when we so often rely on a tax refund for extra “fun” money (to pay for vacations and incidentals)?
- Kelly

You certainly can set up a payment plan with the IRS. It’s easy to do and they’re pretty good about working with you if you’re clearly trying to pay your taxes.

My rule of thumb is that for every dime you bring in that isn’t already taxed, you should save a nickel of it for your tax bill. I do this with every dollar I bring in.

If you owe less than that (and you most likely will), treat the remaining savings as your tax refund.

Q6: Online business and credit cards
I am a small business owner. I have accepted credit cards for 15+ years, but only process a handful of credit card transactions per month.

My credit card processing company keeps raising their fees, raising their fees, raising their fees…..and lowering their level of service; they will no longer even send me a monthly statement, without charging me a “statement fee.” At this point, due to their fees, if I process NO credit cards, my annual costs are $500+! Add in the transaction fees (3% or more per transaction), and it’s just become outrageous.

I would like to be able to continue accepting credit card payments as a convenience to my clients, but these fees have become unbearable.

Besides Paypal, are you aware of any way to accept credit cards without these high fees?
- Shelley

My immediate suggestion would be to use Google Checkout, which seems to be just what you’re looking for here. It will handle your transactions easily, Google takes a small cut, and you move on with business.

I’ve been using Google Checkout for a while now on a project I’ve helped some other people with and it’s worked great.

Paypal is convenient, but as a seller, I’ve heard a lot of stories about frozen accounts and the like and that makes me fairly nervous. I’m assuming you’re wanting to avoid it for similar reasons.

Q7: Buying home for parents
My boyfriend Jim and I have been together for 4 1/2 years and are planning on marriage in the next couple of years. My question is about Jim’s parents. Their real estate business went bankrupt when the recession hit and they have been having a very difficult time making ends meet. Jim’s father is now underemployed doing factory work and looks for minor home maintenance work on his days off. His mother has been disabled for the last few years due to extremely debilitating arthritis. She cannot work. They’re making it, but barely. Jim has been helping his parents out financially since he started working – roughly the amount of their mortgage payment monthly. I know this is something we will need to do for the remainder of their lives unless we do something like buy them a home.

Jim and I are financially solvent enough to buy their home, due to a large inheritance I received – it would cost us less than 5% of our assets. We would like to keep it in our names, and we would let them live there, free. The reason we hesitate to put it in their name is because we do not want them able to take a loan out on the home. Jim’s father has been irresponsible with money in the past. If we bought their home, it would fix all financial problems they are having, barring catastrophe. They would be able to save for an emergency fund, retirement, have enough money to make ends meet, and have a little something left for themselves to enjoy. It would be a very large increase to their quality of life.

Do you think I should buy their home for them? If I buy it, should there be strings? Would “strings” of “forced savings for retirement/emergency fund” be unreasonable? I tend to think strings are a poor idea because of the way it would affect the relationship between us and his parents. I don’t want them to view us as their landlords. I badly want to turn their situation around, but I want to do it in a way that will allow them to remain self sufficient after we do so, and cause us to not need to intervene in their financial lives on a regular basis.
- Kathryn

If you buy it, I wouldn’t attach any “strings” on their behavior. You’re opening the door wide for future conflict.

If you can easily afford it, buy the home and just let them live there without rent. When they no longer use the home, you can fix it up and sell it, possibly turning a small profit on it.

One thing I would suggest from personal experience, though: make sure you establish who’s responsible for property taxes and insurance. Given the situation, it’s likely you’ll be responsible for it, but be sure you’re aware of that before you jump in.

Q8: Heroes
Who are your heroes? What people inspire you greatly?
- Charlene

Most of the people I think of as “heroes” aren’t famous. There are so many people out there doing things quietly in their community, changing lives in a positive fashion, and they never get lauded with celebrity or fame.

I admire the couple in our community that run the food pantry. They spend quite a lot of time on it, collecting food, keeping the doors open, and making food available to the needy in the community. It’s a constant commitment of time with no real reward. They don’t get fame from it. They barely get any recognition from it. Yet they do it, week after week, month after month, year after year, because people in the community need help.

To me, that’s a hero.

Q9: Repair or replace used car?
My wife and I plan to look for and hopefully purchase a house this spring. We have been pre-approved for a decent amount (~$400K). Although we are looking now, current inventory is lacking and we feel after the new reality season in our area (traditionally the week following SuperBowl Sunday) we should be able to find something we like and can afford. With the market being what it is, we are determined to find a house that we can easily live in for at least a decade.

In the meantime, we currently have two automobiles that eventually need to be replaced. We plan to replace them with newer used cars.

My 1997 Mustang needs $1200 worth of repairs to make it safe to drive. This includes brakes (~$400) and new tires (~$400). It would be a game of Russian Roulette to continue navigating Chicago Winters (read: snow) with my current set of tires. [I actually ended up putting in $400 in repairs to the clutch cable and a few other things the other day.]

My wife’s car, a 2002 Trail Blazer, is in better shape but has worse gas mileage than the Mustang. I currently drive her car 26 miles to work (one direction). Her transmission is starting to fail. Our future perfect world scenario would be to replace the Trail Blazer with an Element and the Mustang with a more fuel efficient car to be determined later, perhaps a hybrid or even an electric car if we have the infrastructure, though we’d likely replace the Mustang first and get an Element.

The question is, do we repair the Mustang or use the $1200 toward purchasing a new used vehicle. As I see it, if we invest the $1200 into the car, we reduce our emergency fund and/or downpayment fund (both separate at the moment). However, if we take on even a small auto loan, the interest rate we get for our house might be slightly higher than we could get otherwise and over the life of the home loan, even a quarter percent higher equates to ~20K extra interest paid.
- Ron

It really depends on the reliability of the Mustang other than the things you’ve mentioned.

Has it reached a point where you can barely go three months without something going wrong with the car? Or is this just a conflux of things that’s fairly unusual for an otherwise reliable car?

If the car can’t get you reliably to work and back, you need a different car. Yes, that might slightly postpone your house plans, but if the alternative is having your boss tell you to take a hike because you can’t consistently get there on time, then you don’t really have a choice.

Q10: Using emergency fund during schooling
I am a LPN in my late 40s who will be returning to school in the Fall pursuing the additional education to become a registered nurse. My children have completed college and are out of the house. My husband and I have a house payment of $850 (for another 4-5 years) but otherwise no debt. We have about 6 months of our monthly income in savings, and I have about $150k in a 401k.

When I return to school for the year, I hope to either quit working altogether or work no more than 20-30 hours per month. (I make $20 per hour). My husband will be changing his withholdings from his check once I stop/reduce working, as we both claim zero dependents and have additional money taken from each of our paychecks. So his checks will increase to some degree when I reduce my hours. I will attend a local community college, so educational costs will likely be $4000 -$5000 for the year, and I intend to pay out of pocket for this.

My question is this, if we are financially strapped during the course of my year of schooling, is it better to take out a student loan (since they are at such a low interest rate for 10 years) or potentially deplete/reduce our saved money? Should our savings be used only for “emergencies” ? or do you feel that is precisely what a “savings” is for? I have considered taking out a student loan and putting it in savings and only using it if we are strapped. If I don’t need it, then I’ll repay it immediately after I finish school and have returned to full-time work. (It isn’t always a quick process to obtain a student loan, which is why I have thought about doing it whether or not I need it initially. If I wait until I need it, it might take too long to obtain the funds needed.)

(By the way, I’ve been “couponing” for about 6 months and have nearly a year’s supply of all toiletries and paper products that we will use during the course of my schooling. I also garden and have a significant supply of frozen and canned produce to help us get through this time.)

I’d appreciate your thoughts and insight. I’m excited, but nervous, to be returning to school. RNs in our area typically make 10-15k more per year than LPNs, so it won’t take long to see a return on my educational costs, but more importantly, there are probably 10 RN job opportunities for every 1 LPN job opportunity, because so many facilities are no longer employing LPNs.
- Linda

Don’t even think for a second about what you might earn after this schooling. Betting on earnings that your future self might make is a route to financial despair.

Instead, look strictly at the difficult year. Make a budget for that year. What is your family income during each month? What are the required bills that are going to have to be paid?

If it doesn’t add up, delay this move for a year or two until you can save enough to make it work. Remember, this does not constitute an emergency, so you should not deplete your emergency fund for it. If you do deplete it and then something goes seriously wrong, you’re going to be in a desperate pickle.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

Whenever I find myself in a situation where some cheesy salesperson is trying to give me the hard sell on some product, I find myself walking away. Even more so, I usually find myself getting a negative gut impression of the product being sold, one that’s usually reinforced when I go home and do the research only to find that the product is overpriced or underwhelming.

Case in point: when Sarah and I bought our Prius in 2009, most of the people at the dealership were friendly and hands-off, but there was this one guy who we interacted with that tried to do the hard sell on a service contract.

We were ushered into a small conference room by him where he attempted to do some kind of hard sell on us on a service agreement. It came off like one of those police interrogations on television.

After about a minute, we told him we weren’t interested. I got up to leave and he said, “Now, just hold on a minute…”

I told him, flat out, that I was walking out that door and if I was stopped from doing so, we were leaving the dealership without the car.

That’s how I often react to the hard sell. I just walk out of the room. I don’t trust the “hard sell” and I’m certainly not going to listen to it. If your product is so questionable that you have to resort to the “hard sell,” I’m not interested.

Of course, a big part of the reason I walked out is because, most of the time, that initial offer for a service contract or an extended warranty is way overpriced and does little for you. It’s a questionable product, which is part of the reason why they went for the “hard sell.”

For example, if you’re looking for a service agreement for your car, you’re going to want to make sure that the contract you’re being offered does not merely duplicate things that are already found in the warranty. You’re also going to want to carefully read over the exclusions, because things like “normal wear and tear” make the service contract nearly worthless (as they’ll claim almost everything is “normal wear and tear” and thus excluded from the contract). These two factors alone will eliminate most service contracts you could buy.

If you’re still interested in finding one, shop around. Check with various auto repair shops in your area and ask if they offer service contracts. If they do, ask for a copy and review it carefully. The vast majority of contracts that you find will have exclusions and restrictions that make them a pretty poor value.

What about an extended warranty? These usually just extend the terms of your car’s warranty. However, they’re not a particularly good deal, either, because most of the defects in a car show up before the end of the normal warranty and the warranty often excludes things like “normal wear and tear” (just like that service contract). It’s much like buying an extremely overpriced and very limited insurance policy for service on your car.

In my opinion, your best move is to take the money you would have spent on these things and put it into a savings account. Then, tap that money only when you actually need repairs to the car (repairs that the service contract wouldn’t have covered anyway).

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere. Images courtesy of Brittany Lynne Photography, the proprietor of which is my “photography intern” for this project.

When you’re a fan of someone’s work and read it faithfully, it’s easy to get caught up in that person’s work. You want a new book. You want a new blog post. You want a new photograph. You want some detail to be corrected. I do this all the time. I can’t tell you how long I’ve pined for the next book in fantasy series that I’ve loved or waited for the next album from the artist I enjoy.

Sometimes, though, the curtain is lifted. There are human beings back there, trying hard to create useful things, handle the feedback they get, and still live some semblance of a normal life. They make mistakes. They have pain and regrets.

For every singer, artist, writer, or other creative person whose work you love, there’s at least one real person back there trying to deal with this complicated mess we call life. They deal with sick children, past regrets, relationships that aren’t going well, and illnesses of their own.

We are all human.

How to Choose a Good Bank as a Freelancer This is a really interesting perspective on choosing a bank, as not every bank account is perfect for everyone. (@ freelance switch)

Finding the Courage to Stay the Course Sticking to a long-term goal can be really hard, especially when you’ve reached a point where there’s a lot of work to do before the next milestone. This is some great advice for sticking to it. (@ dumb little man)

Seven Easy Menu Planning Ideas We do most of these things. These tactics really help with food preparation. (@ living richly on a budget)

Five Free Gifts for Valentine’s Day Don’t sweat over a perfect gift or a box of chocolates or something when a bit of thoughtfulness will do. (@ million ways to save)

Now, this seems like a completely simple issue. Put in the key, right?

Well, our Prius has a button on the dash that says “Power” instead of a key. Unfortunately, if you push that button without having a little keychain in your pocket, it won’t work.

Even stranger, if you push it with that keychain in your pocket and haven’t pressed down on the brake, you’ll just get the auxiliary power.

It took Sarah a while to figure it out. Then, a few days later, I spent more than an hour figuring out how exactly this worked. (It seems simple, but when you’re in the car with no idea how to do it, it’s a bit trickier – trust me.)

How did I figure it out? I read the manual.

Those of us who have owned a car for a while generally feel pretty confident about how the thing works. Put in the key, put it into drive, and go, right? Who needs the manual for that?

In truth, a car manual is loaded with useful things, particularly if you’re new to that model of car. It tells you how exactly each feature works on the car, for starters. After my experience with the Prius, I spent about an hour sitting in our Pilot after we purchased it, trying out all of the features just to see how they worked. Let’s just say I never found myself wondering how the emergency brake or the windshield wipers worked during the moments when I needed them.

The manual tells you lots of little useful facts, like the recommended tire pressure (invaluable for when you air up your tires) and the details of your warranty. It tells you the maintenance schedule (something I’ll talk more about in the next few days), where the tools for changing a flat tire are, and how exactly to turn on your flashers. It describes how to change the oil yourself, how to replace the windshield washing fluid, and how to change the transmission fluid.

Every single one of those things will save you time and money. Often, that time and money will be saved during a key moment when time and money are of the essence. All it takes is some time spent right now reading the manual and trying out the things described in it.

Your car manual is a giant recipe for relieving car-related headaches. Take advantage of it.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere. Images courtesy of Brittany Lynne Photography, the proprietor of which is my “photography intern” for this project.

Thanks to William Grootonk for the image.

Yesterday, I was stunned to read a news report about how Freddie Mac denied people the ability to refinance, then made investments that earn them more money if people are unable to refinance. “Freddie Mac has invested billions of dollars betting that U.S. homeowners won’t be able to refinance their mortgages at today’s lower rates, according to an investigation by NPR and ProPublica, an independent, nonprofit newsroom. [...] Millions of homeowners wish they could refinance, but their lenders tell them they can’t qualify for today’s low rates because of tight rules. Freddie Mac is one of the gatekeepers with the power to set those rules, and lately, it has been saying no more often to homeowners.”

In other words, the investment arm of the institution is making investments that will profit if people can’t refinance while their lending arm is telling people that they can’t refinance.

They are not your friends.

Do we even need to go into detail about how banks, insurance companies, and lending institutions consistently work against the customer?

Citigroup’s main brokerage subsidiary, its predecessors or its parent company were considered by the SEC to have violated the law against purposeful or negligent fraud of customers under interstate commerce five times: in 2000, 2005, 2006, 2010 and 2011. In each instance, the firm undertook “never to breach the law again”.

Bank of America, which now includes Merrill Lynch, was found by the SEC to have violated security laws some sixteen times and made similar pledges on each occasion.

JPMorganChase, which now includes Bear Stearns, was found by the SEC to have violated security laws some twelve times and made similar pledges on each occasion.

The scorecard for other big financial institutions is: UBS —seven times; Goldman Sachs —three times; Wachovia —three times; AIG —twice. The list goes on.

These businesses are not out to make your financial lives easier. They are out for profit. Sometimes, profit might be in line with what your financial needs are. At other times, the profit of the bank is opposed to what your financial needs are – and profit will win.

These banks are doing exactly what they were designed to do, which was make money for the shareholders. That does not include making money for you unless doing so happens to coincide with making money for the shareholders.

My point is simple. Do not rely on these institutions for your financial future. If you already do, make it a serious focus to reduce your reliance on them.

Every day you’re in debt, you’re handing money to these financial institutions because they loaned you some money in the past. If you put $1,000 on a credit card and wait a year to pay it off, you’re not only paying back the $1,000, you’re giving them $200 more for the privilege. Mortgages are even more painful. A 30 year mortgage for $200,000 at, say, 6% often has several thousand in closing costs right off the bat. Then, over the lifetime of that mortgage, you’ll not only pay back the $200,000, you’ll also pay back $231,676.38 more in interest just for the privilege.

Got a credit card? The terms will likely change on that card on a fairly regular basis as the companies find new ways to earn a profit from you holding that card. Often, that means you’re going to be paying fees on it or high interest rates on it or interest that starts accumulating very quickly or bonus programs that are difficult to use.

Every day, I receive emails from readers that have piles of credit card debt, piles of student loan debt, a big mortgage, car loans, and other forms of consumer debt. Others are thinking of getting deeper into debt because they want that house or that car now.

When you walk in the door of a financial institution, you play by their rules. They do not give you money because they want your dreams to come true. They give you money because they’re going to make far more money from you over the long run.

Your mortgage may be life-changing for you, but it’s just another profit-making revenue stream for your bank. The same goes for your car loan or any other debt you may hold.

What’s the solution, then? Debt freedom. It’s a very simple goal, but it’s a powerful one, and until you achieve it, you’re going to be simply handing money to financial institutions.

What’s the biggest part of debt freedom? Self-control. You don’t need everything, and you certainly don’t need it today. Your life will not be made whole or complete by having a big house or a shiny new car. Focus on having just the things you actually need and stand on your own two feet with them.

The best thing you can do if you want better behavior from the banks is to make yourself far less reliant on them and stand on your own two feet financially.