Before you even begin talking about how much you’re saving in terms of increased fuel efficiency, you have to determine some of the numbers you’re working with.

First off, how much does a gallon of gas cost? Right now, the gas station nearest to my home charges $3.999 for a non-premium gallon. So, we’ll go with that – $4 per gallon.

You also need to know how many miles you expect to get out of your car after you buy it. It really depends on the age of the car that you buy. If you buy a new or nearly new car, you might get as many as 150,000 miles out of it. For an old car, you might be lucky to get 50,000 more miles out of it. Let’s go with a happy medium – 100,000 miles.

So, what is fuel efficiency actually worth when you’re buying gas at $4 per gallon and intend to cover 100,000 miles in that car? Let’s look at some different fuel efficiency numbers.

If the car you buy gets 15 miles per gallon, that means it’s going to slurp down 6667 gallons over the time you drive that car. At $4 per gallon, that adds up to $26,668 in fuel costs.

If you bump that up to 20 miles per gallon, that means it’s only going to use 5,000 gallons over the period that you own the car. At $4 per gallon, the total fuel cost is $20,000.

Let’s say your vehicle gets 25 miles per gallon. In that case, it only uses 4,000 gallons over that 100,000 mile life span. At $4 per gallon, that adds up to $16,000.

What about 30 miles per gallon? If you’re looking at 30 miles per gallon, the vehicle consumes only 3,333 gallons of gas. At $4 per gallon, that adds up to $13,334 in fuel costs.

What about 40 miles per gallon? In that situation, you’re looking at a consumption of 2,500 gallons over the life span, which, at $4 a gallon, adds up to only $10,000 in fuel costs.

Fuel efficiency is a tremendous savings. If you choose a 40 mpg car over a 15 mpg car, you’re saving $16,668 in fuel costs over the next 100,000 miles (assuming fuel stays at $4 per gallon). That’s enough to buy your next replacement car.

A good rule of thumb to use, assuming you are going to be driving the car for a long while and assuming that fuel prices continue to inch upwards, is that for every single mpg that one car has higher than another car, you’re saving $1,000 in fuel over the lifetime of that car. It’s not a perfect rule and it particularly breaks down for comparing cars well above 25 miles per gallon, but it’s a good one for giving yourself an estimate of the value of fuel efficiency when shopping around.

Fuel efficiency is simply an enormous financial consideration when buying a car. Buying a car that is 10 miles per gallon more efficient in terms of fuel consumption than the other option can easily save you $10,000 over the lifetime that you own the car. Keep that in mind when you shop around.

The post What Is Fuel Efficiency Really Worth? appeared first on The Simple Dollar.

For us, May often means graduations, which means going to a ceremony and watching young people celebrate the end of one chapter in their life and the start of another, one that will often go in a very different direction than they expect.

Most of the time, when lives reach a crossroads, we don’t see the opportunity to shift paths until the opportunity is gone. Graduation is one of those chances to shift directions where the opportunity sits right there in front of us.

There are moments when I wish I could find myself at that kind of crossroads in life again, with that many open highways in front of me. There are so many different directions to choose from.

Q1: Difficulty estimating freelance income
I have a full time job but I also do some freelancing gigs on the side. They’re kind of consistent – I probably do fifteen a year – but they’re really unpredictable in terms of pay and in terms of frequency. I might do five in a month and then do nothing for half a year. Anyway, I’m supposed to pay estimated taxes on this income but I have a hard time estimating how much I’m making a year. How can I do this?
- Roger

It’s pretty easy. Just figure out how much you’d owe in income taxes on the amount you’ve earned in the last three months, then pay that. Just repeat that pattern each time you have to pay estimated taxes.

It’s pretty much impossible to do this perfectly because of uncertainty in your income for the rest of the year, but the IRS actually gives quite a bit of leeway in doing this provided you’re making a reasonable attempt at doing so.

Not paying those quarterly estimates will do nothing more than ensure that you have to pay extra fees and interest when you do file your taxes, so your best approach is to just give it your best possible shot.

Q2: Graduation gift
It seems so meaningless to put $20 inside of a card and give it to a graduate. What does that $20 even mean? They forget about it before the ink is dry on the thank you note.
- Barry

If you don’t feel as though your gift has meaning, seek out something that does have meaning. There are many, many things you can give as a graduation gift. It does not have to be cash.

If you want a gift to have meaning, the best route is to put some serious thought into the gift, pick something that would actually mean something to the recipient, and include a handwritten note explaining it.

Virtually anyone with a thoughtful bone in their body would appreciate that type of thoughtful gift. The challenge is that it doesn’t come ready-made. It requires thought and effort on your part, which is what creates the meaningfulness of the gift.

Q3: Never wanting retirement
I love my job and I fully intend to keep doing it until I can no longer do it. If I am not functionally capable of doing anything of value, I don’t want to live. I know enough of myself to know that I would quickly become massively depressed and would probably not live much longer beyond that point as my motivation to thrive would be gone.

I don’t know why I would ever save for retirement. Why should I be socking away money for that situation?
- Adam

Picture this scenario: you’re sixty eight and your company decides that they no longer require your services. They give you a retirement party and a golden watch. What do you do then? You’re still of able body and mind but your employment window is likely closed. How do you make it?

If you save for retirement now, all you’re doing is creating a nice insurance policy against that. If it turns out you don’t need it, use your retirement savings for travel or whatever else you might want to do in your sixties and seventies and beyond when you’re not in the office.

It is never a bad idea to have money in the bank to protect you against the unknown.

Q4: Why buy a premium car?
Most of the time, when you pay extra money for a high-end version of something, I understand what you’re getting for it. When you buy a high-end car, though, I don’t really understand what you get. The reliability data on many of the most expensive cars is pretty bad, as is the fuel economy (except for something like a Tesla I suppose). The interiors are really nice but still it’s just something that takes you where you want to go. Why does someone pay $100,000 or more for a car?
- Edward

For some, driving a car with a certain label on it can make them feel more empowered and confident, and there are some people who are quite wowed by an expensive car. The interior is usually pretty nice. Many expensive cars really accelerate beautifully when you’re driving them.

But is that worth an $80,000 premium? For me, it’s not worth it at all.

I think it has a lot to do with what you value about a car. If it’s just something to convey you from one place to another, then a lot of those elements are pretty secondary and not worth paying a lot for.

In my eyes, it’s no different than asking someone why they wear a necklace with a bunch of precious gems in it. There’s a lot of money invested into an object that looks good and potentially boosts the confidence of the wearer, but what value is actually there? How does that necklace improve your day to day life?

Q5: Prenupital agreement
I am about to marry someone who has a net worth of roughly fifty times my own. When I discovered it, I was shocked because he didn’t seem rich at all. He has asked me to sign a prenupital agreement that states exactly what I would receive in the event of the end of our marriage. I am fine with the terms of it but I feel almost insulted by it, as though he expects the marriage to end down the road and as though I’m just a passing fancy. What do you think?
- Darcy

A prenupital agreement is kind of a “worst case scenario” protection, not too different than an insurance policy, really. My perception of such an agreement is that it’s usually just protection against a marriage turning bad, but that doesn’t mean that anyone involved wants the marriage to become bad.

Reverse the situation here. Let’s say you had worked very hard to build a net worth that was fifty times the person you were about to marry. Although you deeply love this person and want to spend the rest of your life with that person, the reality is that a lot of marriages that begin with the best of intentions end in divorce. Do you want to lose a significant chunk of that net worth you had worked so hard to build in that scenario?

If you’re fine with the terms, sign it and forget about it. You might want to have a lawyer check it over, just to be sure. If you’re troubled by it, ask yourself this: do you consider someone who buys life insurance to be a person with a death wish?

Q6: Road trip dining
I really enjoyed your recent post about saving money on commutes and I wanted your thoughts on saving money on another driving cost.

About once a month, I make a five hour road trip with my two children. I usually pick them up after school and we get to our destination about 10 PM or so and then we drive back in a few days. On the trip, we usually eat a meal and also usually eat another snack, too.

This cost really adds up over the course of a year. What can I do to trim this back?
- Adrienne

Sarah and I actually do something similar to this pretty often, as our children’s grandparents all live about four hours away from us. When we visit them for a weekend, it goes a lot like the trip you describe.

Our best solution is to just pack a cooler in advance of leaving with our meals in it. In the morning before our trip, we’ll prepare a picnic – sandwiches, finger-friendly sides, and so on – and put everything that needs to be chilled in the refrigerator in one place and put everything else in a canvas bag. When we get home and do our final packing, we dump some ice in a cooler along with the things that need to be chilled. Along the way, that’s our dinner.

Q7: Low interest and minimum payments
How low should an interest rate be before I’m happy just making minimum payments on it? I have a 0.0% debt that will never adjust along with a 2.9% interest debt that will never adjust. Should I be paying anything beyond the minimum on these?
- Walt

With the 0.0% interest debt, I wouldn’t pay anything more than the minimum. Instead, what I would do is set up an interest-bearing checking account at an online bank. I’d then set up a monthly recurring transfer from your current checking into that new checking account that’s equal to just a bit more than your monthly payment – probably rounded up to the nearest $10. Then, I’d set up an automatic bill payment from that new account to your lender that recurs each month for your minimum payment. When your loan is paid off, you’ll have some cash built up in that account.

As for the 2.9% debt, it really depends on what kinds of interest rates and investment returns you can easily get with your money. Five years ago, I would have told you to put your money in a high-interest savings account and do much the same thing as above, because such accounts were earning much more than 2.9%. Today, that’s not the case.

Even so, with ultra-low interest rates below 3%, I would probably lean toward paying the minimum payment provided you were also saving and investing elsewhere. If you’re just making minimum payments and then also struggling to save anything at all, any extra payment you made on that debt would be a positive.

Q8: Does college choice matter?
My daughter is just finishing her junior year in high school and we’re working through the process of figuring out which school to attend. The question I have that no one ever seems to give us a straight answer on is how important the undergraduate school is. Does it matter that much whether someone goes to a state university or a private school or even a community college? How much does it matter?
- Joan

My honest take is that it matters some, but what matters more is getting strong grades and filling out your resume with other achievements, internships, and so on.

Obviously, I think an employer is going to pay more attention to an undergraduate from an Ivy League school than someone who went to a community college, but I think the differences between the institutions in the middle of that sandwich really aren’t all that big. If you’re comparing one state university to another and neither of them are really exceptional ones, it’s probably not going to make much difference at all.

Your daughter’s focus should be on seeking out any and all extra opportunities related to her major and to leadership and personal growth opportunities. Those types of resume boosters do make a difference when hiring. It shows that the person is in this for more than just a degree and is willing to work very hard.

Q9: Interest rate first?
I have two loans outstanding. One is a $1,000 loan with a 8.9% interest rate. The other one is a $22,000 loan with a 9.9% interest rate. Which one should I pay off first?
- Jenny

You can make a good argument either way.

If the goal is to minimize the total amont you’re going to pay over the course of the next several years, you should start on the $22,000 loan. Making extra payments on the highest interest loan is always the best route to minimizing the total interest you’ll pay. In this case, the difference isn’t going to be too much, but it will be measurable.

If the goal is to minimize your monthly bills as fast as you can, you should start on the small loan. You’ll eliminate it pretty quickly and find yourself with one less monthly bill to worry about, which might be very helpful if you have uncertain income and employment in the future.

Given the very small size of the smaller loan and the very small difference in interest rates, I’d probably pay off the small one first to improve my monthly cash flow. If it were much larger or the interest rate were much lower, I wouldn’t bother.

Q10: Student loan question
How much extra should a college student take out on their student loans in order to cover living expenses and books? The student loan I have lets us take out a lot more than our tuition to cover those extra expenses, but doing that makes for a very big student loan after graduation.
- Jeff

The answer to this isn’t the same for everyone. It really depends on what your own expenses are and whether you’re earning any income to cover those expenses.

Ideally, as a college student, you should be doing everything in your power to minimize your expenses at the very least. Many students work to earn additional income.

If I were you, I’d probably live in the dorms for the first year and take out just enough in loans to cover all of it. If you want spending money beyond that, I’d find a job (preferably an on-campus one).

Got any questions? The best way to ask is to email me – trent at thesimpledollar dot com. 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 many, many questions per week, so I may not necessarily be able to answer yours.

The post Reader Mailbag: Graduation Season appeared first on The Simple Dollar.

The problem is that when I go into a retailer without a specific purchase in mind but with an intent to buy something, I’ll usually end up buying something on the spur of the moment – or two or three things.

The last time I was in that store, for example, I wound up buying three books. When I walked in there, I didn’t actually have a title in mind that I wanted to buy. Instead, I was influenced by the store itself when I made those purchases.

(Thankfully, I had budgeted for this. I was anticipating some “spontaneous buying” on that day, so I budgeted that much cash in my wallet for just that purpose.)

Shopping costs you money. Shopping without a very specific purpose really costs you money.

If you want to save money on every single situation where you’re opening your wallet for an item, there’s a very simple rule to follow. Make your buying decision before you ever enter the store.

If you’re buying food, make a grocery list with as much detail as possible before you go there. Use the store flyer to make your grocery list so that it accounts for the sales. That way, you’re making as few decisions as possible when you’re actually in the store.

If you’re buying a car, do your homework on car models before you ever go on the lot. Know what features you want. Use websites to figure out what cars they have on the lot and research those models. Again, that way, you’re not making decisions while on the lot.

If you’re buying a book at Amazon.com, know what book you’re shopping for before you ever go on the site. Don’t use a shopping site as a recommendation tool – instead, only go there when the only decision left to make is whether to click the “Add to cart” button.

Why should you do things this way? Whenever you allow yourself to make decisions on the retailer’s home turf, you’re allowing that retailer to add extra information to your decision-making process. That information that they give you is going to be engineered almost entirely to convince you to buy the item that the retailer wants you to buy, which is usually the one that makes them the most money.

For example, if you go to an electronics store with the vague notion that you want to buy a camera, you’re going to be inundated with options. You’ll be facing a ton of information without context and, to some extent, without reliability. Are these features you really care about? Are you able to actually evaluate things like image quality or battery life or reliability? Unfortunately, no, you’re not.

Instead, you’re going to get information about the features that the store wants you to know about. A salesman will probably “help” you, in that the “help” mostly involves convincing you to buy now rather than later.

Walking into a retailer or visiting a retail website without your decision already made means that you are going to be basing your decision on a set of information that the retailer gives to you. This is usually not the same set of information that will help you actually make the best purchase. If you base the decision-making process on the information provided by the retailer, you’re using a subset of information that’s not going to push you toward the best option for you.

I use one of two options whenever I visit a store of any kind.

One, I have a very specific item or list of items that I want and have already decided on. I’ve already researched the items in advance and made up my mind what I want to buy before I ever set foot in the store. That way, when I’m in the store, I am not making decisions, thus the decision-making process isn’t being influenced by the retailer.

Two, I have a strict spending allowance before I ever go in the door. That money is usually money I intended to spend frivolously and it comes out of my personal allowance for hobby spending. In this case, I’m basically saying that it’s fine for a retailer to influence my spending choices.

Control your decision-making process and you control your money.

The post The Buying Decision appeared first on The Simple Dollar.

One of the big challenges, particularly for people first starting out, is to see the connection between frugality and wealth. Frugality as a sustained and natural habit leads directly to wealth, but that path is sometimes hard to see.

So, let’s walk through this, step by step. Let’s look at three pretty typical frugal changes a person might make.

First, you make the choice to eat one more meal at home per week. You replace a $10 meal eaten at a restaurant with a $2 meal prepared at home and you stick with that forever – let’s say, fifty weeks a year. This is a pretty big change.

Second, you replace all of the light bulbs in your home with energy efficient ones over the next month or so. You have 30 light sockets in your home, the average socket is on for four hours a day, and you’ve switched from 75 watt bulbs to 15 watt bulbs, saving you 60 watts. This is also a reasonably big change.

Third, you join a free ultimate Frisbee league in your town that’s sponsored by the parks and recreation association, which eats up two weeknights with free activities. On those nights, you would have been staying at home with 10 light bulbs on and watching television for two hours, but instead you walk to the park after turning all of that stuff off. This is a pretty small change, but we want one of those for comparison’s sake.

The first step is to calculate what you actually save per month and per year by these changes.

With the choice to eat a meal at home each week, you’re saving $8 per week over 50 weeks, which adds up to $400 per year. Per month, you simply divide that by twelve, giving you $33.33 per month.

With the choice to replace your light bulbs in a typical usage situation, we know that energy companies charge $0.12 per kilowatt hour on average. You’re saving sixty watts times thirty sockets times four hours, giving you 7,200 watt-hours per day in energy savings, or 7.2 kilowatt hours. At $0.12 per kilowatt hour, that’s a daily savings of $0.864, which adds up to $26.28 per month and $315.36 per year.

With the free ultimate Frisbee league, you’re turning off your lights, your television, and your cable box for two additional hours per day. Let’s say your television uses 80 watts, your cable box uses 45 watts, and your light bulbs are using fifteen watts each, as described above. That’s 140 watts, times two hours, times twice a week, times 50 weeks a year, giving you 28,000 watts per year. At a rate of $0.12 per kilowatt hour, that adds up to $3.36 per year, or $0.28 per month.

So, with just these three changes, we save $59.89 per month – or $718.68 annually.

If you’re astute enough, you can put that $718.68 into an investment account each year so that it will earn a 7% return each year. You start doing this at age 25. At age 65, you have $81,100.66.

Yes, switching light bulbs, eating one meal at home a week, and finding a free outside activity to do a couple nights a week – if you take the savings from these things and invest it – will eventually save you over $80,000.

There are two big tricks to really making this work.

First, find frugal tactics that are actually sustainable in your life. For me, these are either one-off things such as changing light bulbs or things that I try out and find that they integrate smoothly into my life. If something is a hassle or produces results I don’t like, I abandon that idea and shrug it off as something I tried that just didn’t work out.

Second, figure out what they’re saving you over your previous choices and save that difference. If you find you made a shift that saves you $5 a month but it’s completely sustainable, then have your bank automatically move $5 each month from your checking to your savings account. One good way to do this is to just have one weekly transfer that’s about a quarter of what you think you’re saving each month thanks to your frugal choices. Keep track of all of the changes on a list somewhere along with how much they’re saving you. Remember, even the little ones really add up over time.

Then, once a year or so, move that saved money into some form of investment. What you choose to do with that is up to you, but you should figure out what your goal is in relation to that money and invest accordingly.

The post How Does Frugality Translate Into Wealth? appeared first on The Simple Dollar.

Like many people in that situation, we went out and bought a larger home – a four bedroom affair. It gave us a lot more room for our family to grow – at least in theory.

What’s actually happened? Our three children enjoy sharing a single bedroom. One of the bedrooms sits largely empty as a guest bedroom. Our ample closet space mostly just stores stuff that we don’t really need to keep and we could sell off. We have a living room and a family room without any real reason to have two separate rooms for that.

While our original apartment might have been slightly on the small side, we really didn’t need a house nearly as big as the one we have. We have a lot of excess space that’s mostly used either to store stuff or to sit empty until the rare occasion comes when we might use it.

In our day to day lives, we mostly just use two bedrooms, the combination kitchen and dining room, and the living room. We use the family room a bit, but we don’t do anything in there that wouldn’t work just fine in the living room. One of the bedrooms is unused, and the other is an office that could work in the corner of the living room. We have a bedroom we basically never use and two bathrooms that are rarely used, too.

We could easily be very happy with 60% of our square footage.

That doesn’t mean I want to downgrade. After all, our house is fully paid for and it’s in an area where property values are inching up steadily even through the housing collapse. What it does mean is that our perception of what kind of house we needed was drastically overinflated before we actually made the purchase.

Here’s the truth: a big house seems like a great idea, particularly when you have a family, but an awful lot of it just winds up being storage space for stuff you rarely use. It’s effectively an overpriced storage unit.

So, what would I do if I had it to do all over again?

For starters, I’d buy a home substantially smaller than what I thought we needed. We did not need to triple the square footage of our apartment. We needed to perhaps increase it by 50% or maybe, on the outside edge, double it. Everything beyond that has essentially become storage space.

Why do it this way? A smaller home means a smaller mortgage, which means smaller payments and much smaller professional stress to maintain a certain income level.

How can you assess what you actually need? Rolling back the clock, I should have simply made a list of our needs and not our wants.

It can be hard to distinguish between the two. A technique that really works well for me is listing every reason I can possibly think of for the move, giving the list some time to rest, then going through it and eliminating those that are clearly “wants.”

That doesn’t mean you should buy a house because it has attributes that you want, but if you focus instead on houses that just meet the things you need, you’ll be paying far less and still likely getting some of the things that you want.

The result? You’re happy and your wallet is definitely happy, too, as is your stress level.

The post The House That Is Too Small appeared first on The Simple Dollar.

1. Keith Ferrazzi on poverty

“Poverty, I realized, wasn’t only a lack of financial resources; it was isolation from the kind of people that could help you make more of yourself.” – Keith Ferrazzi

This is one of society’s greatest challenges. It takes someone really exceptional to escape an impoverished childhood.

2. Maria Bezaitis on the surprising need for strangeness

It isn’t the ordinary and mundane that shapes our lives. It’s the unusual.

3. Cornelia Funke on fear

“Fear kills everything. Your mind, your heart, your imagination.” – Cornelia Funke

It is a true individual triumph to overcome something you’re afraid of and see it for what it truly is.

4. Sir Ken Robinson on changing educational paradigms

Education today was designed for an industrial economy. Today, we have an information economy. How do we cross that bridge?

5. Thomas Carlyle on idleness

“In idleness there is a perpetual despair.” – Thomas Carlyle

One of the few things I fear is sitting still.

6. Beth Fantaskey on fear

“Fear is the worst kind of grave, because it buries one alive.” – Beth Fantaskey

The problem with fear is that it bends so many of the choices you make in life. When you’re afraid of something, it bends all choices you make related to that fear, altering your life profoundly.

7. John Perkins on economic hitmen

It’s an economic model that keeps the rich rich and keeps the poor poor.

8. Thomas Harms on answers

“Saying ‘I don’t know’ doesn’t mean you stop searching for an answer. A lot of people misunderstand that bit. Accepting your own bounds without shame or guilt allows you to see more clearly when your first urge may be to deny your ignorance to yourself or others, and instead admit your limitations and seek the solution from someone or somewhere.” – Thomas Harms

We are all limited. Saying that you don’t know something isn’t a sign of weakness. It is a sign of being a human.

9. Tony Robbins on why we do what we do

He really is the master of motivational speaking, and this is a prime example.

10. Aldo Leopold on the land around us

“We abuse land because we regard it as a commodity belonging to us. When we see land as a community to which we belong, we may begin to use it with love and respect.” – Aldo Leopold

What right do I have to say I truly own the land that I hold a deed for? It was here long before humans appeared on this planet.

The post Ten Pieces of Inspiration #126 appeared first on The Simple Dollar.

That perception is a complete myth. Yes, you will be paying more in taxes if you make more and, yes, you’ll likely be paying a higher percentage of your income in taxes. However, your income will go up far faster than your tax bill will.

In order to keep the picture as clear as possible, I’m going to stick with federal income tax in this example. I’m going to use this calculator to run through a few scenarios.

Let’s say that you’re married filing jointly and your gross income is $40,000 per year. You have no investment income, no IRA contributions, two personal exemptions, no dependent children, and you’re taking the standard deduction – in other words, a pretty typical situation for a newly married couple living in an apartment without children.

In that situation, the estimated federal income tax liability will be approximately $2,108. Your average tax rate is 5.3% and your marginal tax rate is 15.0%. You’ll have $37,892 left over.

Now, what happens if you double that income? We can imagine that one person in the family had a job making $40,000 a year, but then the other person gets a $40,000 a year job. What happens then.

Now, you’re married filing jointly and your gross income is $80,000 per year. You have no investment income, no IRA contributions, two personal exemptions, no dependent children, and you’re taking the standard deduction – in other words, the same situation as before, just with more income.

In this situation, the estimated federal income tax liability will be approximately $8,108. Your average tax rate is 10.1% and your marginal tax rate is 15.0%. You’ll have $71,892 left over. That $40,000 bump in income only increases your federal taxes by $6,000.

Of course, I’m leaving out other expenses, such as FICA taxes and state taxes, but the story remains the same – more income means more money for you.

What happens if both people in the marriage find better jobs and double their income? They’ve got to be paying a lot more in taxes now, right?

Now, you’re married filing jointly and your gross income is $160,000 per year. You have no investment income, no IRA contributions, two personal exemptions, no dependent children, and you’re taking the standard deduction – in other words, the same situation as before, just with even more income.

In this situation, the estimated federal income tax liability will be approximately $26,858. Your average tax rate is 16.8% and your marginal tax rate is 25.0%. You’ll have $133,142 left over. That $80,000 bump in income only increases your federal taxes by $18,750.

What if we double it yet again? Surely, the rich must be getting eaten alive by this!

If you’re making $320,000 a year in the scenario described above, your estimated federal income tax liability will be approximately $75,725. Your average tax rate is 23.7% and your marginal tax rate is 33.0%. You’ll have $244,275 left over. That $160,000 bump in income only increases your federal taxes by $48,867.

Here’s the truth: the idea that making more money is pointless because Uncle Sam will take it all is absolutely false. It’s a fantasy that people use as a crutch to excuse themselves from working hard to earn more money.

The post The Fear of Taxes Shouldn’t Keep You from Earning More appeared first on The Simple Dollar.

Now, he has a vocabulary of several thousand sight words, enabling him to read simple chapter books with scarcely a pause. He can read them aloud, of course, but he also is a practitioner of sustained silent reading.

The effort he has put into mastering reading has earned several compliments from both Sarah and myself. We are proud of the effort he has taken in learning to read – the results are just the fruits of that effort. So, we make sure to focus our compliments on the effort he’s taken: the time spent working on sheets full of sight words and the time spent practicing his reading by reading aloud whether anyone’s listening or not.

Our general rule is that parental compliments and encouragement focus on effort and energy invested in preparing, not on the results. The good feelings that come from results are internal – they’ll feel good anyway. We’d far rather acknowledge and reinforce the path of hard work and effort that it takes to get to that point.

It’s not just for parents, either.

Compliments are like a stack of money that never runs out.
It doesn’t cost you anything to give a compliment to someone else. Almost always, when you give them a compliment, you’ve just made that person’s day better at no cost to yourself.

Also, you’ve usually made them perceive you in a better light, too, as people are attracted to those who seem to like them. It would take a pretty unusual situation for someone to think less of a person issuing them a brief compliment.

Even better, a well-placed compliment reinforces behavior that you consider to be a positive thing. If you give someone a compliment about something they’re doing, they’re more likely to keep along that path because they now know that others see it and value it. It helps them to reinforce a routine, one that’s likely a positive one.

A compliment is something that rewards positive behavior, brings about a distinct positive result, and can be done over and over again. It really is like a bottomless stack of money, one you can use whenever you’re out in public to brighten the lives of everyone.

Compliment the things you want to see in the world.
If your compliments help to reinforce a routine in others, then it makes perfect sense to use your compliments wisely and dole them out when you see things in the world that you’d like to see more of.

If you see someone being kind to someone else, give them a compliment. When you see someone making a smart frugal choice, give them a compliment. When you see someone being a good parent, give them a compliment. When you see someone putting forth an effort to achieve something in their lives, give them a compliment.

The more you compliment the things you want to see in the world, the more those behaviors are reinforced in the lives of people around you, whether it’s a family member or a friend or just someone you happen to bump into in the community.

Save the acid for another day.
Many people seem to enjoy handing out acidic criticisms, but they act in almost the opposite way. They tend to send the other person’s behavior in completely unpredictable directions, plus they cause the person you levy that acidic criticism towards to dislike you.

Virtually nothing is gained by handing out unwanted criticism other than feeding your own internal negativity.

If you feel negative toward someone else’s behavior, shouting out criticism might cause a response, but it’s often not going to be a response you’re pleased with. Avoid it, and save your energy for compliments.

The end result is a better world at no cost to you.
The most amazing thing about a compliment is that it doesn’t cost you a dime, but it brings about real change in the world. One compliment might not change anything, nor a dozen, but a steady stream of well-applied compliments does bring about positive results in the people around you. They feel better about themselves. They work harder in positive directions. They value you more.

If you want a better world to live in, the easiest and least expensive way to start is to compliment the good behaviors you want to see out there – frugal living, kindness to others, hard work – and keep your negative comments to yourself, because negativity often moves in unexpected and usually undesired directions. It costs you nothing other than a moment of your time, but the ramifications often go far beyond what you see in that moment.

The post The Value of Compliments and Positive Reinforcement appeared first on The Simple Dollar.

“Oh, I should be spending less money,” says someone waiting in line for a large coffee and a breakfast pastry at a local coffee shop.

“Oh, I should be spending more time with the kids,” texts someone to their sister while their kids are out in the yard and they’re camped out in a comfortable chair.

“Oh, I should be cleaning the house,” thinks someone as they change the channel.

All of us do this. It’s not a unique phenomenon.

Quite often, the path of least resistance is the one we choose to follow. It’s far easier to snag a convenient meal when we’re hungry than to search for a better option. It’s far easier to camp out in a comfortable chair after a long day at work than to take on another challenge. It’s far easier to just keep watching television than to jump up and take on a personal task.

There’s nothing wrong with doing those things, either. The problem comes in when we pay lip service to those things we know we should be doing, but we don’t bother to actually do them. This fails us in two ways.

One, we don’t actually achieve the thing we think we should be doing. Instead of spending less money, we spend more. Instead of playing with the kids, we vegetate. Instead of cleaning the house, we watch “America’s Next Top Model.”

Two, we reinforce a negative pattern that undermines that thing we “should” be doing. We reinforce a pattern of eating that expensive breakfast. We establish a routine of vegetating after work while the kids play. We begin to accept a messier house and a greater dose of television in our routine.

Lip service is more than just words. Here’s how we break out of it.

When you have a notion of something you ought to be doing, push yourself to go ahead and take care of it. Recognize that you’re trying to put off something genuinely important, then stand up and take care of it. Don’t even give yourself a second to try to talk yourself out of it. Get up and do it.

At the end of the day, reflect on those times you made the “better” choice. When you look back, you’ll feel really good about the things you achieved that day. You’ll tie some strong positive feelings to making that better choice.

The result of that reflection is that the next time that choice comes up, the balance of what seems like the better decision will have shifted a little bit. You’ll feel more inclined to make the “good” choice and not just give it lip service.

Remember, your actions define what you value, not your words. Whenever you find yourself proclaiming one thing with your words but another thing with your actions, you’re betraying yourself in some fashion. Make them match – make your actions live up to your positive words – and you’ll feel incredibly good about the direction your life is taking, not just today, but over the long course of life.

The post Lip Service appeared first on The Simple Dollar.

I’m always amazed how I can go through an entire winter without even having a hint of a cold, but when spring truly blooms, I end up feeling miserable, with a sore throat and a runny nose.

I know that it’s just allergies because it happens every spring on the dot. As soon as the nice weather starts, I can wait about four or five days and I’ll wake up with a sore throat and a runny nose that persists for a couple of weeks and then vanishes.

It’s the price I pay for the beauty of spring.

Q1: Mortgage tax deduction calculator
My fiance and I are buying our first home. We rent in NJ just outside Philadelphia and we’re considering the city or a NJ suburb. I grew up in FL with only federal income tax so all the new taxes are confusing me, making it hard to compare apples to apples. We’re 99% sure to get a 30-yr fixed mortgage around 3.5% (pre-qualified). I know you can deduct mortgage interest (pretty much the first 10 years are interest from what my mortgage broker brother and accountant sister-in-law tell us) and just recently found out we can deduct property taxes! Here are my scenarios:

1. Buy a condo or townhome in Philadelphia. Here we would have state income and city income tax. Property taxes will probably range anywhere from $150 (new construction tax abatement) to just around $2000. Philadelphia is also in the process of reassessing all property and chances are taxes, except for the abatements, will go up about $1000 – $1500. We can look on a website to know the final figure.

2. Buy a single family home in Camden County, NJ, known for having some of the highest property taxes in the country. Taxes could range anywhere from $7000-$11,000, on average. Here we would have state income tax but no city tax, unless I get a job in Philadelphia, then I would have to pay the Philly tax regardless.

My question is: How do you go about estimating how the deductions will impact your taxes? Fiance makes about $56k a year and for now he’s taking the standard deduction. We plan to marry this year but I don’t know how that affects taxes. I could secure a job making anywhere from $35k to $55k.
- Emily

You have several different layers of taxes to worry about here. First, of course, there’s income tax deductions on a federal and state level. You can calculate your federal tax deduction here. For state and local taxes, you’ll have to seek forms in the specific areas where you’re considering moving to.

The same goes for property taxes. You’d have to check with the various tax assessment websites to try to get a bead on the property taxes for the specific properties you’re looking at.

Your best route is to assemble a spreadsheet for all of these things. Have a column for each property you’re considering and a row for each different kind of tax. Almost always, property taxes and mortgage interest are deductible from your federal taxes, and they’re often deductible from your state income tax as well. However, it’s not just pure savings – in order to get the interest deduction, you’ll usually have to forego your standard deduction.

Q2: Private school worth it?
My wife and I live in an area with poor public schooling. We are trying to figure out if private school is a worthwhile investment for us or whether things will work with after school supplements which are far less expensive. Do you have any insights? Is this something you’ve thought about for your own children?
- Brenda

I’m lucky to live in an area with a very good public school system, so I haven’t had to worry about this.

If I were in your shoes, it would really come down to my financial situation above all else. Would the cost of private school put my family in a genuinely precarious financial position? Or is it something that will work if we cut back on some of the non-essentials in life?

You would also want to make sure that the private school you’re looking at actually reflected your values. One private school in our area revolves around a curriculum that Sarah and I would be uncomfortable with, for example.

Q3: Advice on inexpensive business clothes
I worked for years as a prof in [a well-known university]. This is a group of very well dressed people, mostly suits, even for women. It took me a while to figure out what I can modify to add funk to my wardrobe. Now, it’s not a problem at all anymore. Here is some advice:

- Learn to do small sewing repairs: buttons, hems, fixing an undone seam. When you get better, you can take in pants at the waist (I have a shape that needs this). This gives you a much larger choice of clothing.
- Sandra

Sometimes, a reader will drop a great email full of good tips on me. Although it’s not a question, I certainly feel like it deserves to be shared.

Sandra’s email is exactly that. If you’re struggling to maintain a business wardrobe because of the cost, those techniques will save you some serious coin.

The techniques work pretty well for men, too (other than the suggestion for pumps).

Q4: Is home ownership necessary?
My family is pushing us to buy a home, but we really don’t think it’s the best move for us right now. We’ve looked at a few in our area and they all seem very expensive. We pay less in rent each month than the mortgage payments would be and we aren’t paying for property taxes or insurance or anything. Are we right here?
- Andrew

You are, with a few assumptions.

The big question is whether you are actually saving money each month. Yes, your rent might be lower than the monthly cost of home ownership, but it makes no difference if you’re just spending that money on unnecessary stuff. If the money you’re saving from renting is just going to pay for eating out every night, you’re not really ahead.

For renting to actually beat out home ownership, you should be saving/investing the difference between your monthly rent and the total monthly cost of owning a similar home. That way, you’re actually gaining far more in the bank each month than you would ever be gaining in home equity.

Q5: Fantasy writing progress
A while back you mentioned that as an experiment that you’d create a blog that would oultine your experiences writing a fantasy novel (except you’re not going to mention it on TSD). Is this something you still work on a regular basis? If so, how is that doing, do you have a following?
- Sean

I am working on a fantasy novel. I have a first draft I’m happy with that’s largely complete. I have shared large portions of it with test readers. Portions of it are out there anonymously on the internet.

I am currently searching for a literary agent to help me sell the thing to publishers. If I am unsuccessful in that search, I’ll consider self-publishing it.

If I do reach a publishing arrangement, The Simple Dollar will be one of the first places I talk about it.

Q6: Learning about neighbors
My wife and I are looking at several houses that we like. For us, the big deciding factor is the neighborhoods. What will the neighbors be like? What kind of place is the neighborhood? How do we figure that out?
- Adam

We were in this same boat when we were shopping for houses. Our solution was to simply talk to the neighbors of the houses we were interested in. If we saw neighbors around when we looked at a house, we introduced ourselves, chatted, and asked about the neighborhood.

We drove around the neighborhoods at different times of the day, even at night, to assess what levels of activity and noise we could see. Were people out doing yard work? Were there children playing? Was everyone in their homes? Was it noisy at night?

Also, we took into consideration how well kept all of the properties were. Were the properties all reasonably well maintained? Or were there a lot of messy properties?

Those clues helped us figure out which areas were better for families and which ones weren’t.

Q7: Expatriate estate worries
I am from the US but I’ve lived in both Europe and Hong Kong in the past couple of years. I figured that I needed to compile an estate plan due to the number of bank/pension accounts I have in these different countries. I went to HSBC in Hong Kong yesterday and they said that my accounts would have to go through a 6 month probate process if I didn’t have a will but things could be shortened to a few months if I had a will and/or trust. I’m trying to determine the best way for my loved ones to control my assets if I were to pass away prematurely. I could just provide them with a sheet with all of my login information/passwords and then they could transfer funds online to the US after I’m gone to mitigate the hassle of dealing with the Hong Kong or UK governments. If I go down this route I wouldn’t want them to know the amounts in each account or the login information until I pass away. I could also get a trust drawn up but I’m not sure if I would need separate trusts drawn up in each country where I have assets. What is your suggestion for dealing with a situation such as mine?
- Angie

Giving them all a sheet with your login information would get them the money the fastest but would also result in the messiest legal situation for them. I would probably skip that unless you want to also hand them all a legal headache.

If I were you, I’d probably keep all of my funds in the country that I anticipate living in for the longest time over the next several years. I would also probably contact an estate lawyer who can help you get all of this set up the right way.

Regardless, it will probably be most convenient for you to have all of your funds in one place or at least one country, then transfer those funds to other countries as needed. This is assuming, of course, that you’re not wealthy enough to have your own full-time money manager who can handle all of this for you.

Q8: College summers
My oldest child has an unpaid internship for this summer. It’s not entirely unpaid as they are providing living quarters and food. It seems to be related to his career path and he’s excited. My concern is that he’s earning nothing this summer, as I figured he’d work this summer to earn tuition.
- Donald

It really depends on the internship. Some unpaid internships look great on a resume when a person graduates, while other internships are largely useless.

If this is truly an internship that matches his chosen career path, it’s probably worth it in terms of making himself marketable in his field upon graduating.

If I were you, I’d research the details of this internship and figure out whether it’s actually a valuable thing or not. It’s really hard to tell from the bit you’ve written here. I had what amounted to internships in college and those were usually paid via a tiny stipend.

Q9: Big changes needed
My problem is personal change. I agree with everything you say, but I don’t even know where to begin. Every day I think ok, tomorrow I will make changes; stop wasting money on $5 lattes, stop buying items I don’t need and so forth. I have been pretty good about talking myself out of items, and I’ve cut back from a daily $5 drink to a weekly. But there’s still so much waste.

We made $164k last year combined and saved only 2% of my husbands earnings in a 401k. No other money was saved! We spent $50k traveling, took a second honeymoon to Bora Bora, took the kids to California 6 times, went to Ohio and splurged on my husbands “poor” family, went to Vegas for some shows. We did a lot of traveling.

But it makes me sick we don’t have the $7000 for the IRS. We live paycheck to paycheck and as I read your articles, it occurs to me, we make a lot more than the “average” American family. We have a modest house based on our income, we owe $178k. Only my Honda Pilot is financed at 1.9% but it’s still $507 a mo. Our house bills aren’t bad. I could see our dish network bill of $90mo is a waste since all we watch is reruns or nonsense and now I wish we hadn’t committed to 2 years. We got it in Dec, prior to that we honestly hadn’t paid for cable in over 5yrs. But my husband and I had an insane impulse shop at Costco in December and bought not one, but 2 amazing giant flat screens, one for our family room and one for our room. We were always teased by friends for “doing so well” but having 1 older clunky TV set. So once we upgraded, well obviously we needed cable right? Wrong! The cancellation fee is insane so it seems like keeping it now would make more sense. Idk.

Anyway our only other big expense that could be cut is a $440 mo Kumon bill for our 2 kids tutoring. We feel public schools don’t provide enough and though this money isn’t tax deductible, it’s worth it. They’re much smarter, well I should say faster and more fluent, than their peers, and maybe even us, when it comes to math. But our monthly “bills” are only about $3500 and Idk where the rest goes? It seems there’s always a birthday party, baby shower, bridal shower etc; heck there were 5 total just this month! But even spending between $30-50 each, that doesn’t account for the thousands that disappear.

When it comes to food I think we waste a lot of money. We eat out way too much, buy expensive meats & other foods; I spend an average of $400 a week at Costco then make a few trips to Frys or Whole Foods for specialty items midweek. There are 5 of us, my mom lives with us to nanny, saving us on childcare. A friend of mine recently hit by hard times found herself on food stamps and her family of 5 gets $605 from the state of AZ. It makes me wonder how I would manage on such a small amount but she’s doing fine. So I know not everyone must spend $1600 a month on food.

I would like to add aside from the Amex we have no credit card debt. We pay cash for everything. But we are major over-consumers. Obviously. I need serious help and just don’t know HOW to fix myself. My husband leaves it all up to me. He actually spends an allowance while at work and I kill the rest so it really is “all my fault.” 17 years of me deciding everything (yes since high school) and he still just hands over the paychecks and I do as I see fit. So I need the help!

Two weeks ago we was told that this fall he is to expect a major promotion which is salaried at $315k a year. I just took a full time position at $72,000 a year. We will be in a horrific tax bracket. But the scariest part is knowing that we could be living the same way! How can successful people be so stupid when it comes to money?

Just tell me exactly what to do, please! From day 1 tomorrow until I can be like you and Sarah. I’d appreciate ANYTHING you can offer, and I will continue to read your emails as financial gospel….it’s applying the knowledge that’s tricky.

Oh, and how do I explain it to my kids, ages 11 and 14? We just took our family, plus my mom, and a real nanny (to give my mom a break) to Hawaii for 9 days to celebrate our 14yr olds bday last month and spent $10k. So now our 11yr old expects that in June for his bday. He keeps talking about Costa Rica. How do I explain we are making changes meaning “Hey son, we love you as much as your sister, but here’s a playstation 3 instead?” How do I put a positive spin on that?
- Rebecca

It’s pretty easy for me to tell where the money goes each month. You spend $400 a week at Costco, then make another expensive grocery stop mid-week, likely jacking it up another $100. That’s at least $2,000 a month on food alone. You state that you also have $3,500 per month in additional bills – that, I assume, includes your mortgage, your child’s tutoring, and your utilities. So, between just those bills, you’re looking at $5,500 a month, which adds up to $66,000 per year. What about property taxes? What about income taxes? You just took a trip to Hawaii that cost $10,000 for your child’s birthday. You’re adding up very quickly to your pre-tax income here.

You need to sit down right now and figure out what it is you actually want. What is your goal here? You seem to realize that spending so much isn’t a good thing, but what would you do with the extra if you were spending, say, half as much each month? What would you do with $5,000 unspent each month? What kind of goals do you have?

At the very least, you should both be putting 10% of your income into retirement. That’s an immediate thing. Beyond that, you should strive to have no debt, because with that income level, you shouldn’t have any. You should also have a pretty good cash reserve in the bank in case of emergency.

Aside from that, it’s really all about what you want out of life. What I want, more than anything, is to simply leave behind the need to work for income as early in my life as possible. I do not want to be working until I’m 70. What is it that you want? Security? Children that are successful in adulthood? Your money should be working toward whatever it is that you most want from your life. It may be that you most want travel and other such amenities. If so, your financial planning should be all about making them as stable as possible.

Once you have a goal, it becomes much easier to attack the areas in your life where you’re overspending because then you have a focus.

Q10: Door-to-door salespeople
How do you handle door-to-door salespeople or religious people? I feel really rude just closing the door on them, but if you just let them talk they’re usually convincing.
- Adrienne

If I don’t recognize the person, I’ll usually just say, “Thank you, but I’m not interested,” and then I just close the door and walk away. I do that for pretty much everyone who might be considered a salesperson, and I don’t feel guilty about it in the least. They’re on my property without invitation, after all. If you wish, you can put up a “no solicitors” sign.

Sometimes, I’ll end up debating religion with missionaries. I have some knowledge of the teachings of some of the groups that go door-to-door for missionary work and I actually enjoy discussing things with them, though they have zero chance of recruiting me. I just enjoy the discussion.

If I know the person, I’ll listen. If it’s a child from the neighborhood trying to sell something on behalf of their youth group, I’ll usually buy an item.

Got any questions? The best way to ask is to email me – trent at thesimpledollar dot com. 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 many, many questions per week, so I may not necessarily be able to answer yours.

The post Reader Mailbag: Spring Allergies appeared first on The Simple Dollar.

They’ll serve a homemade meal that someone turns their nose up at because it’s not a prime cut. They’ll bring a thoughtful gift to a party only to find that everyone else paid out the nose for their shiny gifts. You’ll show up to an event and feel seriously under-dressed.

This actually happened to me recently. I was at a community dinner that accepted a freewill offering for a charity. There was a bucket at the start of the meal line. Since I wasn’t eating much, I felt perfectly fine putting in just a few dollars (most of the food was meat-oriented and I’m vegetarian). As I kept chatting with the person behind me, though, I noticed that he threw in a $20 bill, as did the person behind him… and the person behind him.

I felt cheap. In fact, I felt so bad about it that after the meal, I went and tossed another $10 in the freewill bucket.

Later on, though, I got rather upset with myself over feeling “cheap” and responding emotionally by throwing money at the problem. Going back and putting $10 more in the bucket was only necessary if I felt that helping that charity was a really worthwhile cause – and, honestly, I was more or less indifferent to the charity. I put in my initial $5 out of politeness.

Not too long ago, I felt cheap when we showed up to a potluck event and just brought a pretty ordinary salad. Other people brought amazing finger foods and other dishes, making our rather inexpensive side salad seem pretty ordinary. I felt bad about it during the event.

You know what? On the way home, I didn’t feel nearly as bad. Why? The host gave me back the bowl at the end of the event… and it was empty.

Whenever a social situation makes you feel “cheap” or “poor,” here are a few things to keep in mind.

First, the aspect that you’re fretting about is usually something that others don’t even notice – or, if they do, they don’t really care. Looking back on it, I don’t think anyone cared in the least how much I put into that charity bucket. I don’t think anyone at the party thought I was “cheap” or “poor” because of the dish we brought. What mattered in both cases is that I gave something and was actively participating.

If you think someone judges you as “poor” or “cheap” because of the dish you brought or the clothes you’re wearing or the car you’re driving, you’re putting your own thoughts into their heads. Almost always, those thoughts don’t even exist, and even if they do, they have relatively little impact on most of the people who would think them. Your stress is tied to a hypothetical bully that rarely shows his or her face.

Second, the reaction others have to what you consider to be a blunder might be positive. Our “cheap” salad was loved by the crowd, for example. Every bite of it vanished over the course of the evening.

Another example: I showed up to an event not too long ago woefully underdressed. Another person walked over to me not a minute after I arrived and said, “Whew, I wish I had worn something more like that. This suit is hot.” He then took off his jacket and held it over his arm, making us appear similarly dressed. Now, he might have simply been putting me at ease, but the situation did directly downplay my sense of having made a “cheap” social mistake.

Third, it doesn’t really matter what a random person on the street thinks of you. Does it matter what some guy on the street thinks of your old car? No. Does it matter what some bitter person thinks about the shirt you’re wearing? No.

The opinions that matter are the ones that are built out of things beyond dollars and cents. They’re built out of the person you are and the acts that you do, not the clothes you wear or the cars you buy or the salad you bring to a party.

Finally, it doesn’t take much extra effort to make inexpensive things seem quite classy. An ordinary salad looks amazing if presented well and made with fresh ingredients. An ordinary shirt works great in most situations if it fits you well and is ironed. An old car looks perfectly fine if it’s clean and well kept.

Respect the things that you have and those around you will respect them, too.

A sense of being “poor” or being “cheap” is just a state of mind. It comes from being self-conscious and worrying too much about what others think of you. Focus on doing good deeds and being friendly and any sense of being “cheap” fades quickly into the background.

The post Feeling “Cheap” or “Poor” appeared first on The Simple Dollar.

I don’t care what it is – the smell of cooking food is tremendously invigorating, at least for me. Nothing makes the mouth water quite like the smell of food approaching a finished state on a grill.

Teach Your Children Financial Independence to Preserve Your Retirement Retirement is so much easier if you’re not dumping thousands of dollars a year into the financial support of your adult children. When they’re young, the best thing you can do to avoid that future is to teach them well. (@ bible money matters)

Since When Is Paying Off Your Debts a Good Thing? This is a risky approach. Taking on personal debt in an effort to grow wealth is fraught with risk. (@ the financial blogger)

How Five Daily Habits Rocked My Financial World It’s all about establishing positive routines that work for you and don’t end up making you miserable. Routines need to make you feel empowered, not despondent. (@ get rich slowly)

Laundry Gadgets That Save Money I’ll personally vouch for the dryer balls. I can usually shave ten minutes off of a dryer load by sticking one of those balls in there, and that’s pure energy savings. (@ saving advice)

The certain shortcut Take the long way. (@ seth godin)

The post The Simple Dollar Weekly Roundup: Grilling Edition appeared first on The Simple Dollar.

In my original article, I lauded the flexible recipe as it enabled people to easily fit whatever ingredients were on sale into a simple casserole that would work for dinner. This meant you could truly pick up whatever was on sale, fit it into the “flexible casserole,” and it would reasonably work.

Here’s the original recipe, from page 625 of Complete Tightwad Gazette:

1 cup main ingredient (tuna, cubed chicken, turkey, ham, seafood, etc.)
1 cup second ingredient (thinly sliced celery, mushrooms, peas, chopped hard-boiled eggs, etc.)
1-2 cups starchy ingredient (thinly sliced potatoes, cooked noodles, cooked rice, etc.)
1 1/2 cups binder (cream sauce, sour cream, can of soup, etc.)
1/4 cup “goodie” (pimiento, olives, almonds, water chestnuts, etc.)
seasoning to taste
topping (cheese, bread crumbs, etc.)

That basic structure makes a lot of sense and some elements of it are quite healthy. The only parts that are really questionable in terms of health are the binder and the topping (the “goodie” could be questionable, too).

So, let’s see what we can do to make this recipe a bit healthier without sacrificing flavor or cost.

A healthy and cheap binder Most casserole recipes use a creamy soup as a binder, but quite often the element that makes them into an effective binder is usually corn starch, which is very calorie dense. So, what can you use instead?

One option is to use eggs. This will turn the casserole into more of an egg strata, which means it’s appropriate for any meal (including breakfast). Eggs are protein rich and add much less salt and fewer calories to whatever casserole you prepare.

Ground flaxseed (if you can find it for cheap) is another good binding agent to add to casseroles. This is more of a “sticky” binder than a “structure” binder like egg whites, but it will certainly do the trick. Almond flour also works, in my experience.

Another option that works well in some casseroles is simply mashed-up beans. They can function as a great binder in a “softer” casserole, especially when used in a small quantity. Don’t expect a highly firm casserole when using them, though.

A healthy and cheap topping The best solution here is to take an ordinary topping and make it healthier.

If you’re going to use cheese, for example, use a low-fat and low-sodium cheese and perhaps mix some dried (or fresh) herbs in with it so that you use a smaller amount of cheese to provide the covering you’d like without sacrificing flavor.

If you’re going to use bread crumbs, use whole wheat crumbs and also augment them with dried herbs.

Lower salt ingredients Choose low salt ingredients along the way. Many of us already get quite a lot of salt in our diets, so choosing low salt ingredients is an easy way to make a dish healthier.

So, what might you come up with if you did this in a healthier fashion?

Cheesy Breakfast Bake
1 cup cubed low-salt ham
1 cup mushrooms
1 cup shredded potatoes
1 1/2 cups egg whites
1/4 cup black olives
ground black pepper
1 ounce cheese tossed with tarragon

Just bake it at 350 F until the egg is cooked.

Light Lunch Salad
1 cup tuna
1/2 cup chopped hard-boiled eggs
1/2 cup finely sliced celery
1 cup cooked long grain brown rice
1 1/2 cups low fat mayonnaise
1/4 cup black olives
seasoning to taste

This can be served cold or even used on sandwiches.

Chicken Casserole
1 cup shredded cooked chicken
1 cup broccoli
1 1/2 cups cooked long grain brown rice
1 cup vegetable stock
1/2 cup ground flaxseed
2 ounces fat free cheese
ground black pepper

Mix thoroughly and bake at 350 F until the cheese is thoroughly melted and the broccoli is done.

Southwestern Casserole
1 cup cooked shredded beef (or ground beef or black beans)
1 cup salsa
1 1/2 cups cooked long grain brown rice
1 cup mashed black beans
1/4 cup black olives
seasoning to taste
2 ounces shredded cheese sprinkled on top

Bake at 350 until the cheese is melted. Serve with corn tortillas.

Each of these recipes follows that same basic structure. Each of these recipes is reasonably healthy (and in some cases, quite healthy). Each of these recipes can be altered and experimented with based on what you have on hand, what’s on sale, and what you like.

As long as you know the basic recipe, the rest simply follows. Never be afraid to experiment with a meal at home. Try mixing things together and find out what happens. You might find something great. You might not. Even in the worst case, it’s just one meal. In the best case, you’ve found something you enjoy. In either case, if you use a basic structure like this and fill in the holes with what’s on sale and what you already have, it’s an inexpensive meal.

The post Building a Healthier “Flexible Casserole Recipe” appeared first on The Simple Dollar.

I really enjoy reading issues of MAKE. The magazine is all about technology-oriented do-it-yourself projects, like making your own homemade musical instrument and wiring it up to a homemade soundboard so you can record the music you make or making a homemade remote control helicopter with a video camera attached so you can do neighborhood flyovers. You get the idea.

Part of the reason I’m subscribed to the magazine is because I enjoy the idea of making such things. Part of the reasons I keep back issues of the magazine is because I tell myself that “someday” I’ll work on some of those projects.

In truth, I’ve only ever made two projects out of MAKE and they were both pretty small ones.

For me, MAKE is an example of what I call “spending money on a someday.” You spend money on something because you like it in some way and you keep telling yourself that someday you’ll find time for it, but you never seem to really find time for it.

The items you buy for “someday” are usually the items that end up filling up your closets or your garage. Those items are loaded down with good intentions and self-promises, but they wind up being pushed aside for other things.

Golf clubs. Treadmills. Scrapbooking materials. DVDs. Musical instruments. Gardening equipment. Skis. Books. Magazines. Camping equipment.

All of those things are often “someday” items. They’re things that we don’t actually use, but we tell ourselves that we will use “someday.” Learning to identify them before you spend that money is a big key toward getting your finances in order.

So, how can you tell that something you buy is going to be a “someday” item? Here are a few tell-tale signs.

One, does the item require you to set aside time to use it? With MAKE, I’d have to set aside some time to work on a project. With golf clubs, I’d have to set aside time to go golfing. With musical instruments, I’d have to set aside time to practice.

Two, is your schedule already pretty full? Do you actually have much spare time? Many adults are already overbooked as it is.

Three, do you have active interests that are already starved for time? Do you have hobbies that you’re already lamenting because you don’t have the time to invest in them? I certainly do.

Four, could I find a way to try out this activity without buying this item? You don’t need $200 running shoes to begin establishing a morning jogging routine, for example. You don’t need high-end golf clubs to take up golfing – in fact, you don’t need any at all to dabble in it. Figure out if this is an activity that is going to become a regular part of your life before you dump money into it.

Whenever you’re about to buy a non-essential item, ask yourself those four questions. Chances are you’ll find yourself realizing that the item you’re looking at isn’t really something that fits into your life.

Dreams are a wonderful thing, but a successful person can separate dreams from reality. Knowing when to put that item back, even if a big part of you desires the item and the activity that goes with it, is a sure sign that your spending is on track and you’re headed toward a bright future.

The post Spending Money on “Someday” appeared first on The Simple Dollar.

The problem is that personal finance isn’t often directly relatable to their life. Quite often, parents and teachers rely on lectures and discussions to get the ideas across, but experiences are the things that many older children and teenagers really connect with. You can tell them about personal finance all day long, but without some experience, it often won’t sink in.

Here are some actual experiences your older children and teenagers can engage in to learn some of the basics of personal finance. I’ve been collecting these activities myself in order to help educate my children in personal finance literacy as they grow older.

Give an allowance each week. You can start this effectively with children as young as four. We give our children an allowance of a rate of $0.50 per week per year. So, a seven year old gets $3.50 per week. Out of that allowance, they must donate at least 20% of it, they must invest at least 20% of it, and they must save at least 20% of it for a future goal, rounded up to the nearest quarter.

This teaches them both the basic structure of budgeting and the benefit of saving money over time. They’ll learn that structuring what they do with their income is a completely normal thing and segmenting their money means that they’ll always have enough for what they need.

Lend them money with interest attached. If your child really wants something, lend them the rest of the money with 20% interest attached, and make the payments come out of their allowance each week. “I’ll loan you the $20 you need for that game, son, but I’ll charge you 20% interest on that and you have to pay me $1 a week until it’s all paid off.”

If they go for it, take that $0.50 each week out of their allowance and remind them each time how much they’ve repaid you. When they reach week 20 and they’ve now repaid the full amount and you’re still taking a dollar a week for the next month to pay off an item that they’ve probably forgotten about, it’ll hit home.

Take your children to a few tax auctions. Explain to them that all of the stuff on sale there came from people who were unable to pay their bills because they spent too much money.

The lesson here is that there are real consequences to taking on debt. If you fall into too much debt, you not only lose all of the money you paid into that debt, you lose the things you bought with that money, too. Personal debt is a dangerous game to play.

Tell them that they have $X to spend this week and they have to figure out what to buy for groceries. If you want, you can actually let them carry forward with this plan from beginning to end. They have to figure out how to spend that money to cover all 21 family meals for the week. How will they stretch those dollars? What does the meal plan look like?

Don’t be afraid to let your older child attempt this, carry it all the way through, and find that it’s a lot harder than they thought it would be. In fact, it’s okay to let it end in miserable failure. Only swoop in when you have to in order to make sure there are actually functional meals on the table.

Encourage them to spend the summer launching a small business. It can be anything they want, from starting a Youtube channel to running a vegetable garden to sell the products at a farmers’ market. Help them work out the costs and give them an out-of-pocket business loan to get started.

The goal here is for them to connect their personal efforts to financial and personal rewards. The harder they work, the greater the financial reward, but the greater the pride in the work they’ve produced as well. Any entrepreneurial effort is loaded with potential lessons for an older child or a teenager.

These activities require time, effort, and patience from the parent, but they provide experiences that make the realities of personal finance far more accessible to children. If you want your child to learn these kinds of lessons, get them involved in these kinds of experiences.

The post Personal Finance “Experiences” for Older Kids appeared first on The Simple Dollar.

One of the most amusing parts of parenthood is teaching your children how to groom themselves. They make such spectacular mistakes along the way.

My daughter, for example, has learned that de-tangling spray makes her hair easier to brush. When Mom or Dad use it to brush her hair, we use just a squirt or two.

Well, she wanted to try to use it herself this morning. I watched her at first as she used a couple of sprays and started to brush. Everything seemed good, so I went to help my youngest find his shoes and put them on.

When I came back to her, she had sprayed her hair so many times that it was almost dripping. I actually dried her hair with a towel after that and it had a bit of an unusual smell… but there were certainly no tangles in it.

Lesson learned, I suppose.

Q1: Quality of life in retirement
I’m turning 60 this year & thinking about retiring & where I will be living in the future. [...] I have to tell you quality of life is a BIG issue. My friend retired last year & saved a ton of money in purchasing & insurance costs & so forth. She is fairly central to family, but not really near anyone she knows. Saving money was her main consideration, yet she is never home, has put many miles in her car visiting friends & family. What is the use of saving in one end if you are going to spend in in another? My mother had an expression “penny-wise, pound-foolish.” She was from Scotland where they knew that value of a dollar (or pound or shilling or pence).
- Angela

I agree that living in one location when you are traveling to another on an extremely regular basis is never a good idea. It’s not too different than what commuters do when they live in the outer suburbs of a city and drive into the middle of the city every day.

Commuting is a major cost, no matter how you do it. Even if you’re able to commute via mass transit, it often adds up to $100 a month. If you’re driving a new car in from the suburbs on a daily basis, that’s easily $1,000 a month in total commuting costs.

I don’t know how often your friend drives back and forth, but if she stuck in one place and then sold off her car, she would be in much, much better financial shape, even if she stayed in an area with a reasonably higher cost of living.

Q2: Angry relatives over estate
When my aunt died, I knew I was executor of her estate, so the first thing I did is I went to her house, opened it with the key she gave me, and had a locksmith come and change all of the locks. My cousins and other relatives were very mad at me because they said I was keeping them from the things that belonged to them in the estate, but I was pretty sure that some of them just wanted to grab anything that wasn’t bolted down. Did I do the right thing? How can I fix it?
- Erica

As far as I’m concerned, you did the right thing. You are the executor and it is your job to make sure everyone gets what they’re supposed to get from the estate as stated in the will. If you’re worried about the security of the items, then changing the lock is a strong first step.

I assume that there will be (or has been) a public reading of the will. When that happens, then you should personally hand out every item described in it. You should also do your best to follow any other directives you were given by your aunt. If anything is conflicting or problematic, consult a lawyer.

Families can (and do) get very nasty during processes like these. Your best chance at maintaining family unity is to be as transparent as you possibly can during this process.

Q3: Credit score challenges
I have a question about my little brother, who is 21. He works full-time in construction (not sure about his income), and just sold his pickup truck for $8500. He still owed a little under $3000 on the truck. He’s now looking to buy another truck for around $6000. He would like to buy a house in the next few years, but being so young he doesn’t have much of a credit history. Other than the loan for his truck, he doesn’t have any other debt, and he could have paid that off earlier, but he has been told that making payments on that loan is helping build his credit history. To my knowledge, he has a credit card which he pays off monthly, and a monthly cell-phone payment, but otherwise he isn’t making any payments on anything. Additionally, he has begun to save for a down payment on a house (though I don’t know exactly how much).

Any advice for him? He is mature for his age, understanding that debt is not a great idea, but wants to put himself in the best position he can to buy a house sooner rather than later.
- Rick

He’s actually doing pretty well for his situation. His truck loan likely established his credit enough to qualify for the credit card, and his regular payments on that card are maintaining his credit report. I don’t think he has a thing to worry about.

If he’s saving anything at all toward a house down payment, that’s a good step. If he’s saving anything at all for retirement – yes, even at 21 – that’s even better. If he puts away $1 at age 21 into retirement and it earns a 7% annual return, it will be worth $27.53 at age 70.

If he truly has no other debt, he is in far better shape than most 21 year olds in the United States right now.

Q4: Neighborhood culture shock
We just moved into a new house in what seemed like a wonderful neighborhood. One of our neighbors had a cookout and invited us along with some other families nearby. Everything was great until the conversation started and I discovered that there were some rather extreme and in my opinion rather sickening political views held by most of my neighbors. I want to be friends with the people around me but whenever I see them I think about the crazy things they said.
- Rachel

First of all, politics is usually a terrible subject to talk to a neighbor about unless you already know them well. The last thing I’d do is talk politics with a neighbor with any more detail than a yard sign supporting a candidate unless I happened to have built a strong friendship with that neighbor.

Now that you’re in that situation, though, you’re going to have to deal. If I were you, I’d maintain cordial relations with the outspoken ones, but not build anything too close with them. It does not hurt to be polite and kind to someone you disagree with, but you can still keep them at arm’s length.

At the same time, I’d try to reflect on that cookout. Were there any people who just didn’t say anything at all? Those people might hold stances closer to your own or, at the very least, have enough tact to not bring up polarizing political views in that kind of situation. If you can recall any, build stronger relationships with them.

Q5: Odd bank behavior
The bank in question was bought by a new financial institution. Out of curiosity, I clicked on their online account button, and sure enough the information that I thought had been closed down a couple of years ago was still on there. I called about it, and a manager got aggressive, told me that they had changed my gender on the account, and subsequently flagged it with fraudulent behavior. So while the account is still open and accessible with personal info online, it has a flag on it (I never had any problems before I asked them to close it). Because of this flag I cannot use the old account but I cannot get them to shut down the personal info online either. I got pretty freaked out by that and closed another account I had with the current financial institution before the merger. That closing appeared to go OK. The second rep told me that the first institution has a lot of problems.

Is this type of situation common? Will it affect my ability to open accounts with other institutions in the future, and can I do anything about it?
- Eric

No, this is not common. This is very strange behavior, and you should get to the bottom of it.

When you ask to close an account with a financial institution, that account should be closed, period. All deposits and withdrawals regarding that account should be denied. The information on that account should be put into long-term storage and not regarded as an active account.

It may be that someone attempted fraud on the account after you closed it, which may explain some of what happened. The changing of the gender may have happened due to some sort of account theft attempt, and when they look at that record, they may be seeing that fraud attempt. When you called, they may have viewed it as another sort of fraud attempt on the account. Still, I think they handled it very poorly. The account should have never been accessed in any way after you closed it.

I’d check your credit report just to make sure that there’s no mention of it. Aside from that, I’m not sure how this would affect your other financial needs.

Q6: Pyramid scheme addict
My sister seems to constantly jump from one pyramid scheme or network marketing business or multi-level-marketing business to another. One week, she’s selling soap. A month later, she’s trying to get me to buy children’s books. She’s been involved with every one I’ve ever heard of. I tried a couple of these in the past and I know that she’s probably losing money on each one. What can I do to get her out of these?
- Ed

I’ve known a few people like this and they all have a few things in common. They’ve seen the celebratory nature and the rah-rah “you can do it” attitude of the people high up the chain in these groups and they really buy into it. They see people who have made a lot in the organization and dream of themselves being there. What they don’t see is what kind of effort it takes to go from someone starting out to getting to that location. They start out, see it doesn’t work really easily, then they become disenchanted… until they see another rah-rah pitch.

This is a lesson they have to learn for themselves, unfortunately. Eventually, they’ll realize either that it takes more sustained work than they are willing to put in or it takes a different skill set than they have to offer.

It can take a lot of time, though, because those organizations tend to feed on people’s dreams. When someone wraps up your hopes and dreams into an easily-digestable package, it’s hard for some to turn away.

Q7: Loan payments and emergency funds
While building a 6-month emergency fund, does one need to include EMIs also?

Example:
total monthly expenses = X Dollars.
total monthly EMIs = Y Dollars (includes all loans: home,car,education,credit-card everything that has a monthly payment)
So, for the 6-month emergency fund, should it be 6*X dollars or 6*(X+Y) dollars ?

Presently, I have an educational loan EMI that is 23% of my monthly take-home pay. And I have saved an equivalent of 3-month EMI and kept in a separate bank account.
And, I have saved 3months of my living expenses and kept in 2 Fixed Deposits (includes everything: rent,utilities,food,basic travel, etc essentials).
- Roger

For those unaware, EMI refers to “estimated monthly installment” or “equated monthly installment.” It’s a term used in some parts of the world to refer to the monthly debt payments that person owes.

An emergency fund should include everything you would need to pay your bills and maintain your way of life for whatever number of months you intend to save for. It sounds like you have a three month emergency fund in full, as you have money to cover your loan payments for three months and your living expenses for three months.

The biggest reason for such a measurement is because emergency funds are often used for that biggest of emergencies, the unexpected job loss. If you have a few months of living expenses and bill payments sitting in the bank, you don’t have to move into outright panic mode when you lose your job. You can focus rationally on a job search.

Q8: Trusting Wikipedia
I notice that sometimes you link to Wikipedia for specific information. Why do you trust that site? It’s edited by anyone who wants to edit it.
- Amy

Wikipedia is a great way to get a grasp on a basic concept. However, it’s not rigorous enough to use as an actual source on an academic paper – it’s not meant to do that. It’s meant for people to get the basics of a topic before they move onto more advanced material.

I pretty much entirely agree with Harvard’s stance on using Wikipedia:

“There’s nothing more convenient than Wikipedia if you’re looking for some quick information, and when the stakes are low (you need a piece of information to settle a bet with your roommate, or you want to get a basic sense of what something means before starting more in-depth research), you may get what you need from Wikipedia. In fact, some instructors may advise their students to read entries for scientific concepts on Wikipedia as a way to begin understanding those concepts.

Nevertheless, when you’re doing academic research, you should be extremely cautious about using Wikipedia. As its own disclaimer states, information on Wikipedia is contributed by anyone who wants to post material, and the expertise of the posters is not taken into consideration. Users may be reading information that is outdated or that has been posted by someone who is not an expert in the field or by someone who wishes to provide misinformation. (Case in point: Four years ago, an Expos student who was writing a paper about the limitations of Wikipedia posted a fictional entry for himself, stating that he was the mayor of a small town in China. Four years later, if you type in his name, or if you do a subject search on Wikipedia for mayors of towns in China, you will still find this fictional entry.) Some information on Wikipedia may well be accurate, but because experts do not review the site’s entries, there is a considerable risk in relying on this source for your essays.

The fact that Wikipedia is not a reliable source for academic research doesn’t mean that it’s wrong to use basic reference materials when you’re trying to familiarize yourself with a topic. In fact, the library is stocked with introductory materials, and the Harvard librarians can point you to specialized encyclopedias in different fields. These sources can be particularly useful when you need background information or context for a topic you’re writing about.”

The broader a subject is and the more editors are involved with it, the more accurate it’s likely to be.

Q9: Roth IRA as savings account?
A friend of mine recently suggested something that really set off some alarms in my head. He thinks that it is a good idea to use a Roth IRA as a savings account for longer term, low-priority goals. His argument is that even very conservative funds have much higher returns than savings accounts and there is no tax penalty on removing the contributions from the IRA, as long as I’m not contributing more than the IRS limits I should be fine. This flies in the face of my conventional thinking that once money goes into a retirement fund I can’t touch it without some serious penalties. If I’m aggressively funding my retirement through my work’s 401(k), is it ok for me to use an IRA in this manner?
- Jill

You can use a Roth IRA in this manner if you so choose, with a few catches. For starters, you can only withdraw up to the amount you contributed without penalty. So, for example, if you put in $5,000 and it grows to $8,000, you can only withdraw $5,000 without incurring a penalty. The rest must wait until retirement.

If you want to have access to those gains before retirement, you shouldn’t be using a Roth IRA – you should be using a taxable investing account. That way, you can access the money without penalty, merely paying taxes on the gains, which is what you would do with the Roth IRA except that you’d also have an early withdrawal penalty.

Which way is better? It really depends on what you intend to do with that money. If you’re focused more on the retirement savings, then the Roth is better. If you’re saving for a non-retirement goal, then an ordinary brokerage account is better.

Q10: Changing role of motherhood
I really enjoyed this great article at the Atlantic on the changing role of mothers and how it affects family finances and more. What did you think of it?
- Marjorie

I enjoyed it, too. Almost every chart in that article revealed something interesting to me.

For example, mothers are spending more time on child care per week than in the 1960s through the 1980s, but the amount of time spent on housework has gone down by almost 50%. Does that mean that fathers are picking up a lot of the household work? Yes. Does it also mean that the average house is messier than it was thirty years ago? I’d bet yes on that one, too.

The mothers of this generation of babies are far more educated than previous generations. What will that mean for the babies? We’re going to have far more children growing up this generation as the product of two parents with college educations. What will they be like?

Also, I found it fascinating that the only group of women who are getting married more often than in the past are the top 5% of wage earners. All other women are getting married less often.

That article has tons of interesting stuff in it and is well worth reading. What does all of it mean for the next generation or two? I guess we’ll find out.

Got any questions? The best way to ask is to email me – trent at thesimpledollar dot com. 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 many, many questions per week, so I may not necessarily be able to answer yours.

The post Reader Mailbag: Child Grooming appeared first on The Simple Dollar.

I’m as guilty of that as anyone else. It’s a great way to drastically trim your finances.

Let’s be honest, though: a lot of people simply aren’t going to give up their car. They have too much emotionally tied into the freedom of having an automobile to take them wherever and whenever they want.

So, with that in mind, here are fourteen pieces of advice that will each help you save on the fuel costs of your commute. Every single one of these tactics will improve either the efficiency of fuel consumption on your commute or will reduce the number of miles you put on your car.

1. Air up your tires to the maximum recommended pressure each month.
Tire air pressure is measured in psi. For every psi below the maximum recommended pressure that any one of your tires falls, you’re losing 0.125% of your fuel efficiency. So, if all of your tires are 8 psi low, you’re losing 4% efficiency just because of air. Your 25 mpg car becomes a 24 mpg car just because you haven’t aired up the tires lately. Since airing up your tires is free at many gas stations and it only takes a few minutes, you should take the time once a month or so to air your tires up.

2. If at all possible, telecommute.
If you work at a job that allows you to work from home, even if it’s one day a week or one day a month, take advantage of that time. Every single day that you don’t have to commute to work is savings in your pocket.

3. Minimize every little bit of accelerating and brake usage.
Every time you accelerate your car, your engine starts burning more fuel, and the harder you accelerate, the more fuel you burn. Every time you touch your brake, you’re compensating for too much acceleration earlier on or you’re ensuring that you’re going to have to accelerate more soon, which takes you back to more acceleration. Instead, accelerate slowly out of stops and break as little as possible.

4. Familiarize yourself with gas prices along your route.
Which gas station along your route consistently has the lowest prices? Watch the stations along your route and continually compare them. Often, you’ll find that a station or two tends to have lower prices than others along your commute. Frequent those stations.

5. Use a credit card tied to the gas chain with the lowest prices.
If you’re satisfied with one of those low-cost stations, check and see if they have a credit card tied to the chain that offers rewards for using it for refueling. Many chains offer rather impressive rewards cards. If they do, sign up for that card and use it only for fueling, paying it off at month’s end and using the rewards as often as possible.

6. Minimize your heater and air conditioning usage.
Both of these burn fuel. Simply get your car’s internal temperature to something tolerable and flip it off. If it’s hot out, roll down the windows and use air motion to bring the car’s temperature down significantly before using the air to lower it further (if you must).

7. Use fuel efficiency as one of your big factors in your next car purchase.
When you buy a car, figure out the fuel efficiency of the models you’re examining and use that as one of your major factors. It doesn’t have to be the only factor, of course, but it should provide significant impact on your purchasing decision.

8. Ask about employer programs for commuting, such as a gas allowance.
Some employers offer a stipend or a reimbursement to employees for their commute. Often, it’s a program that’s not shouted from the rooftops to current employees but was perhaps included as a perk in a collective bargaining agreement. Ask the human resources office at your workplace if such a program exists.

9. Use your commute home for reasonable errands along the route.
If you know you’re going to need some specific item when you get home, shoehorn it into your commute. That way, once you’re home, there’s no reason to waste the fuel to drive out of your residential neighborhood again. You already have the item you need. I used to find that a Post-It note stuck to my rearview mirror in the morning was a perfect reminder.

10. Get rid of any and all extra weight in your car.
If you are storing any items in your car that aren’t necessary for the trip, get them out of your car. Your fuel efficiency gets worse with every extra pound that your car is carrying. Toss anything and everything extra out of your vehicle. (Remember, of course, that safety equipment, particularly in winter, is not an extra – it’s essential.)

11. Use the cheap fuel.
Read your manual and find out what kind of fuel is recommended for your car. Most of the time, the manual suggests 87 octane fuel and, if it does, that’s what you should be using. There is very little advantage to the premium fuel – what little there is does not add up to the cost difference for a car that runs fine on 87 octane.

12. Get your oil changed regularly and use the type recommended in your car manual.
Fresh oil keeps your engine properly lubricated, minimizing the work that the parts have to do in order to provide the power needed to run your car. Old oil causes the parts to run with less efficiency. Thus, if you want to minimize your fuel use (and prolong the life of your car), get oil changes according to the manufacturer’s schedule.

13. Carpool.
Carpooling means that some days, you don’t have to even drive to work. Someone just drives you right to your door. It also means that on the days you do drive, you can use the HOV lane for more efficient driving. Even if you’re just giving someone a lift each day, it’s still worthwhile. If you have a HOV lane available to you, you can now access that lane and drive at a more reasonable pace with substantially less stop-and-go driving.

14. Replace your air filter according to your maintenance schedule.
A final tip: change your car’s air filter on a regular basis. Proper clean air flow contributes to the fuel efficiency of your car. Change the filter according to the recommendations of the filter manufacturer.

Keep on top of these things and you’ll get more miles on fewer dollars.

The post 14 Ways to Save Money on Your Commuting Fuel Costs Without Giving Up Your Car appeared first on The Simple Dollar.

The staff of this charity has made a ton of commitments on an organization-wide level. They’ve pledged help to many different local groups and causes and those commitments are impressive and good ones.

The problem is that these commitments lean very hard on active fundraising work by their members. In order to make those commitments, the people on the ground will have to work their tails off.

That leads to another challenge: burnout. The people that volunteer their time and effort and passion for this charity can only get tapped so hard before they give up and walk out. Although they want to give to the charity, there is only so much they can provide.

In order to push them harder, the organization has hired “communications specialists,” not to try to help with fundraising, but to push the volunteers to fundraise harder.

So, what does that all mean? It means that the organization will probably reach their ambitious goals for the current year, but the members they’ve relied on for so long are starting to burn out and leave the group. They’re starting to no longer believe in the group’s mission and their volunteer efforts are starting to go in other directions.

The group has sacrificed the future for the present, in other words.

What lesson can a person take home from this?

Right now, you have to worry about your own present and your future. You can’t simply assume that your future will take care of itself. You are responsible for that future right now.

With every decision you make, you either put more pressure on the future (by spending more right now and saving less right now) or put more pressure on the present (by spending less right now and saving more). The organization I mentioned has decided to put too much pressure on the future, sacrificing the long term for the needs of today.

Ideally, we are trying to seek a balance of those two pressures. If you put too much pressure on the future, you end up having misery down the road. If you put too much pressure on the present, you end up having a miserable life today.

So, what’s the solution? Make choices that aren’t miserable today that also don’t put pressure on your future.

Whenever you do something enjoyable that doesn’t cost you much money at all, then you’re doing something that’s pleasurable today that doesn’t put pressure on your future. Whenever you can find immediate satisfaction in saving money, you’re doing the same.

Our goal at the end of the day is to live a happy life today that’s sustainable down the road. Whenever we spend more than we should, we sacrifice sustainability. Whenever we spend too little, we sacrifice that happiness today.

The moments that really make life worth living are the ones that are magical in the moment and don’t bring about guilt later on. They keep the pressure off the present and off of the future, too.

The post Sacrificing the Future to Serve the Present appeared first on The Simple Dollar.

A “top-down” approach to something means you take something large and break it down into smaller pieces. For example, if you’re making a meal, you would be taking a “top-down” approach if you walked into the kitchen with a specific recipe already in mind and then you went about finding the ingredients.

A “bottom-up” approach, on the other hand, means that you take the elements you have on hand and see how they combine together into something greater. To continue that meal example, you’d be taking a “bottom-up” approach if you opened up your pantry door without anything other than the vague notion of meal preparation in mind, pulled out a bunch of ingredients that seemed like they might go well together, and then used them to construct a meal.

Both of these approaches work in different aspects of life. There are times when I go into the kitchen with a recipe in mind. At other times, I just open up the pantry door and see what I can throw together.

How does this relate to finances, though?

I view “top-down” personal finance as being oriented toward a long-term goal. Let’s say you want to be retired with 80% of your income at age 65. What do you need to do in your life to achieve that goal? You start breaking down that big, singular goal into smaller pieces, such as contributing a larger amount to your retirement plan.

On the other hand, “bottom-up” personal finance means that you focus on optimizing all of the little things so that you’ll have resources available for whatever life might throw at you. You don’t really have a big goal in mind, but you know that something will eventually come along and require you to be in good financial shape to take advantage of it, so you minimize your spending and save carefully.

Different people will thrive with these two different approaches.

For example, I’m strongly a “top-down” type of person when it comes to personal finance. I am motivated by having a big goal that I’m working towards and I love putting the pieces together to make that goal happen.

On the other hand, one of my closest friends is clearly a “bottom-up” kind of person when it comes to his money. He doesn’t have any major goals for the future, but he prides himself on finding ways to spend less right now so that whatever comes down the road is easy to handle. Not too long ago, he wrote a check for a house seemingly on a whim because he saw a great deal on one. It wasn’t planned out or plotted – it was just an opportunity that he had the resources to handle.

What I’ve found is that these two ways of thinking really appeal to different people. Some will absolutely migrate to one or the other.

On the flip side of that, I’ve also found that if someone hasn’t really found that approach that makes sense for them, it’s hard to really succeed at personal finance. I tried very hard to approach things from a “bottom-up” perspective, but I never really found the motivation to make little changes without an overarching goal. On the other hand, my close friend has told me that the thought of enormous goals makes him feel as though he’s destined to fail because the mountain seems so immense.

Some people simply find joy in the maximizing of the small details, regardless of where the benefits of that lead. Others, like myself, find that working toward a big goal really works best for them.

If you’re finding difficulty making personal finance click for you, ask yourself whether a “top-down” or a “bottom-up” approach fits you better. Are you more into the establishment of a goal and planning for that goal? Or do you find more value in improving specific aspects of your day-to-day life? There is no right answer, just a path to a better approach for you.

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1. Samuel Johnson on habits

“The chains of habit are too weak to be felt until they are too strong to be broken.” – Samuel Johnson

I wouldn’t quite call them unbreakable, but they can become incredibly strong.

2. Angela Lee Duckworth on the key to success

If you aren’t adept at overcoming the small difficulties, you’re going to struggle deeply with overcoming the big ones.

3. Tao te Ching on what we give each other

“What is a good man but a bad man’s teacher? What is a bad man but a good man’s job? If you don’t understand this, you will get lost, no matter how clever you are. It is the great secret.” – Tao Te Ching

In the end, we are all in service to each other.

4. Children at play

I couldn’t help but see my daughter and youngest son in this picture.

Thanks to the State Library and Archives of Florida for this image.

5. Kurt Vonnegut on little things

“Enjoy the little things in life, for one day you’ll look back and realize they were big things.” – Kurt Vonnegut

I hear this quote and I think about rocking my children to sleep when they were infants.

6. Ayrton Senna on idols

“I have no idols. I admire work, dedication and competence.” – Ayrton Senna

Those traits are ones worth admiring.

7. Tulips

Our tulips have started blooming. I took several pictures, but none quite as good as this wonderful image by Kivanç Nis.

8. Emerson on superiors

“In my walks, every man I meet is my superior in some way, and in that I learn from him.” – Ralph Waldo Emerson

What do you learn from the people you meet?

9. More tulips

Another great view of tulips in bloom, this one by Alexandre Dulaunoy.

10. J. D. Salinger on reverse paranoia

“I am a kind of paranoid in reverse. I suspect people of plotting to make me happy.” — J. D. Salinger

It’s an interesting take on human interaction.

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