Rich Dad Poor Dad – Robert Kiyosaki

Posts Tagged ‘simple-dollar’

Every other week, The Simple Dollar reviews a personal finance book.

Greg Karp is the author of the “Spending Smart” column which appears in a number of newspapers nationwide – it’s typically a pretty good read, though Greg didn’t fall on my radar screen until I read his first book, Living Rich by Spending Smart.

Almost a year ago, I wrote a sparklingly positive review of Living Rich by Spending Smart. Given the quality, as soon as I heard that Greg had written a second book, I was quite eager to give it a read.

The 1-2-3 Money Plan, per its subtitle, claims to discuss the three most important steps to saving and spending smart. The book clearly focuses on the applicable, with several interesting suggestions and conclusions. Let’s dig in and take a look.

1 – Spending Smart Redux
One big theme that you notice right off is that this book is heavily invested in the idea of the “rule of three” – that a three-step plan makes the plan easy to follow and that knocking a complex idea down to three discrete points makes it easier to understand (hence the title, I suppose). Three-step plans pop up all over the place in this book.

This opening chapter of The 1-2-3 Money Plan really has one key idea: the best way to get a leash on your money is to get your spending in check. My favorite piece of advice was how to spend your discretionary income: focus entirely on things you deeply care about, experiences, and things that appreciate in value.

2 – First Things First
What comes first in getting your financial state in order? Karp offers five distinct areas: taking stock of your current financial state, basic estate planning, preventing identity theft, getting with a good bank (and automating your finances), and paying your bills (again, some automatically).

Sure, these steps seem simple, but they really are the basis for getting your financial house in order. I actually believe getting a good grip on your money is a powerful first step, because it then becomes much easier to see the impact of your individual decisions on your pocketbook.

3 – Get FIT (Food, Insurance, Telecommunications)
Karp identifies three big areas where almost everyone can cut some spending: food, insurance, and telecommunications.

With food, Karp piles on the recommendations: make a price list, match coupons to flyers, make meals in advance, build a meal plan, use a grocery list, and go shopping less often (once a week at most).

On insurance, avoid extended warranties, refinance your life insurance (meaning shop around now for a better policy, then ditch your old one), and raise your deductibles, particularly on your house and automobile insurance.

For telecommunications, cancel your landline service (good advice if you’re not in a highly rural area with occasionally dodgy coverage), downgrade your wireless plan to one that matches your needs (or perhaps even ditch it and get a pay-as-you-go phone), and actually evaluate how much you really use your television and internet service (and potentially downgrade those as well).

4 – How to Buy Stuff
The basic procedure Karp advocates is pretty straightforward: don’t make a major purchase without first reading plenty of reviews, asking for recommendations, and doing both online and offline price comparisons. This should be mantra for anyone making any sort of major purchase.

One interesting part of this chapter was Karp’s advice on allowances: give your kids an allowance, but don’t tie it directly to chores. When my son turns 4, we’re going to start an allowance for him, and this is the way we’re leaning – using non-monetary methods to encourage him to do basic chores.

5 – Green Means Green
Most of the techniques a person uses to reduce their environmental footprint also reduces their spending footprint. Use rechargeable batteries. Replace your five most used light bulbs with CFLs. Drive sensibly (don’t speed and don’t punch the accelerator). Avoid bottled water.

One point where I disagree with Karp – he suggests always avoiding big-ticket energy efficiency upgrades because the break-even date may be a decade or more into the future. What he’s not considering is that such fixes often greatly increase the resale value of your home. For instance, if I replaced our roof tiles with solar tiles, it might be very expensive, but the energy bill would immediately go down plus the value of our home would go up (since the next tenants would have lower energy bills). That makes the break-even point quite a bit earlier.

6 – Credit When Credit’s Due
Karp offers great advice on the basics of credit here. First, check your credit report (and don’t use freecreditreport.com) and make sure there are no errors on it – that’s the most important thing, if you haven’t done it.

How do you start digging out of debt, though? First of all, stop using credit. Then develop a debt repayment plan and stick to it. If you’re having trouble, it’s vital to remember that cutting your spending is a key counterpart to a debt repayment plan.

My favorite point from the chapter was the discussion of how to use a credit card effectively: get a good rewards program, stop carrying a balance (paying it off in full every month), and use your leverage – don’t be afraid to call them and threaten to switch credit cards if they raise your rates or anything you don’t like.

7 – How to Save Money
The biggest key is to automate. You should start by automatically transferring money to separate savings accounts – one for your car and one for an emergency fund. From there, grow to funding a Roth IRA using automatic funding. If you have kids, fund a 529 college savings plan automatically, too. If you have to think about it, you’re opening yourself up to forgetting about it or talking yourself out of it – so don’t give yourself that chance.

The most interesting idea I found here was the idea of a savings account for seasonal expenses. For example, in Iowa, one’s energy bill is often much higher in the winter, plus there’s the cost of snow tires, etc. If you put some money automatically into a seasonal account, particularly in the spring, summer, and fall, you’ll have that extra money in the winter. This works well for any seasonal expense.

Is The 1-2-3 Money Plan Worth Reading?
Most of the advice in The 1-2-3 Money Plan is advice you’ve possibly heard elsewhere. Karp covers most of the truly familiar areas of personal finance writing with this one.

So what makes it stand out? At the start of this review, I mentioned the reason – Karp sticks strongly by the “rule of three.” In other words, almost every point in this book is followed by three very direct and blunt action tips, which make it easy for the reader to actually take direct action on that idea.

So, The 1-2-3 Money Plan is a great book if you have a hard time transforming specific personal finance ideas into direct action. Karp hits a home run in that department. However, if you’ve already got your money in order, this book might not have too much to offer you.

Read more from the original source:
Review: The 1-2-3 Money Plan

A while back, while checking out at a Williams-Sonoma (this place is my guilty pleasure – what can I say?), the cashier asked me if I wanted to sign up for their email list. I said “Sure!” and gave them an email address.

On the way out of the store, my wife chided me. “Don’t you always say on The Simple Dollar that it’s a bad idea to open yourself up to more advertisements?”

I smiled back at her and gave her a little wink.

In fact, whenever I’m asked for my email address at a store or a restaurant I might ever return to, I’m quite happy to give them my address.

Seem like a contradiction in terms?

Well, the truth is that I don’t give these stores my real email address – my personal one or my work one. Instead, I have a separate account that I use for just this purpose. That address has helped me out time and time again to save a few bucks here and there – and even better, I’m never tempted by ads that come in via email.

Here’s the game plan.

Sign Up For a Webmail Account
All you have to do to get rolling is sign up for a fresh new email account with one of the web-based email services. I find GMail to be the most convenient – but Hotmail and Yahoo! Mail work just as well for these purposes.

Choose a name you’ll easily remember. Your first name + “stuff” will probably be available, for example. If it’s not, try putting a very simple memorable number on the end. So, you might end up with something like “trentstuff2009″ for your name.

The key is just picking something you won’t forget, because you’ll want to pull it up from memory fairly often.

Sign Up For Your Favorite Retailers’ Lists
From then on, whenever you’re at a retailer and they ask for your email address, give them this new address. The retailer will almost always begin mailing things to this address – sometimes weekly, sometimes monthly.

If you’re anxious to get started, most websites for such retailers have sign-up forms somewhere on the site that will get you on their mailing list.

So, for me, I might visit the websites of various booksellers (Borders, Barnes & Noble) and, of course, Williams-Sonoma.

Once you’ve done that, don’t worry about it. Everything is good to go.

The Next Time You’re About to Shop There Anyway…
… just sign in to that email account and search for the retailer you’re about to visit, then check the most recent two or three mailings. You’ll often find a few coupons and notices of any sales that are going on.

Since you’re not receiving this stuff in your normal inbox, you won’t be tempted to go chase “bargains.” However, you still get the advantage of coupons for your favorite retailers without having to dig through coupon sites (and the resultant popup ads and the like that such sites typically bring).

Good luck!

View original here:
A Deal-Collecting Email Address

Many newer readers of The Simple Dollar haven’t been exposed to the hundreds of great articles in the archives of the site, so this is a weekly series that highlights the five best posts from one year ago this week, as well as the five best posts from two years ago this week. I call it … the Time Machine.

One Year Ago (June 7-13, 2008)
Review: Please Send Money Dara Duguay’s book is one of the best I’ve read at addressing the financial realities of college students. Strike that – the best.

How to Budget Using ING Direct (Or Another Full-Service Online Bank) It’s amazing to me how easy it is to use online tools for automatic budgeting. Here’s an excellent description of how to do exactly that if you use ING Direct.

My Entrepreneurial Inspiration I call him Dad. Also, this post includes a great sidebar discussing whether or not being a writer is a form of entrepreneurship.

Sixteen Ways to Go Out on the Town on the Cheap It can be really hard to enjoy an evening out with the gang without spending a lot more money than you might want. Here are some simple and subtle ways to curb that.

Discussion: What Should Be Part of a High School Consumer Education Curriculum? Some passionate discussion about a topic that’s near and dear to my heart. How can we possibly get good personal finance information into high schools in a form that will actually make them care about it?

Two Years Ago (June 7-13, 2007)
How To Get Off The Treadmill: A Detailed Guide To Becoming Self-Employed I wrote this as I was essentially moving myself through the process. There’s a lot of good advice here. Biggest tip: avoid the charlatans. Everything you need to make it is already inside you – you don’t need a “get rich quick” kit.

What Aspects Of Personal Finance Bring You Happiness? Yes, managing my money makes me happy. Here’s why.

I’m Making All The Right Moves, But I’m Still Unhappy Just getting your money in the right order isn’t a guaranteed ticket to happiness – it’s just one piece of the puzzle. This is a great discussion of the rest of the equation.

Eight Free Things That My Family Uses In The Community Most towns are loaded with tons of great free things to do and see. Here are eight that we use all the time.

Review: How to Win Friends and Influence People I consider this one an essential read for pretty much everyone. It provides a lot of good clues for making social situations work better, plus provides some insights into how others behave.

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

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

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

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

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

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

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

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

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

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

Read the original:
The Simple Dollar Time Machine – June 13, 2009

Quite often on The Simple Dollar, I’ll discuss some aspect of my personal finance life and I’ll say that “I” did this or that “I” did that.

Well, for every mention of the word “I,” my wife is there in the background, doing something little to make sure it all happens. She’ll cook a great meal, do something amazing for our kids, come up with a plan for some purchase we have to make, or simply be there in the moment with a great smile and a hug.

It’s pretty simple – without Sarah in my life, I would never be able to reach for my dreams. She provides so much of the foundation of our day-to-day life in many subtle ways – and, from my perspective, it is these subtle things that build the foundation of a strong, financially stable marriage.

Here are twelve little things that she does to make it all work. If you want a checklist of little things to do to help your marriage click, this can seriously help.

She listens. When I have something to say that’s actually of any importance, she listens. She stops and considers what I have to say, and she incorporates that into what she’s thinking. She doesn’t simply discard it, but she doesn’t adopt it as gospel, either – she simply listens and actually absorbs my thoughts.

She’s not afraid to say what she thinks. On the other side of that coin, she’s not afraid to say exactly what she thinks. If she thinks I have a good idea, she’ll say so – but if she thinks it’s bad, she’ll say that, too, and support it with reasons. Such open and equal give and take enables us to constantly come to the best decisions for us – in our money, in our work, and in other aspects of our lives.

She’s honest about her mistakes. No one is perfect, and neither is she. However, when she does mess up, she’s willing to admit it. She’ll say things like, “I just didn’t get it done. Sometimes I’m lazier than I’d like to be.” That simple effort in admitting to mistakes makes it much, much easier for us to work together to overcome the problem.

She picks up the slack when I leave it behind. On the other side of that coin, there are often times where some responsibility of mine will interrupt things. I have a phone interview. I have a television interview. I need to get a piece of writing submitted somewhere. Whenever these things occur, Sarah always just steps up. She knows that if I succeed, she succeeds – and I know the reverse is true.

She’ll go over things as many times as I need to. Sometimes I don’t pick up on things. I’ll put things in the wrong place in the pantry. I’ll not get the towels washed, or I’ll forget to use the cold rinse on the cloth diapers. Instead of going ballistic, she just checks to see if I did things the appropriate way and, if I did not, she just reminds me of how to do it. She does it so coolly and calmly that the only upset I feel is at myself for not picking up on the right way to do things.

She has a good sense of humor and a lot of tolerance of my own foibles. Along those same lines, she just rolls with who I am. She laughs at (or at least tolerates) my goofy jokes. She knows the things I’m good at and the things I’m not good at – and worries more about accentuating the positive instead of eliminating the negative.

She understands and is committed to spending less than we earn. We sit down and talk about our financial goals all the time – and she’s similarly committed to putting our financial life on a good path. Thus, our choices are in sync – I’m not worried that she’s out there spending money in ways that are undoing my work – and vice versa.

She’ll make good career suggestions – but isn’t hurt if I don’t take them. My wife reads The Simple Dollar and often has suggestions for improvements on it – ways to market it, post ideas, and so forth. (She also sometimes laughs at the things I do to protect people’s privacy.)

She encourages me to grow – and makes room for it. She gives me breathing room for my hobbies and gives me “alone time” when I need it. That “me” time is the time I use for reading, meditating, and personal growth – which are all key for keeping me sane.

If something is clearly a good deal, she’s enthusiastic about pursuing it. She does almost all of the real nitty-gritty bargain hunting when we make major purchases. She also is the one who will find new and useful ways to expand our search and comes up with good criteria to search on. For example, with our car purchase, she was the one who suggested that we include new cars in the search, which eventually led us to discover that in the current car market new cars have tremendous advantages.

She’s there beside me when things are good and when things are bad. When something good happens, she’s there. When something bad happens, she’s there. She doesn’t back away, regardless of how things are doing. She’s just a steady constant, because she knows that we’re going to be there for each other no matter what happens.

She revels in the simple things in life. It doesn’t require an expensive gift or a fancy dinner to impress her – in fact, she’s happy with a spaghetti dinner and a potted plant for Mother’s Day. She’d far rather lay out on the grass or play with the kids than go out on the town or go shopping.

All together, she makes this crazy ride work. And for that, I’m forever thankful.

More here:
12 Ways My Wife Quietly Makes Our Life Work

One of the best personal finance articles I’ve ever read is Snowflaking: A Primer, at I Paid For This Twice Already. Here’s an excerpt so that you get the idea:

Snowflaking is a spinoff of the Snowball approach to debt reduction popularized by Dave Ramsey. With the Debt Snowball method, you figure out what amount you can pay to debt every month, and then you keep paying that amount, even as your debts shrink and your minimums get smaller. To implement it, in a nutshell, make a list of all your debts, order them from either smallest to largest or highest interest to lowest interest (that is a debate in itself), and you focus all extra money above the minimum payments on a single debt (either the smallest total or the highest interest, I use interest order). As you eliminate debts, you apply the payment you were making to that debt to the next debt in line until the snowballing effect of decreasing minimums and increasing amounts applied to particular debts eliminates all the debts on your list.

Well, what are snowballs made of? Snowflakes! I have a set amount I pay to debt without fail every month that is above my minimum payment due (about $800). On top of that, I also try to collect up little bits of money wherever I can and I apply those as well to my top priority debt as immediately as possible. I take surveys online, I sell possessions on craigslist and ebay, I have yard sales, and any money I get from these endeavors goes directly to my debt. I also keep a very strict accounting of all the money that comes in every month and what I spend and everything left over at the end of the month not earmarked for future expenses also goes directly to debt. These are my snowflakes. I have averaged over $200 extra going to pay down my credit card debt every month due to these snowflaking efforts.

Many small snowflakes make a snowball, and no amount is too small for me to snowflake. I used to pay my credit card directly every time I collected a snowflake through their online interface, but now that I have moved my credit card debt to another card with a 0% interest offer, I collect the snowflakes and pay them once per week (I am limited to the number of payments I can make to this card a month). If you are able to and your debt is not at 0% interest, I highly recommend the “pay snowflakes immediately” method. The faster your balance is reduced, the less interest you will accrue.

Snowflaking is, quite simply, a great way to get aggressive with your debts. It gives you a little extra push towards achieving your goals. Even better, you can also “snowflake” towards any savings goals you might have.

Don’t know how to get started? Here are 15 ways you can get snowflaking going in your own life. These are low-impact ways – far from starting a side business – to earn a few bucks without devoting countless hours to a major project, things that sync very well with what you already do or can be picked up whenever you feel like it.

Have a yard sale. Go through your house, identify the items you don’t use much, and sell them. Put them out for sale in your yard over a weekend (with reasonable prices) and put that money straight towards your debts or other goals.

Keep your aluminum cans separate. In Iowa (and in many other states), there is a nickel “deposit” that one pays for each aluminum can (or bottle) purchased. Keep these cans and bottles separate from other trash, then occasionally return all of them for $10 or so. It helps the environment and gives you a bit of snowflaking cash.

House-sit. If someone you know goes on vacation, offer to house-sit for them, look after their pets, and so forth. It’s pretty easy work and can earn you some quick cash to knock down some debts.

Walk pets. If you already walk your own pet in the morning, it’s not much of a stretch to stop by another house or two, pick up their pet, and walk that pet as well – for a fee, of course. Put that fee straight towards your financial goals.

Blow snow. Got a snowblower? You’ll be blowing the snow from your own lawn anyway, so why not set up an arrangement where you’ll blow the snow from your neighbors’ driveways and walks for $10 or $20. Then, take that cash and put it towards your goals.

Eat a “free” meal. Freeze your “utility” leftovers, then make a meal out of them once in a while – mix your leftover rice, vegetables, and chicken pieces to make a “free” meal. That’s worth $5, easy, so just snowflake $5 when you do it.

Take surveys. It’s a great way to make a few bucks at your computer while watching a TV show or a movie. It’s not a great money maker, but it’s low-intensity and can be done whenever it fits your schedule.

Mow lawns. Got neighbors who can’t mow very often? Mow their lawn whenever you mow theirs for a few dollars. You’ve already got the mower out, right?

Write. You don’t have to start a blog and post regularly (though there’s success to be found there, too). Instead, just write articles and submit them to services like Associated Content or make “lenses” at Squidoo. It’s a great way to burn an hour or two on a lazy evening and earn a few bucks in the process.

Do simple tasks. Amazon’s Mechanical Turk will pay you a few cents for a mindless task that just takes a few seconds. One of my friends does this on her laptop during commercial breaks when she’s watching a television show and makes enough to cover basic cable.

Babysit. If you already have kids at home, put out your shingle as a babysitter. Most evenings, you’re already at home, so you’ll be getting paid just to mind another little one around the house. I know several people who do this.

Deliver groceries. If you know of any elderly folks or shut-ins who have difficulty getting out to buy groceries, give them a ring whenever you shop and offer to pick up what they need. They’ll often pay you several dollars extra for the service (and even if they don’t, it’s a great way to help someone in need).

Make crafts. Many people enjoy some sort of craft as a hobby. Create projects that reflect the best of your work, then sell them on sites like etsy. Anything from knitting to woodworking to scrapbooking to jewelry making can make you a few dollars in your spare time.

Be a “search guide.” If you’re just browsing the ‘net, why not help others find what they’re looking for online and make a few bucks? Cha Cha does just that – people send text messages to the service with questions, they pop up on your computer, you figure out the answer, send it back, and earn a bit to throw towards your debts.

Give charitably. Give what you can to charities – goods and other donations. Then, when you get the receipts for tax deductions, figure up how much you “get back” on your taxes and contribute that to your debts.

Good luck!

Excerpted from:
15 Ways to Get Started on Snowflaking

Recently, I’ve been reading Nassim Nicholas Taleb’s book The Black Swan. Most of the book has to do with economics and mathematics and is not very relevant to personal finance at all, so I won’t bother doing a detailed review here. However, there are two pieces of the book that I think are worth talking about, so let’s dig in.

The Black Swan and Your Emergency Fund
The basic premise of The Black Swan seems like common sense: life is full of unexpected events. Big ones (like, say, 9/11), medium sized ones (like, say, a career shift), and small ones (like, say, your daughter wetting her pants just before you’re about to leave on an errand).

The Black Swan argues that our minds use a lot of tricks to hide these so-called “black swans” (his term for largely unpredictable and rare events) from us. We need to see the future as at least somewhat predictable, or else we wouldn’t bother making many plans at all. So, when we reflect on our past, it seems much more orderly than it actually was. Also, when we think about the future, we imagine something much more orderly than what will happen.

This idea makes a lot of intuitive sense to me. I know that quite often, when I think about the past, it does seem like an orderly progression of things. However, when I look at old diary entries and old videos, I see that there were actually a lot of “black swans” floating around. I didn’t see The Simple Dollar’s success coming at all, for one. When I went to college, I didn’t see myself working for a slightly eccentric German fellow who would basically set up my first career for me and also taught me how to pack effectively for business travel – he was a black swan.

Given that, I think there are a lot of things one can do in their own life that will prepare oneself for the arrivals of black swans of all magnitude.

Learn a wide variety of skills. I don’t just mean transferable skills, either. Know how to make things. Know how to build things. These skills will come in handy over and over again, often in unexpected ways.

Live frugally. I believe that’s one of the underlying messages here – frugality is a great economic and personal advantage. Knowing how to always maximize one’s resources makes one much more able to survive great changes in life – and also gives the person the ability to build up resources (as mentioned below).

Minimize your future costs. If you can use your money now to invest in things that will reduce your costs in the future, do it. The fewer resources required in the future to maintain your way of life means that fewer “black swans” can disrupt you.

Have a large, stable emergency fund. Having a large amount of cash reserves makes it possible for you to ride right through any small and medium-sized “black swans.” Your car unexpectedly dies? Not a problem. A career opportunity comes up? You can jump at it. You lose your job? Not the end of the world.

Have a good “opportunity” fund, too. Sometimes the unexpected comes along and it requires you to have resources. For example, there’s a large chunk of land near our house for sale. If it suddenly makes a nice drop in price, I’ll jump on it. If I happen to see the owner sometime soon, I may negotiate. It’s been up for sale for quite a while, so something nice may happen soon – not quite a black swan, but a good example. A real “black swan” might be that a neighbor is in a pinch and puts a sign on his car that says “$5,000 or best offer” and you can walk over there with $3,000 in cash, snipe it, then resell it for $5,000 with some footwork.

In short, keep some resources at hand, make yourself more useful, and minimize what you’ll need in the future.

The Black Swan and Investing
One particularly interesting point in The Black Swan comes when Taleb briefly discusses investing. His suggested portfolio for taking advantage of black swans is very unusual, yet it makes some sense.

He advocates putting 85-90% of your investment money into something extremely stable, like treasury notes. The other 10-15%, invest it in the riskiest things you can find – things where a black swan might make it go crazy.

So, let’s translate that into dollars. You have $10,000 to invest. You put $8,500 of it into treasury notes, which return 2% annually. You put the other $1,500 into Bangladeshi startups (for example).

At the end of the year, even if you lose all of the Bangladeshi money, you still have $8,670 – your total loss is only 13.3%. On the other hand, let’s say that your Bangladeshi startup goes bonkers and you get a 900% return on that investment, turning $1,500 into $15,000. You now have $23,670 – a 136.7% return.

Basically, Taleb’s argument is that, as I mentioned above, there are many more black swans out there than we initially believe there are, so one should take them for a ride without too much exposure to risk.

My feeling is this – if you have enough risk tolerance in your investments to put them into stocks, there’s some logic in using Taleb’s investment ideas. It puts a floor on the worst case scenario and gives a lot of upside.

Much of the rest of The Black Swan suffers from the same condition that befalls Taleb’s other books – lots of good ideas, but also lots of ego and self-congratulation. It’s thought provoking, but at times you want to go wash your hands.

Excerpted from:
Personal Finance and The Black Swan

After chatting with a few readers lately, I’ve been thinking about trying the “book club” concept again, where a single book is discussed in detail over a series of posts.

I’ve done this three times in the past:

The first time, with Your Money or Your Life, went really well, with tons of good discussion. You can browse through those entries here.

The second time, with Born to Buy, went pretty well, though it seemed to engage parents much more than other elements of the audience. You can browse through those entries here.

The final time, with The Intelligent Investor, didn’t go well at all. I think the key problem was that the material was too dry and the topic was perhaps a bit too far away from what most Simple Dollar readers are interested in, at least with that much coverage. You can browse through these entries here.

One big thing I learned is that doing it weekly was too slow. If I bring it back, it’ll last about a month to a month and a half, with three entries a week. Another thing I learned is that the book really needs to be in sync with what you all are interested in, because if you’re not interested, the discussion isn’t interesting. You seemed to get into the first two (especially the first one), but didn’t like the last one at all.

So, are you interested? I’m considering these eight books as possibilities (click through to read my earlier shorter reviews of them): Getting Things Done, The Total Money Makeover, Never Eat Alone, Debt Is Slavery, Scratch Beginnings, The 4 Hour Workweek, You’re So Money, and Green With Envy. I think each of these books have enough information and enough material in them to discuss to really get some good discussion going as well as teach us all something along the way.

If you’re interested in doing this again with one of these books (or another one), leave a comment. If you really are opposed to one book or another (or to the whole concept), leave a comment. I’ll try it again if there’s a clear consensus towards a particular book (or two) – otherwise, I’ll let this sleeping dog lie.

40 Places Where Freelancers Can Learn More About Business I tend to think that these are resources that anyone can use to sharpen their business skills, particularly if they’re self-employed or starting a small business. (@ freelance switch)

Stocks Are for Losers? A more appropriate statement would be that individual stocks are for losers. Although the stock market grows over time, that growth is pushed almost entirely by the top 25% of stocks – the ones that really hit it big and drive industries. The other 75%? A net loss. Interesting – and a great reason for wide diversification. (@ five cent nickel)

5 Ways to Dramatically Improve Your Finances – Beginning NOW These are probably the best five principles around if you’re just getting started turning your finances around. Great article with tons of links to more information. (@ simple mom)

Failed Frugality: Five Clues You’ve Gone Too Far In a nutshell, if your frugality is interfering with your interpersonal relationships and driving people away, you might want to rethink things. (@ wise bread)

Is Converting a Traditional IRA to a Roth a Brilliant or Stupid Idea Right Now? I actually get this question fairly often – and I agree with the conclusion. It entirely depends on the assumptions you make and your own situation – there is no blanket right answer, just like the 401(k) versus Roth IRA debate. (@ frugal dad)

Saying No This is one of the hardest lessons I’ve ever had to learn. If you’re good at something, the surest way to ruin it is to not know how to say “no” – you’ll take on more than you can handle and you’ll eventually fail miserably or burn out. (@ seth godin)

More here:
The Simple Dollar Weekly Roundup: Bringing Back the Book Club Edition

Several people I know have a treadmill in the garage or basement of their home. They bought it with great visions in their head of walking every day, but after the newness wore off, the treadmill began to gather dust – then it was folded up and put into storage.

One reader of The Simple Dollar invested almost $1,000 in pans for her kitchen. Six months later, she’s still mostly using the microwave and the pans are gathering dust.

One of my friends bought a netbook recently, thinking she’d use it all the time to keep up with her email better for her online business. It’s still in her purse, but she claims to have only used it three times in the last month. Instead, she still uses her cell phone.

I myself have done this. Take Wii Fit, for example. When I bought it, I thought it’d be great for establishing a simple cardio exercise routine. I do use it, but instead it just comes out once a week to play mini-games on.

Each of these purchases is essentially the same story. You have a behavior you want – a fitness routine, cooking good food at home, keeping more up-to-date with email – but you’re having some difficulty establishing it. So you make a big, splashy purchase in order to kick-start things – and then you find that didn’t do the trick either, and you’re left with a lot of money sunk into something you don’t really need.

Many people have stories like this (in fact, share yours in the comments!). Why is it so prevalent? I think there are at least three reasons.

First, we have the best of intentions. Most of us do actually strive to improve ourselves, but lives are complicated. Almost every moment is a balance of different things – the things we want to do, the things we should be doing, and so on. It’s often hard, even with the best of intentions, to push another routine in there, especially a time-intensive one.

Second, advertising appeals to those intentions. We see ads for exercise equipment, think about our goals, decide that “we could do that for twenty minutes a day,” and order the equipment. A good ad is designed to do that – prey on a notion already in our head and transform it into a purchase.

Third, a new routine is perilously hard to establish. You have to make yourself do it every day, at least for the first month or two. It doesn’t come naturally.

Add these all up, and buying a piece of equipment in order to jump-start a new routine is almost always a complete waste of money.

Instead, I propose some new rules for a new routine.

First, figure out a very simple routine – don’t dive in with a complex one. Walk for fifteen minutes a day. Practice the guitar for fifteen minutes. Cook one meal a day – and keep it a fairly simple one. Check your email three times a day. Check Twitter three times a day.

Second, try establishing the routine with minimal equipment. Don’t go buy a treadmill or new running shoes. Instead, go outside and walk every day for fifteen minutes – go around the block three times or so. Don’t go buy a netbook – instead, try checking your email on the equipment you already have. Don’t go buy $1,000 worth of pans – instead, buy one low-end pot and one low-end skillet and try making some very simple dishes every day. Don’t go spend $3,000 on an electric guitar – get an old acoustic one to practice on and see if it sticks.

Third, make room for the new routine. In other words, find an unhealthy routine and minimize it. Cut your television viewing down to an hour a day – or less. Trim down your internet usage if you use it excessively. Stop going out to eat so often – cut it down to once a week. All of these choices free up time – and that free time can easily be filled by your new routine.

Finally, make reminders. Leave your equipment out where you can’t miss it. Put your guitar in your favorite chair. Sit your jogging shoes there. Keep your pans right out on the stove. Leave recipes out where you can find them. In short, make your new routine screamingly obvious at all times, giving you the best chance possible to make the leap to maintain it.

Good luck on the new routines in your life.

Here is the original post:
Buying Something to Force Yourself Into a New Behavior Doesn’t Work: New Rules for a New Routine

Many newer readers of The Simple Dollar haven’t been exposed to the hundreds of great articles in the archives of the site, so this is a weekly series that highlights the five best posts from one year ago this week, as well as the five best posts from two years ago this week. I call it … the Time Machine.

One Year Ago (May 31-June 6, 2008)
Planning for the Long Haul: My Family’s Lifetime Financial Plan We’re still pretty much sticking to this plan a year later. Nothing has really changed, except for, to some extent, the “retire early” part, since we’re both passionate about our work. We’re also on track for our 2009 goal.

Money Magazine’s “7 Investments You Need Now,” Portfolio Theory, and My Own Plans for the Future A mixture of railing against the “fund of the month” type of financial writing along with how to translate it into something truly useful, as well as a primer on basic portfolio theory. Mmm… a tasty mix!

Making Frugality a Game For people who thrive on competition, this is one way to make frugality really work in your home.

Got Credit Card Debt? Ten Tactics to Use Right Now to Get It Under Control If you’re sitting there with a big mountain of credit card bills and you’re simply wondering where to go from here, here’s ten things you can do immediately to start taking charge of the situation.

Ten Clever Money Savers You Might Want To Try This Weekend Some of these are really timely, because they focus on tactics that work great in June but perhaps don’t work well in November.

Two Years Ago (May 31-June 6, 2007)
Ten Financial Matters I Wish I Had Discussed With My Wife Before We Got Married This is a pretty good list of things for any couple to discuss, particularly during the run-up to marriage, but also afterward. My wife and I would have started our marriage on a better foot with these conversations.

Comparing Yourself To An Earlier Generation – And Blowing The Comparison To Bits The financial reality of your generation is different than the ones before it – and the ones after it, for that matter. Don’t judge your success by what your parents did at a similar age – and don’t judge your children’s success by where you were at their age.

Save Time, Effort, And Money With A Monthly Home and Auto Maintenance Checklist If you own a home or an automobile, it’s well worth your while to spend an afternoon once a month practicing proper maintenance. Things will last longer and you will save money – a lot of it. Here’s a lengthy checklist to get you started.

The Simple Dollar Convinces Someone to Quit Their Job This was actually the very first moment when I realized that the things I wrote really impacted people’s lives. It was exciting, but simultaneously quite scary.

A Guide To Eating Well Without Spending A Fortune Although we spend more on food than we should, it’s primarily because we buy things like organic milk and free range chickens. Our baseline of food spending is actually really low, and here’s how we do it.

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

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

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

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

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

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

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

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

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

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

See the rest here:
The Simple Dollar Time Machine – June 6, 2009

My three year old son loves to go to the grocery store with Mom and Dad. He wanders around with us, listening to our discussions about which products to buy, and quite often expresses his own opinions. He’ll remind us that he loves V8 Fusion (our preferred fruit juice, since it’s 100% and also is half vegetable juice) and often dallies for a long time near the Pepperidge Farm goldfish crackers, as I noted two years ago (and depicted as well):

As we shop, we make tons and tons of little decisions along the way. Those decisions, on their own, seem inconsequential.

Should we buy the bulk can of diced tomatoes or the smaller can?
These tortillas feel softer, but they’re way more expensive – is it worth it?
The free range whole chickens are on sale! Should we stock up?

A choice one way or another here might save us a dollar or cause us to spend a dollar more. In the eyes of many people, it’s an inconsequential decision – just make it and keep going. One dollar doesn’t make a huge difference, right?

The problem is that each little buying decision you make is deeply tied to other buying decisions, whether consciously or not.

How so, you might ask?

All of our buying decisions are based on a set of principles in our head, ones that are often so well-grounded that they don’t even pop up in conscious thought.

Here’s a thought experiment to help you see what I mean. Imagine a product you would never buy in a grocery store – pork rinds, maybe, or perhaps insanely potent hot sauce. Now, what about that product would cause you to not buy it? You’re likely to pop up an immediate simple answer – I don’t like the taste or it’s unhealthy – but on other purchases, you’re quite willing to overlook that principle for other reasons.

In truth, when we make a decision to buy in the grocery store, we’re trying to reduce a big set of principles and inputs down to one split-second decision. And often we feel we’re completely justified in that decision – and we move on with life.

It is very easy to tease apart each little buying decision, tell yourself that it doesn’t really matter that much and that it’s okay to splurge, and then essentially ignore your final tally when you get to the checkout because each decision was justified in your mind. Doing that, though, is a game that will, time and time again, put your wallet in the hurt locker.

So, what can you do to overcome this problem?

The easy methods are the shopping list and the meal plan. Making a shopping list in advance of your visit to the grocery store simply serves to reduce the number of decisions you have to make. This, of course, leads you to making fewer bad decisions.

But that’s just the start. Once you’re in the store with your shopping list in hand, commit to three more things.

First, simply do not put anything in your cart that’s not on your list. Your list, if it’s thought out at all, should have everything you need for your meals for the next week. If you see something you feel like you need or deserve, jot it on the back of the list for next time.

Second, mark any items that you’re not simply searching for the cheapest version of. On our list, I like to put a little X by any item that I don’t intend to just buy the cheapest version of. For example, with diced tomatoes, the various brands and cans are identical in terms of ingredients, so we usually just get the cheapest version. This, again, reduces the number of opportunities for poor impulse decisions in the store.

Third, if you have specific brands in mind (because of coupons or because of previous buying experiences), put those on your list, too, along with the size. For example, we usually have a big stack of coupons for V8 Fusion (100% juice, half fruit and half vegetable). So, instead of just writing “fruit juice x 3,” I’ll write “46 oz. V8 Fusion x 3″ on the list. In other words, if you make the list more specific, you further reduce the number of potential impulse decisions in the store.

Using all of these techniques, you’ll end up making just a handful of in-the-moment choices in the grocery store – and with fewer potential decisions, you have fewer chances to make poor ones. The end result? A cart full of items that you actually want and a much smaller grocery bill.

See more here:
Living and Saving in the Moment

One of the biggest reasons I like living where I do is that two or three times a summer, someone hosts a block party. The format is pretty simple – bring a side dish, grab a plate, fill up, and talk to people. Yet, I know from watching the hosts, the actual hosting can be really frenetic – the hosts often look completely frazzled, even if everyone else is having fun.

Block party. Photo by jeffk.

I had planned on having a block party early this summer to celebrate the release of my first book, 365 Ways to Live Cheap, but the release date wound up being substantially earlier than I expected. So I decided to push the idea off until the release of my second book (which I anticipate to be late next spring).

During the process of thinking about the party, I stopped by and had a chat with a person who had recently hosted one. He told me that it was (a) surprisingly expensive and (b) a lot more work than he expected it to be, but it was very worthwhile because it gave him an opportunity to meet so many neighbors – something I find very valuable, too.

So I resolved right then to plan out a frugal block party. If you’ve ever wanted to host a block party but have been thrown off the scent by fear of the cost and time investment, here are the tactics we’re using to trim both factors without reducing the fun.

Buy Only the Basics – But Buy Far in Advance As soon as you’re sure you’re going to host a block party – even before you set a date in stone – make a shopping list. The earlier you make a list, the longer you have to shop for the items – meaning, the more time you have to find huge sales on the items you need to get.

The items to look for are pretty simple: paper plates, silverware (I prefer biodegradable corn plastic silverware), napkins, and cups. Over a long period of time, it’s easy to find each of these items on sale somewhere.

Invite a Neighbor or Two to Co-Host This enables you both to serve as hosts and be involved in the meeting and greeting of everyone, but split the costs and effort in setting up, hosting, and tearing down.

Estimate High on What You Need Estimating high will cause you far fewer headaches than estimating low. The items that are left over can be saved and used again for other occasions, whereas if you start to run low on items during the party, panic will ensue and difficulty will follow – including high prices because you couldn’t shop around. Of course, if you’re buying in bulk, this likely will not be a problem.

>Rely on Guests for Side Dishes and Some Beverages Preparing a flyer for the party is key – and on that flyer, be sure to highlight some key information – your address, your phone number, and also a note to bring a side dish.

As for beverages, you can set out a few beverages in bulk – like water and tea – in self-dispensing jugs with cups, but if other beverages are desired, you should note this for guests who might come.

Depending on available seating arrangements, you may also ask guests to bring their own lawn chairs. In some neighborhoods, there will be a plethora of options – picnic tables and the like. However, you may want to have backups for some guests.

Borrow Equipment Don’t hesitate to ask the people you know well if you can borrow some items for the party, such as extra chairs they might have, extra tables, or even their grill. The more items you can borrow, the fewer items you have to invest money in for such a limited use.

What About Entrees? This is going to be an experiment in cooking for a large group, so go with something you can prepare easily in large quantities. I almost always think sandwiches are a good idea. Have bratwursts, hot dogs, and veggie dogs (for any vegetarians) – or have burgers (beef and soy options). Another option – pulled meat sandwiches.

Along with these, you’ll need to buy buns in bulk, as well as condiments. Again, plan this as far in advance as you can, so you can seek out bargains.

Get Cheap Help A big reason that you’re having this party is so that you can meet neighbors and build relationships, not run around on small errands. One good solution is to hire some neighborhood help – and one great solution for that is enlisting any teenage children that live nearby. $10 or $15 is a small price to pay to have someone making sure that there are no emergency needs or other things, keeping beverages rotated, and so forth, leaving you to actually meet and greet people.

The Week Before Clean! Clean your garage. Clean the yard and make sure it’s mowed two or three days before the party. Clean any portions of your house that people might use for the restroom – and also in event of rain. It’ll leave you feeling refreshed and more prepared.

The Day Before Borrow equipment from neighbors and store it in your garage. Begin thawing anything that needs thawed. Make sure all equipment that you’re going to rely on is in proper working order – fire up grills and so forth. Doing this now will save you a lot of money and stress compared to putting it off.

The Big Day Something will go off wrong. Expect it. Don’t stress out when it happens. Recognize that it’s just part of life, and make do as best you can. If you’re prepared for this, you won’t react with strong emotions and you won’t be drawn to throw money at it just to solve it.

Also, plan to cook so that a large batch of food will be put out thirty minutes after the start time. This gives the on-time arrivers plenty of time to mingle, get side dishes set up, and when people start going through the food line, the first batch won’t sit out there for long. I find that putting food out when people start arriving usually means many people just eat and run and many other people end up eating food that’s sat out for a long time.

The biggest thing, really, is not to panic. Something will go wrong. Don’t worry about it too much. Spilling a beverage won’t ruin everyone’s day. Nor will being fifteen minutes late with the entree. No matter what, don’t throw cash at the problem – just solve it calmly, with what you have.

Any other frugal and/or time-saving suggestions for block parties?

Read the original:
How to Organize and Host a Frugal Block Party

A career is like a brick wall. If it’s built well, from a collection of bricks that fit well together and are thoughtfully put in place, it can be a very strong foundation for whatever dreams you may want to reach for. A great collection of bricks, well assembled, will build a platform for you that allows you to stand tall in your profession.

Yet, sometimes, we find ourselves in situations where we must knock the wall down and start over – or so it may seem.

I argue that the entire scope of our professional life is a series of bricks. Every time we complete a class, we have another brick to add to our wall. Every time we complete a major project, we have another brick to add to our wall. Our choice of bricks – and where we place them in that wall – makes all the difference.

My Story, In Brick Form
I usually think that personal stories explain an idea very well to begin with, so let’s start with my college years. I made the unusual choice of double majoring in two “hard” sciences – biology and computer science. My coursework in these areas helped be to build two seemingly separate brick walls…

Yet they weren’t entirely separate. Any hard science has some elements in common with other ones: a strong preference for logical thinking, the scientific procedure, the teasing apart of complex problems. It’s easy to see how training in one hard science lends itself in a strong indirect fashion to other hard sciences. However, a degree in computer science does not open doors for a career in biology, and vice versa.

You’ll also note that third brick wall sitting over there, separate from the others but not quite as tall. This was my ongoing passion for writing, a smaller wall built of bricks made from my own self-directed projects and flailings about. We’ll get to that one later on, but for now, it’s clearly not up to snuff.

Luckily, late in my college career, I found a brilliant mentor who helped me to bridge those gaps. He employed me in his research lab, taught me many techniques for applying computer science to biology, got me into some graduate-level courses, and actually paved the way for many of my jobs right after college.

It was upon that foundation that I started my career. I spent a few years digging deep into life science data analysis using computers. I tore apart databases. I studied (and applied) various statistical models. And, along the way, I thoroughly enjoyed myself.

Yet, through it all, I still yearned to write. It felt like the thing that I was called to do.

So, as time went on, I began to seek out opportunities at work to communicate the ideas I was working on with others. This was hard at first – I’m a natural introvert and it took a lot of work for me to get over it. I started by taking charge of writing reports on the work that my lab was doing. Over time, this grew into making presentations on scientific data and scientific tools. Eventually, I was giving long presentations in front of rooms full of people who knew far more about hard science than I did – but I was able to communicate with them, translating the ideas in my head into a common language we could share.

It turned out that this work experience really opened the door to further exploration of my own writing. I began to take my writing in new directions, writing more nonfiction things and exploring new areas – writing about parenting and, eventually, writing about the personal finance changes going on in my own life – The Simple Dollar, in other words.

Eventually, my writing took off and I made the choice – for the time being – to focus entirely on that for my career.

Will I return to science? There is a very large part of me that wants to go back to graduate school. There’s also a large part of me that feels very compelled to write. Perhaps someday I’ll wind up writing science fiction or “pop” science books along the lines of Fermat’s Enigma. I’ve certainly built a foundation for it.

What Is a Brick?
A brick is any distinct element that helps you build a career. Some common bricks include:

Close professional relationships People who you’ve helped in the past and you can rely on for help in the future if you were to need it. Close confidants or that guy down the hall who owes you one and sticks by his word both apply here.

Completed coursework What classes did you take in college? What degrees did you achieve? Both are important – one builds skills and knowledge, the other is pure resume fodder.

Projects, completed and otherwise A completed project teaches you skills and becomes perfect resume fodder. Yet, I’ve often found that failed projects tend to provide you with much more in terms of personal growth.

Natural talents Everyone has some natural talent in some area. Yes, some are blessed more than others, but each of us has something to build from.

Membership in reputable organizations Groups of like-minded people are not only resume fodder, but are also great places to build strong relationships that can only help you later in life.

Training Much like completed coursework, training both offers you extra skills as well as potential juice for the ol’ resume.

Choosing Where to Place Your Bricks
As you can see, a few bricks are somewhat set in stone (talents and passions). For the most part, you can’t control these – they’re bricks that are already put in place for you.

Most bricks, however, are ones that you choose. You choose what to major in. You choose what classes to take. You choose which projects to tackle. You choose what organizations to join. You choose which friendships to cultivate.

Each of these bricks requires some time investment and distinct effort on your part. A semester spent in a class. Several afternoons spent with a business acquaintance. Three weeks of burning the midnight oil on a project or a presentation. A year spent as president of the Rotary Club.

Some bricks fit anywhere – they’re transferable skills. Time management. Administrative skills. Creativity. Interpersonal communications. Information management. Personal development. Leadership. All of these things fit well into any wall you might want to build – and can be used over and over again.

Other bricks can only be used in certain walls. Specific training. Specific projects. Certain organization memberships. They’re vitally important in building some walls and completely useless in others.

A Brick-Based Alternative to Knocking Down Your Wall
So, let’s return to the situation I described in my own story. What if you have two completely separate walls, one built from your own passions and interests and another built from experience and work?

My suggestion is twofold.

First, work on those transferrable skills. They fit into almost any wall. Find opportunities to work on them and grow them whenever you can. This will not only help your career, but it’ll help any other directions you might choose to take in life.

Second, look for “bricks” that can build a bridge between the two. Jump hard on any project at work that lets you incorporate pieces of your other passions. You’ll build skills and produce a brick that bridges both walls. You can even try to seek these out – suggest possible projects at work, or use your work for inspiration in your other endeavors.

The Final Question
The real question here is simple.

Right now, are you working on another brick to add to your wall so you can stand above the crowd? Or are you peddling in place while others add bricks to their wall – and their walls grow just a bit taller and stronger?

Credit:
Building Your Career, One Brick at a Time

Long time reader Bob writes in:

I like reading all of your suggestions about making a grocery list and searching for bargains. My technique is actually pretty simple. I trust Consumer Reports completely – they’ve never led me wrong. So each month when I get an issue, I write down their “best buys” in each product category. That’s what I buy – I just look for the best deal among these. I often use coupons for things on that list, too.

I actually really like this idea – it provides a wonderful balance of getting quality items for a good price. In fact, I decided to give it a try myself with a few product categories just to see the results with my own eyes, so I pulled out the May 2009 issue of Consumer Reports and went shopping with five product categories in mind.

Kids’ Breakfast Cereal
Consumer Reports identified four best buys for cereals for children, balancing health, tastiness, and price: Cheerios, Life, Kix, and Honey Nut Cheerios.

I pulled out the grocery flyers this past weekend and found a sale at Target on the General Mills cereals (Cheerios and Life). I then flipped through the coupons and quickly found a coupon for those cereals.

End result: the price for a “double box” of Cheerios or of Life, after the coupon, was cheaper than almost any other cereal in the aisle, with only some generics beating them. After doing an ingredient and Nutrition Facts comparison, Life was our product of choice. The kids utterly love it and it’s pretty good for them, too.

Glass Cleaners
Consumer Reports identified five best buys for window cleaners: Windex No Drip Foaming Action, Sprayway Ammonia Free, Windex Crystal Rain Ammonia Free, Glass Plus, and Streak Free with Ammonia (the Wal-Mart store brand).

The solution here is a simple one: shop at Wal-Mart and get the store brand at roughly a third of the price of the other brands.

Coffee
I’m far from an expert on this category (as I don’t make coffee at home – keeping it as an out-of-home treat keeps me from getting addicted to the morning joe), but Consumer Reports identified Eight O’Clock 100% Colombian, Caribou Coffee Colombia Timana, and Kickapoo Coffee Organic Colombia as the three best choices.

In the stores I visited, Eight O’Clock 100% Colombian was the cheapest of the three by far, usually costing less than $5 for a 12 ounce bag of whole bean coffee. Here’s the trick, though – there were many coffees that were less expensive.

Since I’m not familiar with this area, I asked my wife for some input and she said that unquestionably, the price premium of the Eight O’Clock coffee over Folgers is worth it. She claims the volume difference in the containers is deceiving, since it takes substantially more Folgers to make good coffee than whole bean Eight O’Clock. So, three votes for the Consumer Reports model.

Tub & Tile Cleaners
Consumer Reports says Comet Scratch Free Disinfectant with Bleach, Ajax with Bleach Scratch Free, Kaboom Shower Tub & Tile, and Green Works Natural Bathroom Cleaner are the best choices, with Green Works being not quite up to the standards of the other but the best of the “natural” cleaners.

Coupons for Comet are extremely easy to come by and they reduce the cost of Comet below the store generic brand for that item. It works well for cleaning our tubs.

Creamy Peanut Butter
This was the one area where there was some debate. Consumer Reports identifies Smucker’s Natural and Smucker’s Organic as the two best buys for peanut butter.

Smucker’s Natural is substantially cheaper than Smucker’s Organic, ringing in at $2.49 for a 12 ounce jar at my store of choice. However, there were several peanut butters available for substantially less on the shelves. Having tasted Smucker’s Natural, I can say that it is quite noticeably tastier (much stronger peanut flavor) than many of the lower-end brands, and the texture is better, too. An ingredient comparison shows that it’s healthier as well.

For me, Smucker’s Natural would be the purchase if I had a coupon for it. Otherwise, I’d put off buying the peanut butter.

My Conclusion
From my experience, Bob’s strategy simply works if you’re trying to get the maximum value for your dollar (and not just seek the bottom dollar). This strategy pairs up well with looking at coupons and flyers, reducing the price benefit that the store brand has over the “best buy.”

Will I switch to this strategy? Perhaps not completely, but I am starting a list of the Consumer Reports best buys. It works surprisingly well.

Read more from the original source:
Using Consumer Reports to Assemble Your Grocery List

In the next few weeks, I’m going on a lengthy road trip with my wife, my children, and my parents. We’re going to visit several relatives that are spread out all over the southern part of the United States. Along the way, we’re planning longer stops in the Dallas/Fort Worth area, the New Orleans area, and the Memphis area (in fact, if you’d like to have me speak at your library or other event in one of those areas in early June, contact me).

Our trip, as currently planned, is 2,548 miles in length – and that doesn’t include the inevitable driving around in local areas or any side trips we decide to take along the way. Yes, it’s long. Yes, it’s fairly intimidating.

Originally, our plan for the trip had involved taking two vehicles – our Prius and my parents’ car. From our perspective, this was a good idea, since the Prius gets great gas mileage, but my parents’ car doesn’t do as well.

As we discussed the trip more, we came to the realization that it made much more sense to drive in one vehicle, for several reasons.

First, one vehicle at 20 miles per gallon consumes the same amount of gas as two vehicles at 40 miles per gallon. In short, even if one of the vehicles is our Prius, we’re still better off purely in terms of gas driving a minivan.

Second, maintenance costs over 2,500 miles are significant. The average car has 5.3 cents per mile in maintenance costs beyond fuel – oil, transmission fluid, coolant, tires, and so on. That’s a total of $132.50 per vehicle over the trip.

Third, 2,500 miles on your vehicle is 2,500 miles of depreciation. Again, the average car depreciates roughly $0.20 per mile – this is very hard to precisely estimate, but it’s a real value. Again, by reducing to one vehicle, we save $500 in depreciation. Note, here, that depreciation includes major repairs and other such factors.

Fourth, two cars means double tolls. On our trip, assuming no detours, each car would be paying somewhere around $15 in tolls. Reducing to one car saves another $15.

In total, we realized that we would save roughly $650 by using just one vehicle on this trip – and that assumes no fuel savings and also assumes no detours, no construction, and no environmental impacts.

At that point, we really beat the pavement to accelerate the purchase of our second vehicle. The problem, though, was that we couldn’t find a vehicle we really wanted.

So, finally, my wife raised the question: would it be cheaper to just rent a van for this trip?

The trip is scheduled to be nine days in length. I did some calling around to local rental services and found several vans that could be rented for $400-500 for the length of the trip – unlimited miles.

So, let’s look at the math. We would save depreciation on two vehicles ($1,000), maintenance on two vehicles ($265), toll on one vehicle ($15), and a small amount of fuel savings, too, for $400. That’s a total savings of $880.

In order to make sure there wouldn’t be any nasty surprises, I contacted our auto insurance provider, who told us that coverage while driving the rental would be essentially identical (in terms of our cost) to coverage if we were driving our own car. Thus, no need for the additional cost of rental car coverage.

Thus, for our purposes, the decision has been made – we’re going to rent for this long road trip and split the cost. This choice will save us $440 and also save our parents $440.

Sometimes, thinking outside the box a bit can save you a surprising amount of money.

Read the original post:
Is Renting a Vehicle for a Long Road Trip Worth It? Our Math Says Yes

Recently, I’ve started contributing a weekly article about saving money on small business expenses to OpenForum, a site that covers a wide variety of small business topics.

I’m also hosting those articles here on The Simple Dollar in its own “small business” section. If you’d like to visit this section, you can check it any time you like by visiting the “small business” link along the top of any page.

So far, I have two articles posted there:

Dreading the Cost of Software for Your Business? Try These Free Solutions discusses a giant handful of great free software solutions for small businesses, enabling them to redirect their resources to other things.

My favorite one, though, is A Culture of Empowerment, which discusses how my father used empowerment of his fishing employees – myself included – to drive them to achieve more, and also fuel his own business.

Articles from me will be appearing there weekly, and I’ll include new ones in the weekly roundup. Any time you want to browse through them or check for a new article, just hit the “small business” link along the top of any page.

Here are some additional great personal finance articles from around the web.

25 Traits of the Not-So-Well-to-Do This is basically a checklist of financially bad behaviors that I considered completely normal just a few years ago. (@ free from broke via free money finance)

Five Secrets to Sustaining Good Financial Habits I especially agree with the idea of surrounding yourself with like-minded people. If you’re trying to be thrifty while spending your time with big spenders, you’ll find it very hard to save money. (@ frugal dad)

Office Space: Why I Rented a Place to Write I went through almost this same internal debate. My final solution was easy – I just started closing the door to my office all the time. It was a great psychological barrier. (@ get rich slowly)

Argentine Wine Hack: Make Bad Wine Better This is a really clever trick! If you buy lots of inexpensive wines, you’re going to get some lemons, so this is a great way to turn those lemons into lemonade! (@ wise bread)

How to Review Your Equifax Credit Report This is an excellent look at how to read a credit report. Sometimes, they can be really confusing. (@ bargaineering)

Personal Change You Can Measure I find that, if you can make a change measurable and keep measuring yourself on a regular basis, that measurement becomes a great motivator for change. (@ think simple now)

55 Best Ways To Save Money: Frugal Ideas From Our Readers This is simply an awesome collection of tips. (@ digerati life)

Read the original here:
The Simple Dollar Weekly Roundup: Open Forum Edition