The Simple Dollar offers a month-long plan for fixing your finances. All you need is an open mind and an hour each day.

If you’ve followed this plan all the way to this point, congratulations. Even if you’ve chosen to not follow every point, you have at least spent some serious time evaluating your finances and your spending and put them in the context of your overall life, which puts you already far ahead of many of your peers.

However, the reality of the world leads many of us to forget what our overall goals are in a desire to be accepted and to feel good. Our society tries to convince all of us to spend endlessly. We’re constantly bombarded with enticements and reminders of how “great” it is to spend.

Here are seven useful tips that can help you keep your mindset in the right place, enabling you to live what you love every single day. Some of these might not work for you; just use the ones that seem as though they would be a powerful motivator.

Wrap your credit cards in a slip of paper that lists your life goals that you defined at the start of the month. It shouldn’t take more than a little slip of paper. This way, every time you go to pull out your credit card, you see your goals right there – and it becomes a reminder that by using this card, you are likely pushing away those goals.

Reevaluate your social situations. Is an evening with friends always expensive? Is a day with the girls involve a big pile of shopping bags? If these things are true, your social situations may be causing you big problems. You have several options: suggesting other activities and seeing what happens, going along and capping your own spending, or simply “dropping out” of the social club and instead investing yourself in new activities – and perhaps new friends that better match your life goals.

Engage in inexpensive activities that match your life goals. If you dream of becoming a writer, don’t spend your time at the mall buying stuff. Engage in online writing communities and look for ways to spend your time practising your writing. For almost any life goal or dream you have, there are inexpensive activities you can become involved in that synergize with that activity. For me, I’ve started this blog as a way to channel my writing and also educate myself about financial issues instead of spending my time doing the same old thing; it’s a great way to spend my time that’s much more in line with my life values, plus it’s very inexpensive.

Use the ten second rule. Whenever you find yourself about to buy anything, count to ten and ask yourself whether or not this purchase really meshes with your life goals. Quite often, you’ll find that it doesn’t, and this will be enough to cause you to put that item back on the shelf or to close the browser window.

Keep a laminated “life goals” card in your pocket. This way, every time you reach into your pocket, you’ll feel that laminated card. It will serve as a constant reminder of your goals and help keep your mind on a strong path.

Keep yourself clean. This seems bizarre, but a healthy personal appearance is well worth the money. By this, I don’t mean investing money in clothing. I mean that investing adequate time in keeping yourself clean. You’ll feel more confident and in control, and this will enable you to more easily resist the siren’s call of spending.

Live what you love. Every single day, do something that is directly in line with your lifetime goals, and as you go to sleep that night, think back on it. Very few things make me feel better as I’m going to sleep than reflecting on my day and realizing that I spent today not just doing things, but actually living my life.

Ready? Let’s continue on to the next day.

For some, deciding when to cut financial ties is easy. In my situation, it was the day I left for college: other than birthday and Christmas gifts, I was basically on my own after that (though my mother would irregularly send me small amounts of cash with the purpose of “going out and having fun” during my first year of college).

For many others, though, finding the right time to sever financial ties can be difficult. Should it end when they go to college, or should you support them throughout their studies? Should you continue to give them money while you can “afford” it? For many families, these are questions without clear answers, and by avoiding them, you’re merely postponing the inevitable.

So when is the right time to cut ties?

When your heart even begins to hint that it’s time, it’s almost always time. Many parents tend to wait longer than necessary to cut financial ties to their children out of a sense of obligation. The truth is that by paying allegiance to this imagined obligation, you’re actually damaging their personal growth by supplying them with financial support.

When your parents cut ties with you. Think back to that period and ask yourself whether that was the right time – and whether you learned important things from that separation. This is the best example you have in your life of how to cut the ties, so use it as a frame of reference to decide what is right for you.

When your children are using the money to buy many frivolous things. If you see that your children are buying brand new automobiles and other items that are clearly beyond their means without your support, it’s time to consider cutting the support because they’re beginning to use your support as part of their expected salaries.

When they begin to expect and demand what you give them. When support of an adult begins to transform from assistance to entitlement, it’s time to stop giving and let them start living.

Here are some tips for when the time comes to cut financial ties.

Make it clear why you’re doing it. Don’t just call them up and say, “In six months, you’re done,” because that will just cause resentment. Instead, call them up and reinforce the fact that you feel they are ready to be on their own. Don’t let it be about money, let it be about independence and respect for a maturing individual.

Give plenty of forewarning. Do not just cut ties without warning, because they may have made financial commitments relying on your support. Instead, give them a cutoff date that’s very clear (a calendar date, not “in about a year”). You might also want to start slowly reducing the support.

Offer advice and nonfinancial support. Offer as much advice as they want, but don’t thrust it upon them. While doing this, be very careful to follow some basic advice for talking about money to adult children. Don’t be pushy about it, but make it possible for them to come to you.

In short, you should frame the conversation about independence and respect, not around dollars and cents.

This week, The Simple Dollar takes a look at David Bach’s The Automatic Millionaire. I enjoyed Bach’s earlier book, Smart Couples Finish Rich, but will I like this one, too? Let’s find out.

The first portion of the book focuses on the “pay yourself first” concept, which basically boils down to putting away investments for the future right off the top, before you even look at living expenses. It’s a simple concept, but one that most people either (a) don’t believe in, or (b) believe is far too difficult to try (usually because they’re “just getting by” as it is).

The truth is that the “pay yourself first” concept, even if you pay yourself only a small amount each day, simply works. Let’s say you are able to put aside ten dollars a day; that gives you $300 a month to invest. Start doing this when you’re 25 and put it in investments that earn an average of 10% a year, do you know what you’ll have on your 65th birthday? $1.66 million.

Many people think about a ten dollar bill and can’t possibly connect it to being a millionaire, but the power of compound interest makes it so, and people who can harness the power of compounding are the ones that become rich; people who don’t spend their lives scraping together two dimes to get by. Bach spends several pages focused on this concept alone.

Bach also spends time explaining how it’s not difficult, either: just make the whole thing automatic. Withdraw it automatically from your paycheck each pay period and you’ll soon find your savings building up … and up … and up. Automation is the key, though, because without automation it becomes very easy to simply not save the money and instead use it for an unnecessary living expense.

With regards of coming up with money out of your monthly income and expenditures to actually start doing this… we’ll discuss that tomorrow.

The Automatic Millionaire is the thirteenth of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.

Tiger Woods has won seven straight PGA events against the best players in the world. I can’t hit a ball out of a bunker. Sometimes, people with skill amaze you so much that you begin to believe that they’ve got a touch of the supernatural. Anyway, on with today’s posts.

Making The Financial Sacrifice To Get What You Want Great post – sometimes you have to suck it up and make sacrifices if you want to reach your goals. Of course, it’s much easier to go get a latte. Remind yourself of that when you’re eighty and eating Alpo. (@ my two dollars)

Giving Up A Childhood Fantasy Because You Do Not Want To Sink Into Debt What are you living for if you don’t take advantage of these moments? If I’m faced with a situation like this, where if I choose the “sensible” thing, I’ll regret it for the rest of my life, I’ll be going into debt for it. (@ blogging away debt)

If you haven’t entered yet, you might want to check out this week’s giveaway, a copy of Jim Cramer’s latest book, Mad Money. Entering is easy – just leave a comment on that post listing your stock of the year for 2007, and you’re entered! Only four days left, so get clicking!

Also, take some time to visit this week’s Carnival of Personal Finance (a collection of personal finance postings from a number of blogs, at five cent nickel this week) and also this week’s Carnival of Debt Reduction (a similar collection, this time focusing on debt reduction, at No Credit Needed Network).

Please note that the Borders Rewards program has changed significantly since this was written. I leave this post up as a primer to demonstrate that customer rewards programs can be quite financially lucrative.

It has been repeatedly shown that purchasing books online is substantially cheaper than buying books in brick and mortar bookstores, and for obvious reasons: online supply chains and number of customer service workers per shopper are much smaller than brick and mortar stores. Yet, as an avid book buyer, I still enjoy the aesthetics of a bookstore quite a lot, even as I realize that I’m far better off financially at the library.

My personal favorite bookstore in northern Iowa is Borders. Their stores are clean, crisp, and have a lot of chairs for sitting while browsing through books. I thoroughly enjoy stopping at Borders for my book buying purposes, even though a simple comparison of book prices demonstrate it to be quite expensive.

Or is it? I spent some time on Friday doing a three way comparison of costs at amazon.com, Borders without leveraging their Rewards Program, and Borders with the Rewards Program, and I walked away quite impressed with their Rewards Program. If you’re a frugal book buyer, you should definitely consider joining the program.

How does the Borders Rewards Program work? The Borders Rewards Program costs nothing to join. Whenever you make a purchase, it does not directly give you a discount; instead, you earn points equal to 5% of your purchase. Each December, you can use your points to buy books at Borders. So, if you bought $250 worth of books, DVDs, and CDs at borders in a given year, you would have $12.50 in store credit at Borders to use in December.

There’s another feature of note as well. If you spend $50 in a calendar month at Borders, you are qualified for a “Personal Shopping Day,” during which you can take 10% off all of your purchases at Borders during that day.

Beyond this, the service regularly emails coupons for strong discounts on books (20% off any title, and so forth), but I won’t include these in this comparison.

What are we looking at? For the purposes of this comparison, I’m going to use the first twelve personal finance books I’ve reviewed in my 52 Personal Finance Books in 52 Weeks series:

The Millionaire Next Door by Thomas Stanley and William Danko
The 9 Steps to Financial Freedom by Suze Orman
Nickel and Dimed by Barbara Ehrenreich
Make Your Kid A Millionaire by Kevin McKinley
The Total Money Makeover by Dave Ramsey
Your Money or Your Life by Joe Dominguez and Vicki Robin
The Richest Man in Babylon by George S. Clason
Rule #1 by Phil Town
Smart Couples Finish Rich by David Bach
The Number by Lee Eisenberg
The Wealthy Barber by David Chilton
Real Money by Jim Cramer

Prices at amazon.com: I looked up the prices of each book at amazon.com, going always with the cheapest new version available.

The Millionaire Next Door – $10.20
The 9 Steps to Financial Freedom – $10.61
Nickel and Dimed – $7.80
Make Your Kid A Millionaire – $11.05
The Total Money Makeover – $16.49
Your Money or Your Life – $10.20
The Richest Man in Babylon – $6.99
Rule #1 – $16.50
Smart Couples Finish Rich – $10.17
The Number – $17.16
The Wealthy Barber – $11.20
Real Money – $15.60
Total: $143.97

What about Borders? I used a kiosk at Borders to price these same books out, again using the cheapest price they had for a new copy:

The Millionaire Next Door – $15.00
The 9 Steps to Financial Freedom – $14.95
Nickel and Dimed – $13.00
Make Your Kid A Millionaire – $13.00
The Total Money Makeover – $24.99
Your Money or Your Life – $15.00
The Richest Man in Babylon – $6.99
Rule #1 – $25.00
Smart Couples Finish Rich – $15.00
The Number – $15.00
The Wealthy Barber – $14.00
Real Money – $26.00
Total: $197.93 (plus sales tax)

You also earn $9.90 in store credit redeemable at the end of the year.

Obviously, amazon beats this total, though Borders does equal it on one title and beat it on another. How much are we helped, though, if we leverage the “Personal Buying Day” a bit?

Borders with leverage One day, we go in and buy the following books:

Rule #1 – $25.00
Real Money – $26.00
Total: $51.00 (plus sales tax)

This qualifies us for a “Personal Shopping Day,” where we earn 10% off on all titles. So we buy the following books on that day:

The Millionaire Next Door – $15.00
The 9 Steps to Financial Freedom – $14.95
Nickel and Dimed – $13.00
Make Your Kid A Millionaire – $13.00
The Total Money Makeover – $24.99
Your Money or Your Life – $15.00
The Richest Man in Babylon – $6.99
Smart Couples Finish Rich – $15.00
The Number – $15.00
The Wealthy Barber – $14.00
Total w/ discount: $132.24 (plus sales tax)

Thus, the overall total is $183.24, and you earn $9.16 in store credit. The Rewards Card, which is free, saves you $14.70.

Great, but why not just buy everything at amazon? There are often titles at Amazon that are equal to or higher than Borders, and in those cases, if you’re in the Rewards Club, you’re better off buying at the brick and mortar store. Their email coupon bonuses are also worth receiving, because quite often they amount to an extra amount off of any title.

So my strategy boils down to this: I often shop at Borders for new releases (they usually have a 30% off by default, which I can make lower with a coupon, making their price very similar to amazon) and also regular paperbacks of older releases (which both stores sell at list), and take most of my other purchases to amazon. I do this by usually making a list of books I’ll get (plotted out via amazon), stop at Borders for some price comparisons, buy what makes sense at Borders using my Rewards Card, then buy the rest at amazon.

Earlier today, I discussed methods for parents of young adults to talk to their children about money. Now, I’m going to tackle the opposite direction: how can a young adult (a college student or a young professional) discuss financial matters with their parents?

Many college students dread talking to their parents, mostly because they believe they’ll be perceived as failures and let their parents down. Thus, when a major talk comes, they go in with a combative attitude and things don’t go very smoothly at all. It’s a scenario I’ve seen repeat itself time and time again, and it’s one that is easily avoidable.

Here are several things that you can focus on in order to make a financial discussion with your parents go much easier.

Don’t be angry. Quite often, parents will make statements and suggestions that provoke a sense of anger in the child, even if that’s not their intention. If you find yourself getting angry during this talk, look like you’re thinking, count to ten, and then ask yourself why exactly you got angry. Usually, it’s defensiveness, so ask yourself what you’re defending and why. In many cases, you’re defending a paper castle, something that you’d be better off revealing than hiding.

If their attitude makes you uncomfortable, ask questions. If they appear superior and condescending, ask them calmly if they’ve ever been in an awkward money situation before and how they dealt with it. Ask them how they would deal with your situation given that the past can’t be changed. Do it calmly and rationally above all, because anger is the one element that will cause this conversation to collapse.

Be completely open. If you are hiding things, you will only make things worse. Your life doesn’t have to be an open book, but if something is relevant to the topic, be open about it rather than hiding it. Not only will this answer more of your questions, it will encourage your parents to be more open as well.

Don’t be combative. Don’t enter into a financial conversation perceiving it to be a war, with ground gained and lost. Instead, look at it as a situation to personally improve yourself. The only way people win in conversation is if they gain a greater understanding of the issues discussed, not if they “win” or “lose.” Thus, quite often there’s nothing to argue or feel resentment about.

Ask lots of questions. The most valuable thing you can gain from a conversation is a resolution to the questions inside of you, so ask every question that comes to mind. Not only will you receive answers, giving others the chance to talk and say what’s on their mind will make them more calm and collected as well.

The Simple Dollar offers a month-long plan for fixing your finances. All you need is an open mind and an hour each day.

There is one final point that merits discussion before we close out this month, and that is the logic behind paying cash for any purchases smaller than a home purchase. This includes automobiles, appliances, furniture, electronics, and so forth. To most Americans, this concept is almost alien, but if you take nothing else away from this month, this is the concept to remember.

Why pay cash? To put it simply, instead of paying some company an interest rate, you can invest that money yourself and earn some interest. This might seem like a minor issue, but in actuality it is thousands of dollars that you’re throwing away, more than enough to keep companies like GMAC in solid financial shape year after year after year.

How much can I actually save? In this example of a late model used car costing $10,000, you can pocket about $3,000 simply by paying in cash rather than financing the car. That’s how much you will pay in interest, plus the amount that you can earn in interest in a savings account. Do that three times and you’ve literally netted a free car.

How am I supposed to pay cash for a car? The next question that many people ask is how they can possibly pay cash for a car. If you’ve followed this plan from the beginning, the answer should be pretty clear: your emergency fund. If you see that an auto purchase is coming, start rolling money into your emergency fund instead of into other investments or uses, building it up to the point of having several months of salary in it. I recommend making car payments into the emergency fund at this point, preferably for a couple of years. Then simply walk into the dealership, negotiate a price without saying that you’ll use their financing, then write a check. After that, you’ll probably need to build up your emergency fund again, but you won’t be making payments on your car.

I can’t do that right now! That’s true, you probably can’t do that immediately. But you can set it as a goal. One big step towards achieving that goal is to stop leasing, because auto leases as they allow you to effectively rent a more expensive car than you can afford, but leave you with nothing in the end. If you already don’t lease, then buy a late model used and drive it for years past the end of the financing. While that’s happening, continue to make your car payments into your emergency fund. Then, when the time comes, you can simply buy a car, no questions asked.

So what can I take away? Spend some time and plan out when your next auto purchase will be and what type of car you’re aiming to buy. Then, calculate the numbers and see if you can put yourself in place to pay in cash. Can’t swing it? Could you swing it if you drove that car for another year? Remember, this does fit into your budget if you just transform your car payment into payments into your emergency fund, and in a few years the dividends of seeing interest build up on your car “payments” will really start to show.

Now that the month is almost complete, we’ll spend the next two days tying up some loose ends.

Ready? Let’s continue on to the next day.

Many of my friends during my college and early post-college years were swimming in debt, some of them to the point of being scared to open the mail. Whenever I would suggest talking to their parents or guardians about it, their faces would freeze with an additional layer of fear, as though it was the last thing on earth they wanted to do. They feared lectures, the feared they feared letting down their parents.

Since I’ve entered adulthood, I’ve had several long talks with my parents about various issues. My parents have always been quite easy to talk to, and when I had my own child, I asked them for advice on how they made topics that were so troubling so easy to talk about. Here’s what they told me, in so many words.

Don’t push. Adult children are often trying very hard to spread their wings and fly, but they will know better than you will when the time is right to ask for advice. Don’t pressure them into a conversation unless there is a strict need for it.

Admit your own mistakes. As children enter adulthood, the relationship between you and your children has to change; you need to move from being the superhero protector into being a respected and trusted advisor and friend. Admit where you’ve messed up in the past, too. No one on earth has been financially perfect, so dredge up a few of those mistakes and add to your own humanity. This will pave the road to a great deal of openness.

If you fear there are problems, let them know that it’s okay to talk about them. Tell them this directly, and bookend it with your own admissions and flaws.

Don’t be judgemental. The world of a college student today is substantially different than the world when you were that age. The culture almost coerces you to get into at least some debt trouble by making credit access so simple without explaining the drawbacks, and also making expensive consumer goods highly desirable. Student loans are also enormous, and they also have huge expectations of a great job after graduation that aren’t always feasible because a degree today isn’t worth what it was twenty years ago. Using your own experience as an indictment on theirs is completely unfair.

Ask questions and listen. When I had “money talks” with my parents, they quickly devolved into lectures in which I would sit there and nod my head and ignore every word of it. Instead of lecturing, ask them questions about how they’re spending money and listen to what they say. Questions that delicately lead towards certain conclusions are almost always better than lectures and pointed statements.

Give your child the benefit of the doubt. There are probably some issues that your child simply isn’t comfortable discussing with you – if you think back to that age, remember the things you were uncomfortable discussing with your parents. Allow them to throw dirt over their tracks; don’t spend a lot of time trying to wheedle out something that makes them uncomfortable. Quite often, if you show yourself to be approachable and demonstrate that you’re being attentive, they’ll tell you many things anyway.

Check in – but not too often. Some parents believe that when the child is out the door, you should let them call you; others try to call multiple times a day and still micromanage their lives. The best balance is somewhere in between: give them space, but remind them that they’re loved and that they have support. My parents called a lot at first (I was the only person I knew at my college and I got very homesick), but as time went on, they scaled back slowly, to the point where I called them more than they called me.

Tomorrow, we’ll expand on that final point and look in detail at the process of cutting ties, financial and otherwise.