For many people, the morning and evening commute is time spent stuck in traffic, listening to the radio, or calling their sister-in-law on the cell phone. The truth is that the commute is a great time to actually improve your career. How? Here are five things you can do on the way to or from work to help your career, even if you’re stuck in traffic. It can help you get a leg up on the competition or free up some time at home to spend with your family.

Listen to an audiobook. Find an audiobook connected to your career at the local library and listen to it on the way to and from work. Even if you don’t have books that can directly help your career, you can listen to an audiobook that teaches another language or one that teaches general productivity skills (like Getting Things Done).

Use a voice recorder to record thoughts. When I was heavily involved in managing projects, I used to use a voice recorder during the commute to record ideas and plans for the coming days. Quite often, my brightest ideas would occur to me during the commute, and an easy-to-use voice recorder made it possible for me to immediately record them.

Practice your language skills. This includes learning a foreign language from an audiobook, but this really applies to learning how to simply speak better. Practice giving speeches by copying what you hear from speeches on NPR, or get a tape of great speeches and practice repeating those lines. Practicing your verbal deliveries can help you no matter what your job is like.

Plan a very clear checklist of specific things to do when you get to work / get home. I’ve found, time and time again, that if I have a list of small and very discrete tasks that I can finish in a short timeframe (say an hour or an hour and a half), I feel really productive and ready to tackle anything that faces me.

Eat something healthy. This is especially true for the morning commute. Eat a banana or an orange or a homemade breakfast burrito. This energy booster can really make a big difference in your energy level throughout the day and can turn an ordinary day into a great one.

Here are three interesting questions sent in by readers of the series of mutual fund posts this week.

I don’t understand how the companies that run these funds make enough money to make it worthwhile after ads, expenses, and so on.

When you look at a mutual fund on Morningstar, you’ll see two key numbers: the expense ratio and the total assets. Multiply them together and you’ll get a pretty good sized number. Take the Vanguard 500, for example. It has an expense ratio of 0.18%, but it has $118,883,000,000 in assets. Multiply them together and Vanguard is netting $214 million a year out of the fund. Even with a small expense ratio, a fund can bring in a lot of money. An investment house does have a lot of expenses, but with that kind of money coming in, they can easily afford what they need to do and bring in some serious cash.

How do I balance a mutual fund portfolio if it’s invested in several different places?

The easiest way is to focus each account on a specific piece or two of your portfolio. This is especially easy if these investments are in 401(k) or Roth IRA accounts where you can move around the balance without incurring tax penalties. Sometimes an account won’t have enough in it to cover a single piece of your desired portfolio; in that case, you should finish out that piece in another account.

You keep mentioning capital gains tax. How do they work?

A capital gains tax is a tax that the government charges you when you sell an asset and make a profit on it. If you buy a stock at $10 and then sell it at $15, you have to pay capital gains tax on that $5 difference. Typically, capital gains tax are filed as part of your income tax return and are typically subject to a lower tax rate than normal income. More importantly, if you have a capital loss in a given year, you can subtract that loss from the gain and only pay taxes on the overall gain.

Sometimes you are subject to capital gains tax even if you don’t sell anything from a mutual fund. This is called turnover and occurs when a fund does a lot of selling of assets during a year without replacing these sales - they instead distribute the fund’s gains to the holders, putting them on the hook for capital gains. This distribution usually reduces the value of the fund, so it basically means that part of your investment can be handed right back to you and you have to pay capital gains tax on it.

Here’s an example of why turnover can be bad. Let’s say you bought $70,000 worth of a fund. It goes to $100,000. Two days later, the annual distribution occurs. You get a check for $30,000 and your fund’s value drops back to $70,000. You’re then on the hook for the capital gains tax on that $30,000 whether you like it or not.

One way to avoid this is to look for funds with low turnover, because those are much less likely to do a distribution (and thus cost you money).

Yes, You Can Get A Financial Life is the latest in a long string of books on financial topics from Ben Stein and his regular co-author Phil DeMuth. This one’s premise seems to be of particular interest to twenty- and thirtysomethings looking to get their financial house in order: it’s basically a guide to prudent financial decisions at each stage in life, from your 20s to retirement. I’ve been a fan of Ben Stein’s financial writings for years, but this is the first book of his that I’ve picked up. Could it possibly be as good as his columns? Is it worth reading at all?

This relatively short book is broken down into a pretty large number of chapters, making each chapter not too much longer than one of Stein’s columns on Yahoo! Finance. There are a handful of chapters devoted to each decade in a person’s life, starting off with their twenties, and making it clear how and why you should be dealing with money at that point in your life.

This book is conservative in tone. At no point does the book advise dumping everything into speculative investments or anything of that nature, so if you’re looking for advice on individual stock investments or the like, this isn’t the place to go (try Jim Cramer’s Real Money, for example, if that’s what you’re seeking - it’s quite good). However, if you’re not looking for a ton of risk and don’t want to invest mountains of time into your investments, there’s a lot of appropriate stuff in this relatively thin tome.

The first two chapters are pretty introductory and mostly provide a good argument of why you should get financially prepared now rather than later. The book really gets going, though, in the third chapter.

The 20’s

Chapters 3 through 6 of Yes, You Can Get A Financial Life focus on personal finance issues of people in their twenties. The book unfolds some premises: your salary will go up dramatically during your twenties and it is likely you will marry in your late twenties. The book generally puts off issues such as childbirth and a home purchase until the next decade of life.

So what’s vital here? First, you should invest in your own human capital. Go to school and get the education you’ll need for your life. Figure out who you are and what you want to be doing. Spend the time needed to polish yourself a bit.

Next, find the right job to start with. Usually, this is a job that will reward hard work with advancement, not necessarily a job that immediately puts you in the corner office. Get to a place where you can be rewarded if you prove yourself.

Then, start saving for retirement as early as possible. The earlier you start saving, the less you’ll have to save because compound interest will take care of a lot of the work for you. If your company offers a match in your savings plan, get that match as soon as you possibly can as it’s basically free money for your future self - never turn down free money.

If you still have room to breathe, start saving for a house (even if you don’t see yourself in one). This money can provide the foundation for a life full of financial stability, whether you use it for a house (which is really encouraged) or for simply long-term savings.

The 30’s

A large portion of the book (chapters 7 through 13) really focus on issues that many people begin to face in their thirties, and this provides the central meat of the entire book. It provides some general financial rules of thumb in several different dimensions of life during the third decade of life.

On a career in your 30s Basically, the book indicates that for the most part, the biggest acceleration in salary you will have in your life occurs in your 20s because early on is when you can demonstrate the greatest increase in your skill set. How can you leverage this? By remembering that a 10% raise when you’re making $25K is the same net increase as a 5% raise when you’re making $50K (ignoring taxes, of course).

On being single in your 30s The book advocates that as long as you’re single, you should put effort into staying competitive in your career, as married life often can fill up a lot of time that you would have otherwise used in building up your career. Continue to invest in your own human capital with time and money.

On being married and setting up a home in your 30s If you’re married, learn how to start living well within your means and saving money for a home. This means being frugal and cutting down on unnecessary expenditures, and taking that extra money and socking it away until you have a house down payment. If you “can’t” do this, then you are opening yourself up for a lot of risk in the event of job loss.

On having children in your 30s Children are wonderful, beautiful, amazing things - but they’re also expensive things. Plan ahead by having a “saving for baby” account if you’re going to have one in the future, then use that when it comes time to actually have one, as you’ll have start-up costs and a nice increase in your monthly budget.

Investment changes? The book is still in favor of being rather aggressive with retirement savings throughout your thirties, though depending on your specific plan, you may want to readdress things when you get near the end of that decade.

The 40’s and Beyond

The final portion of the book discusses the march toward retirement and all that it entails: children leaving the nest, a need to carefully manage your retirement portfolio, and so on. For many people, the period between age 40 and retirement is the most financially lucrative of their lives, but it is also the period most strapped with expenses. Let’s take a look at the things people in this age range should be doing, according to this book.

Manage your retirement portfolio carefully. As you get within fifteen years of retirement or so, you should slowly start migrating your portfolio out of high risk stock investments and into bonds - after all, you don’t want to be on the edge of retirement and be holding the next Enron. The book doesn’t offer any direct rules of thumb for everyone, but provides a nice walkthrough of the logical process.

Bump up your savings when the nest is empty. When your children leave, now is the time to really kick retirement savings into high gear. Toss as much as you can into retirement, particularly if you live in a home that is fully paid for.

Set your long term plans now when you’re relatively young and healthy. This means long term care insurance and estate planning - do what you can so that you’re not a financial burden on your children. Do this early and keep tabs on it to make sure that it continues to represent your desires.

Buy or Don’t Buy?

I really wanted to like this book. I adore much of the writing of Ben Stein and his column clearly shows that he can write about personal finance.

However, this book not only doesn’t contribute anything compelling or new. The information is all quite basic, which means that it could potentially be good for someone with no idea of basic personal finance.

But there’s another problem: it’s just not that entertaining, either. There are a lot of introductory personal finance books out there that are far more entertaining than this one - either more purely entertaining or more thought provoking.

In short, I wouldn’t buy this book. If you still want to read it, I’d definitely look for it at the local library. The book is not bad, per se, but it just doesn’t offer anything compelling that isn’t done better elsewhere.

I originally reviewed Yes, You Can Get A Financial Life in five parts, which you may view here, here, here, here, and here if you’d like to read the original comments.

Yes, You Can Get A Financial Life is the twenty-first of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.

Lately, I’ve been noticing a very interesting change in how I do things. It’s been a progression towards frugality, and I thought I would give an example of it using books. Readers of this site know that I’m a very avid reader and that I just truly love holding a new book in my hands and cracking open the cover.

A year ago, if I heard about a book I wanted to read, I would simply go to whatever source was most easily available and buy it. Period. Obviously, this solution is ridiculously expensive, especially considering I can easily read several books a week.

Six months ago, I would still buy books almost on a whim, but I had started checking online sources first for the best price before running to the bookstore. The biggest change here is that I had killed off impulse buying. I would know what I wanted to buy before I walked into a bookstore. It was during this time that I really discovered how to leverage the Borders Rewards program, for example. This saw some serious savings, but nothing compared to what was to come.

Now, I’ve got a very clear system for buying books that saves a ton of money and doesn’t really take all that long, either.

First, I check my local library’s online service. If I see a book that I am interested in reading, I check to see if my library has it before anything else. This allows me to read it for free. Now, there are many books that (a) the library doesn’t have or (b) I actually wish to own for long-term reference.

Second, I check for the book on PaperBackSwap. Basically, this service lets you swap books for free via the postal service. Using USPS Media Mail, I have access to a million different books - for keeps - for only $1 or so.

Third, I check online booksellers. I visit amazon.com to get a “baseline” price, then check several other sellers for prices. I typically deal with amazon if no place beats their price significantly because I’ve had many good experiences with their customer service.

Only if all three fail me do I turn to a brick and mortar bookstore.

Because I’ve gradually become committed to this procedure, it’s now easy for me to visit my local Borders and just browse. If I bump into something interesting, I don’t buy it: I just make a note of it in my handy pocket notebook and then look for it when I get home.

This process has saved me a lot of money in just the last few months and is emblematic of my more frugal mindset.

The April issue of Money Magazine arrived in my mailbox a few days ago and unfortunately stood by itself on my kitchen table for a couple days. I finally opened it - and it was worthwhile. Here are the ten things that really stood out at me from the issue:

A nice rule of thumb for comprehensive and collision auto insurance. If your car is worth less than ten times what you pay each year for collision and comprehensive insurance, drop them. They’re not worth the money on an older car. (p. 18)

If you’re depressed, buying stuff doesn’t help. It took me a lot of years to figure this out, but the things that really bring me joy don’t cost very much at all - reading a book, sleeping, exercising, playing with my son, listening to old records, blogging - why should I spend a lot of money? (p. 28)

Should you ask for a prenup? The magazine offers a guide to asking for one, but what about when two people go into a marriage with almost no assets? It’s hard to predict what’s going to happen and a prenup is a blind guess that may end up causing really unfair situations later on. On the other hand, if one or both people come in with assets, a prenup is a good idea as insurance against the unexpected. (p. 38)

If your children expect you to hand them money, something needs to change. I’m in favor of an allowance system with very clear responsibilities, and if the child doesn’t meet those responsibilities, they don’t get the allowance. The article advocates a similar system. (p. 44)

Wine is becoming a strong long term investment. One big problem: if I had a case of 1982 Burgundy in my basement, I’m sorry, I would simply be unable to avoid enjoying it. (p. 63)

Four blue chips have increased profits for twenty straight years. Home Depot, General Electric, Wal-Mart, and Walgreen have all shown profit growth year in and year out for two decades - they’re about as steady as you’re going to find. (p. 74)

If you’re 35 and want to retire at 60 and assume you’ll have no pension and no job in retirement, you need to already have 1.6 times your salary in savings. I’m 28 and my total retirement savings is about 0.75 times my annual salary. I am definitely on pace to beat that target number for age 35. (p. 82)

GTD works for tax preparation. David Allen gives a bunch of useful advice on how to get your papers organized for tax season. Basically, just store everything that might have tax consequences in a folder and deal with it in April. Simple - just like GTD. (p. 115)

Price matching guarantees rip off the lazy. Generally, if you see a “price match guarantee,” the price is actually inflated. This way, some people will buy thinking they’re getting a “deal” without actually doing the legwork and others will buy with the deal in hand. The two balance each other and overall the seller just sells even more at, on average, the price point they wanted anyway. (p. 129)

Quote of the month (p. 97):

There’s a big cocktail party on Martha’s Vineyard. Someone comes up to this writer, I think it’s Joseph Heller[author of Catch-22], and says, “Joe, see that guy over there? He’s a hedge fund manager, and he made more money yesterday than you made on all the books you have ever published.” Heller looks over, pauses, and says, “Yeah, but I have something he’ll never have: enough.”

Ask yourself this: do you have enough? It’s an interesting question to think about, actually.

As a finale to mutual fund week, I wanted to share my thoughts on the continual debate between mutual funds (especially index funds) and individual stock picking. There are both positives and negatives to each and I hope not to sway you too strongly in one direction or another, because each have their proponents (for instance, just read . So let’s look at some of the major benefits and drawbacks of each strategy side by side.

Individual stock picking allows for massive and quick returns. If you invest in individual stocks, you give yourself the opportunity to pick the next Starbucks and ride all the way to the top, doubling or tripling your investment annually. This is simply not going to happen in a mutual fund.

Mutual funds hedge you against massive and quick failures. On the other hand, your individual pick might be the next Enron, which would mean bankruptcy. Investment in a mutual fund leverages this risk because you’re invested in a lot of companies.

Individual stock picking requires a lot of homework for success. Jim Cramer recommends one hour of research per week per individual stock holding, and I think that’s a pretty sound prescription if you want to see big successes.

Mutual funds require little research, but detach you from the day to day mechanics. With a mutual fund, it’s easy to get in, but it’s hard to really have a pulse on what’s going on with your investment. With an individual stock, you can just obsessively follow a certain company; with a mutual fund, it’s too broad to follow, so you just have to trust the fund manager.

Individual stock picking costs you on the buy-in and the sell with brokerage fees, but leave you alone once you’re invested. Thus, many small trades can eat you alive just with the fees, let alone the capital gains taxes. However, if you plan your moves carefully and have some strong money to invest, the fees become quite tiny in comparison.

Mutual funds generally cost nothing extra to get in, but slowly sip away expenses over time. Again, some careful planning can minimize this drain - get into an index fund that has a very low expense ratio.

So, which is better? Individual stocks are generally high-risk and high-reward but they require some serious footwork. Mutual funds generally have lower risk and don’t require as much homework, but they won’t get you rich in a few years. As for me? Mutual funds are the foundation; individual stocks are things to play with.

Five Minute Finances is a series of tips on how you can save significant money or reorganize your financial life in just five minutes. These tips appear Monday, Wednesday, and Friday on The Simple Dollar.

If the one thing keeping you from cutting up your credit cards is fear that you might someday desperately need them in an emergency, this tip is for you. When I was younger, my aunt once filled an ice cream container half full with water, put it in the freezer, waited twenty four hours, pulled it out, put her credit cards in there, then filled it up with water to the top and stuck it back in the freezer. The end result was a giant ice cube with her credit cards stuck in the middle.

What? Why? She realized that she was spending far too much money with the plastic and if she kept the cards around, she would keep using them on stupid things. She also realized that there may be a big emergency some day when she would need them. So instead of cutting up her cards, she froze them.

By freezing her cards, she didn’t destroy them, but she rendered them very difficult to use. To have access to the card, she would have to unthaw a rather large ice cube - it filled up a gallon plastic bucket and thus would take some significant time to unthaw, even if you used heating methods to help. This served two purposes: one, it got the cards out of sight and out of mind, and two, it made her take some very serious pause if she ever thought about getting them out to use them.

Using this strategy and about two years of steady payments, my aunt got herself completely out of credit card debt, and this technique was a big help in the process. The best part is that it’s quite simple and a very effective psychological trick to get yourself out of the plastic mentality.

After writing all week about how great mutual funds are, it’s important to note that they’re not the be-all end-all of investments. Here are four good arguments for why you should not invest your money in mutual funds.

You can’t get exceptional growth from a mutual fund because the skyrocketing investments are held back by ones that aren’t skyrocketing. This is the big argument against mutual funds from the perspective of the individual stock investor, and it’s true: a single well-picked growth stock can utterly annihilate the gains from any fund.

They take a percentage of your money every year just for the “benefit” of holding it. Every year, a mutual fund takes a piece of your investment for their own - the expense ratio, to be exact. Other investments hold their original value without being slowly leeched.

The “success” of mutual funds is skewed by survivorship bias. In essence, survivorship bias means that the returns, on average, of an investment group’s mutual funds are higher than reality because investment houses kill poor funds quickly. They kill off all the bad ones and then average the ones that remain. Of course you can beat the market if you “cheat” like that.

Funds are marketed like anything else - and you pay for that marketing. You know the ads you see in magazines touting how great a fund is? You directly pay for them through special fees called 12b-1 fees. Not only that, the ads are designed to make the fund appear better than it actually is.

So why should you invest in mutual funds at all? They take your cash, stunt your returns, and lie to you about how great they are… why even invest in them? Well, each of these arguments has either a fatal flaw or a strong counterargument. Let’s walk through these one by one.

First, you can’t get exceptional growth from a mutual fund because the skyrocketing investments are held back by ones that aren’t skyrocketing. This is true, but you also can’t get exceptional loss from a mutual fund, either. Owning Enron individually would have bankrupted you, but owning a fund with Enron in it would have just been a little bump in the road.

Second, they take a percentage of your money every year just for the “benefit” of holding it. Obviously, someone has to put in the time to actually manage the fund and actively managed ones can be expensive, but you can really reduce this expense ratio by focusing on index funds. Many of them have expense ratios that are less than 0.2%, which in a fund like the Vanguard 500 that has returned over 12% over its history is really a tiny amount.

Third, the “success” of mutual funds is skewed by survivorship bias. Well, you aren’t investing in the entire offering of an investment house, so anyone that mentions survivorship bias is repeating talking points. It’s trivial to avoid survivorship bias by doing a bit of research; just find out what the numbers are on the fund you’re interested in and ignore such wide statistics.

Lastly, funds are marketed like anything else - and you pay for that marketing. Again, just do a bit of research and avoid funds that charge 12b-1 fees. Look at discount brokers and investment houses who don’t dump cash into advertising, like Vanguard, for instance.

In short, most of the big arguments against funds either have a good counterargument or can be avoided with some simple research.