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?

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.

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.

So here’s what I went with with the burgers: I mixed some Mexican blend grated cheese with the hamburger and put in a tiny bit of salt and pepper and a few dashes of hot sauce. The burgers were incredible. Even my seventeen month old went “Mmmmmm!” We just ate burgers with a salad for dinner, and it was fantastic. So here are some personal finance posts.

Frugal Workout: Dethatching Your Lawn Manually I dethatched my parents’ lawn when I was younger. It was an excellent workout, didn’t cost much money at all, and made their yard look utterly luscious that summer. If you’re thinking of selling a home sometime soon, this is a great task to do that’s cheap and subtly increases your home’s value (@ clever dude)

The End Of My Credit Card Arbitrage (Or Why I Hate Discover) This is exactly why credit card arbitrage is dangerous - you’re adding a lot of risk and sometimes when you take on risk things outside your control happen even if you cover everything you possibly can. (@ lazy man and money)

You Need A Car To Get A Job But You Need A Job To Buy A Car This is why public transportation exists… but of course you need access to it to use it. (@ blogging away debt)

I have several little bits of news and a few notes to share about The Simple Dollar that somewhat continues a few threads that have been going on on this blog for a while and that readers have asked about with some regularity. I wrote this in the form of a question and answer forum.

Are you going to write more about blogging? I am working on launching a blog on the art of blogging because I keep getting requests to write more along the lines of the Building a Better Blog series. I get roughly two emails a day asking for blog advice and extolling a desire for me to write more in that series, but I know that for many readers of The Simple Dollar, it simply wasn’t very popular. Thus, the solution was to start another blog. I’ve already bought the domain and am preparing materials for launch, which is scheduled for May 1. I’ll make a big announcement here when it launches.

Will this affect The Simple Dollar? Not significantly. I may lower the pace here from six weekday posts to five weekday posts, but we’ll have to see how it goes. Generally, when I’m suffering writer’s block on financial topics, I can write extensively about other topics, so I don’t think writing will be too much of a problem.

How’s the house hunt? We are pre-approved and are watching the local housing market carefully for the right house. In the last year, we’ve seen three houses we really liked, but two were simply too expensive and the other one is actually still a possibility - it had a Sold sign on it, then the Sold sign disappeared, and now it says Sale Pending, so I’m not sure what’s going on there.

How’s the baby? The baby is coming in September. (S)he is perfectly healthy.

How’s the book? The book proposal is finished. It’s a really slick package and is going to be shopped to some publishers … well, starting tomorrow, actually.

Are you going to take the plunge and go at this full time? This issue is actually on the table right now. The answer is wait and see a bit longer to see if the second blog is successful at all and also if the book sells. If both happen, I will become a full time blogger/writer and given the rapidity of my writing, I may start a third blog. Yes, I can write that much … I have the gift of being able to research obsessively and write frenetically all day long and I love it.

A few weeks ago, I listened to the audiobook of Winning by Jack Welch (read my earlier thoughts on Winning). For those unaware, Winning is a book on management practices and career development by Jack Welch, the CEO of General Electric during their big growth years in the 1980s and 1990s.

In the book, Welch seemed to keep coming back to one big thing: passion is what makes a winner. He kept coming at this central tenet from different angles with different examples, but as the book went on, it was clear that with example after example, passion did set people apart from the crowd. I can say that in my life, every time I simply followed what made me passionate, things went well, and when I resisted following my passions, things were rough.

So what does that have to do with personal finance? Well, first of all, the first steps of following your passion is usually a financial disaster. It usually means the cost of education, the cost of leaving a job, or the cost of starting a business. These are painful costs and are usually enough to keep people from following their dreams.

Second, passion is extremely hard to quantify and evaluate. I’m passionate about blogging, but I confess that I had no idea whether I would be successful or not when I started this blog. I thought it would go well, but it has gone far better than I had expected. Simply put, I could not rely on the simple fact of my passion to carry me through. You can have all the passion in the world, but it doesn’t guarantee you a dime.

Does it sound like I’m trying to convince you not to follow your passions? I’m not. In fact, here are five rules I encourage you to live by so that you can balance your passions with the necessity for healthy personal finance.

Understand what you’re really passionate about. When do you feel happiest? What do you do that you enjoy, that you can do well? You’d be amazed at what people can find. I know a person who really found what he was passionate about: hunting for morel mushrooms. And he was good at it, so good that he only really works one month a year in the spring, following the morel growing season, and picking sixty to one hundred pounds of them a day to sell to restaurants. Yes, wandering in the woods and picking mushrooms off the ground. It’s his passion and he followed it with his whole heart.

Don’t kill yourself for any job you’re not passionate about. If you hate what you’re doing and it seems to consume your life, but you desperately need the money to survive, stop letting it consume your life. It’s not worth it to keep running like a maniac for a job that’s killing you. If it’s time to quit, you have a pile of stuff on your desk, and you’d rather be dead than continue to work on it, get up and leave. I’m not advocating not doing your job; I’m advocating not sacrificing your life for something that doesn’t fuel your fire.

Understand exactly how you can make money from your passion. How do people make money doing what you love to do? I watched blogs and experimented in various ways for a long time before starting The Simple Dollar just so I understood how I could take a passion for blogging and sharing ideas and make something sustainable out of it.

Formulate a plan that doesn’t involve abandoning your current job. What can you do to follow that dream that doesn’t cause you to abandon another major income stream? My solution was to set aside a block of time each day during which I can blog - it starts after I put my son to sleep in the evening, usually stops for an hour so I can spend time with my wife, then continues again until I go to bed. That adds up to about three hours a day or so, and it’s enough time for me to manage The Simple Dollar and also plan other opportunities.

Execute that plan and let yourself be surprised. Passion is apparent to others, and it’s also infectious. If you’re doing something you love, others will come along for the ride just by the sheer magnetism of it. It happens over and over again: if you truly love something and can pour part of yourself into it, people will come. If they’re not coming, then it’s either not a true passion for you or you haven’t figured out exactly how to do it yet.

You’ve read up on mutual funds and you’ve picked a small handful out that you want to invest in. Now what? How can you buy in incrementally and then keep them balanced over time? Here’s a great strategy for building up the portfolio the way you want it, getting it balanced right, and then keeping it balanced.

Your first step is to figure out the percentages you want in each fund. This is a personal decision, but I would recommend for most people that they have at least 30% in fairly aggressive funds (I have 60% in my target portfolio) and at least 10% in something pretty conservative that will weather a bumpy ride.

For an example, I’m going to use the portfolio that I am shooting to achieve in the next three years for my home investments (which have a fifteen to twenty year timetable before I completely cash out):

30% Vanguard 500 (VFINX)
30% Vanguard Total International Stock Index Fund (VGTSX)
30% Vanguard Small Cap Growth Index Fund (VISGX)
10% Vanguard Long Term Bond Index Fund (VBLTX)

Next, figure out how much you need to actually build the portfolio. In other words, find out the minimum investment needed for each of the funds you’re going to invest in, then use that to determine how big your “starting” portfolio has to be. For me, all of the funds cost $3,000 to buy in, so that means I need a total investment of $30,000 to build that portfolio. In terms of starting dollar amounts, I need to look something like this:

$9,000 Vanguard 500 (VFINX)
$9,000 Vanguard Total International Stock Index Fund (VGTSX)
$9,000 Vanguard Small Cap Growth Index Fund (VISGX)
$3,000 Vanguard Long Term Bond Index Fund (VBLTX)

There’s another factor, though; Vanguard charges $2.50 a quarter for each fund you hold that’s under $10,000, and so I should start these $9,000 funds at $10,000. So here’s my actual position that I plan to start with:

$10,000 Vanguard 500 (VFINX)
$10,000 Vanguard Total International Stock Index Fund (VGTSX)
$10,000 Vanguard Small Cap Growth Index Fund (VISGX)
$3,500 Vanguard Long Term Bond Index Fund (VBLTX)

Once you’ve got the dollar amounts figured out, start investing in the funds. You’ll hear a lot of opinions on the order you should invest in. My feeling is that there should be one in your portfolio that you consider to be your “anchor” - not too risky, but not too conservative - and that’s the one you should start out in. For me, it’s pretty obvious - it’s the Vanguard 500.

I don’t have enough money to buy into the fund I want! Open up a high yield savings account, like one at ING Direct (the one I use) or HSBC Direct (another good one), and start putting money incrementally into that account until you can cover the minimum, then start buying the fund directly with those same increments until you reach your target. Then repeat the process with the other pieces.

Should I literally build a piece until I reach my target dollar amount? Some people might want to build a portfolio piece to near their target value and then move on to another. To tell the truth, either approach is fine. My plan is to build each piece up to their “starting” amount and then just let it ride while I build up other pieces. Once I have all of the funds with at least their starting amount, then I’ll do a rebalance soon after.

OK… what’s a rebalance? Let’s say I go through those investments in order and buy in to my target amount in each one. Obviously, I will have been invested in some funds for longer than others, and when I get done building all of my positions, hopefully some of the earlier funds will have grown a bit. Let’s say, hypothetically, that I finally get my portfolio built in December 2009 with a buy in on VBLTX and the balances look like this:

$13,500 Vanguard 500 (VFINX)
$12,000 Vanguard Total International Stock Index Fund (VGTSX)
$11,000 Vanguard Small Cap Growth Index Fund (VISGX)
$3,500 Vanguard Long Term Bond Index Fund (VBLTX)

My portfolio is now worth $40,000, so I’m really off to a good start here. But it’s a bit out of whack compared to how I wanted things based on percentage. My original goal was this:

30% Vanguard 500 (VFINX)
30% Vanguard Total International Stock Index Fund (VGTSX)
30% Vanguard Small Cap Growth Index Fund (VISGX)
10% Vanguard Long Term Bond Index Fund (VBLTX)

… but the actual percentages are now this:

33.75% Vanguard 500 (VFINX)
30% Vanguard Total International Stock Index Fund (VGTSX)
27.5% Vanguard Small Cap Growth Index Fund (VISGX)
8.75% Vanguard Long Term Bond Index Fund (VBLTX)

Switching back to raw dollars, I actually want is a balance close to this:

$12,000 Vanguard 500 (VFINX)
$12,000 Vanguard Total International Stock Index Fund (VGTSX)
$12,000 Vanguard Small Cap Growth Index Fund (VISGX)
$4,000 Vanguard Long Term Bond Index Fund (VBLTX)

To do that, I have to sell $1,500 in the Vanguard 500 and put $1,000 of it into the small cap fund and $500 in the bond fund. I just sell shares that minimize my capital gains tax incurred and reinvest it so that I again have my target portfolio.

When should I rebalance? To be honest, in reality, I probably wouldn’t rebalance that above portfolio. My rule of thumb is to check the portfolio every six months and if a holding is more than 5% off of my target, I rebalance it so that all funds are at or near the percentage I want. Basically, I just convert the entire portfolio to percentages (like I did above) and then compare each percentage to my target percentage. If there is a more than 5% difference, then I rebalance; otherwise, I let it sit.

Why? Basically, rebalancing leverages risk. At different times, some funds will outperform others - this just ensures that you can take gains out of funds that are very volatile and also buy in when some funds are underperforming. In other words, rebalancing is a way to buy low and sell high, at least in comparison to the rest of your portfolio.

Good luck!

For a short while, I hung out with a crowd of people who spent money at a level that I could scarcely comprehend. They would go out every night after work and drop a lot of cash, they would all dress exquisitely, and someone had a neat new gadget or item to show off seemingly every week. We would sit around a big table every night after work, knocking back rum and Cokes (and never the cheap rum) and talk about everything from politics to Proust.

Except we never talked about personal finance. That topic was as off limit as possible. The second it was mentioned, the table would get quiet, and then someone would mention the latest Wes Anderson movie or something and then we’d all be off and running on a different topic.

I didn’t realize it at the time, but the real truth of the matter was everyone at that table was in debt at least up to their eyeballs, even though their actions and personas created an air of having plenty of money.

The scary part is that I hear a variation on this story from many people my age - from both personal acquaintances and also readers of The Simple Dollar. Quite often, the person has woken up to the idea that they need to get their money in order, but they’re still surrounded by a social circle that spends like there’s no tomorrow. Even worse - they feel as though they have to stay in with this group because of social requirements related to their job.

If you find yourself in this situation - in a social circle that you’re tied to, but the spending is just out of control and in opposition to your values - here are some tips for handling it without bucking the trend.

Find subtle ways to chip away at the spending. If everyone goes out and orders expensive mixed drinks, order a rum and Coke with cheaper rum in it and nurse it instead of knocking it back. If you can buy a cheaper drink at 60% of the price and then nurse it through two rounds, you’re only spending 30% of what you were spending before and are still able to “go out with the gang.” You can also look for less expensive meals if you dine out - try eating a salad and say you’re dieting, for example.

Buy clothes that mix and match well. You don’t need to hit the Wal-Mart discount rack to start saving on clothing. Buy high quality items, but focus on the ones that can match a lot of other clothes. This is much easier for guys than for gals (from what I’ve been told), but even guys can jump on great deals on a pile of khakis and then accrue shirts that match well with a lot of them. Remember, if you’re a guy and have three ties, three shirts, and two pants that are all mix-and-matchable, that’s eighteen distinct outfits. Thus, you can dress very well and not blow tons of money.

Save up to buy items rather than putting them on a credit card. I usually recommend cutting out as much frivolous spending as possible, but if you must occasionally buy new gadgets or the like, save up for them and pay cash instead of putting them on the plastic. Let’s put it this way: if you want to buy a $600 item, you can save $25 a week and buy it in 24 weeks (and have earned a bit of interest in the process), but if you put it on a credit card with an 18.9% APR and make only $100 a month payments, you’ll have to pay about $50 more in interest. That’s real savings.

Learn to live frugally when you’re not around the gang. If you’re still purging too much money because of these social requirements, look for opportunities to live cheaper in other aspects of your life. There are countless ideas for this; just visit the frugality category here, and check out the five minute finances for some other quick tips along those lines.

You don’t have to give up an important social situation just because it’s expensive - just be sensible about the money you’re spending and look for ways to maximize your value.

So how do I pick the funds that I invest in? Although I don’t prescribe this list for everyone, I use seven distinct factors for selcting the funds that I plan to invest in. These factors usually tell me everything I need to know about the fund and whether or not it’s a good choice for me to put my money there. These factors are (in no particular order):

The expense ratio The lower, the better. This is actually the biggest factor I look at, though not enough to swing me into investing in a fund with truly poor recent returns. Why? A fund with a low expense ratio is one that is looking for efficiency in investing, because many people merely look at returns. This means that when the market is bad and the actively managed and expensive fund is struggling, the efficient fund will have less baggage. You can find this info on the Morningstar.com page for the fund.

The five year return I basically view five year returns as the real short term, as I’m not in a mutual fund looking to maximize single year growth. Usually, a five year trend shows you most of one economic cycle, so you can get a rough idea of how it’s doing given the recent path of the economy. You can find this info on the Morningstar.com page for the fund.

The ten year return On the other hand, I also like the ten year return, which shows how it did over a full economic cycle (and a bit more). It shows me whether or not the five year trend is a fluke - if the two are far apart, I need to do some research before I invest. You can find this info on the Morningstar.com page for the fund.

The Morningstar rating I place a lot of trust in Morningstar’s rating, and I usually find it to be a nice thumbnail sketch of the state of the fund. I discussed this one in detail yesterday. You can find this info on the Morningstar.com page for the fund.

The investment philosophy of the fund I like to understand the ideology behind the fund: why do they invest the way they do? I like funds that primarily are on the lookout for shareholder value, but you may have different things you’re looking for (”green” investments and the like). You can find this in the fund’s prospectus, usually available from the investment house.

The turnover The lower, the better. High turnover funds might get nice returns, but they also hammer you hard on taxes. A high turnover usually the sign of a frenetically managed fund. You can find this info on the Morningstar.com page for the fund.

All other fees Before I make the leap, I make sure that there are no other fees or expenses that are hidden from my eyes. I do this by giving the site of the investment house a very thorough scouring for such things before I put in my money. I was literally obsessed with Vanguard for a period before finally investing with them. You can find this information on the website of the firm you invest with.

It’s also worthwhile to check out the full mutual fund prospectus before you invest, just to get a broader view of things. I previously wrote a guide to reading a mutual fund prospectus if the task seems daunting.

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?

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.

So should you buy the book or not? I’ll give my buy or don’t buy recommendation tomorrow in the final installment of this review.

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.