Not too long ago, a friend of mine inherited a collection of thimbles from his grandmother. Aside from one that he wished to save for nostalgia, he had no reason to keep the collection and wanted to liquidate it (that’s actually what she wanted him to do - keep any with sentimental value and get some money for the rest).

The only problem was that he was at a loss as to how exactly to liquidate such a collection without getting plainly ripped off.

This is a difficult question, one that I’ve faced with a few collections of my own. There are a lot of routes you can follow with this, some better than others, but I will say that the obvious answer - eBay - is often not the best one.

Let’s examine a few options that I’ve tried and that others have tried as well and see how they work.

Dealers Interacting directly with a dealer, unless your item is extremely esoteric, is probably the worst option, but it is the easiest. If you’re just in there to dump your collection, they will not see you as a customer - instead, you’re merely an avenue to profit.

eBay EBay is probably the strongest solution if you want to put in minimal legwork to get the items sold. Just write up a description of the whole collection and dump it out there as one auction, collect payment, and ship. Obviously, you can break up the collection into multiple auctions, but then the time factor begins to seriously escalate and you start seeing diminishing returns for your effort.

Research Another path is to meticulously research your collection by visiting library and online resources for pricing of such collectibles, if you can find it. This works very well for collectibles that are popular but completely unknown to you, like comic books, trading cards, political buttons, and so on. This usually takes significant work, but can really pay off because you can then use eBay to auction off the “best” stuff individually with reasonable minimums, then auction off everything else as a block.

Contact an expert This is actually where I’ve found the most success, particularly in selling comic books: I dove into the blogosphere. I wrote to several bloggers who blogged on the comic book industry and asked them how to start. I coupled this with some research, so I was able to name some of my top ones. Interestingly, I had very, very nice offers for some of the items and I ended up selling all of it directly to bloggers and their contacts at a very decent price. This won’t always happen, of course, but they can often point you in a very healthy direction.

So here’s my conclusion in a nutshell.

If you just want as little hassle as possible, take it to a dealer. This is the easiest way to go, but will have the lowest returns.

Otherwise, I suggest first doing some research into your items so that you know what you have, then follow that up by contacting bloggers who might be interested in or know about the items. Just inquire about how to sell the items and tell the real story; most bloggers are straight-up people who will guide you well. If this doesn’t work out, utilize that research to make appropriate eBay auctions, selling off the higher-priced stuff individually and the rest as a bundle. With this route, your time investment can really pay off, especially when it can be done mostly online.

Now, what am I going to do with that Russian doll collection that I’m likely to inherit someday?

Each Friday, The Simple Dollar reviews a personal finance book.

Over the last couple of years, I’ve become quite familiar with John Bogle’s investing philosophy of low-cost broad-based index fund investing. Because this philosophy made so much sense to me, especially after reading Bogle’s short book The Little Book of Common Sense Investing, that I actually took the leap and made my first investments with Vanguard, Bogle’s investing house based on his philosophy - and I couldn’t be happier.

Unsurprisingly, several people recommended Bogle’s first book, Common Sense on Mutual Funds, to me. It’s a much weightier book than The Little Book of Common Sense Investing, but I desired reading it so that I could understand the philosophy in more depth. Let’s dig in and see what I learned.

Digging Through Common Sense on Mutual Funds

Part I - On Investment Strategy

1. On Long-Term Investing The book opens by discussing the fact that in any given year, the stock market might be way up or way down (or somewhere in the middle). The volatility is far, far worse than that when looking at individual stocks - look at Enron and Google, for example. The only way to minimize this volatility is to buy everything and stay in for a long period of time so that the peaks and valleys can average out. Over the long-term history of the stock market (since 1800, adjusted for inflation), this comes out to about an 8% return per year, but the return has been much higher than that over the last thirty years or so. Your best bet is to invest now (to maximize your timeframe), invest in a broad investment with low costs (like an index fund), and just sit on it, contributing more over time, until your personal needs encourage you to withdraw it.

2. On the Nature of Returns So what about that volatility? What causes it? Bogle spends this chapter arguing that it’s speculation, and that over a long period of time, some of the time people will speculate in stocks and other times people will speculate in something else. When the speculators are putting their money in, the stock market will go up faster than expected. When the speculators are pulling their cash out, the stock market will go down far below what is expected. In fact, over the long term, the stock market grows almost perfectly in accordance with company earnings - the only time that’s not true is when speculators interfere with it.

3. On Asset Allocation Bogle makes an interesting argument here, stating basically that minimizing costs is more important than worrying about your asset allocation. Figuring out that perfect balance of domestic and international stocks, small-cap and large-cap stocks, bonds, real estate, and whatever else you might want to invest in is worthwhile, but it’s far more important to make sure that your costs are low, because even 2% costs (pretty typical for a managed and advertised fund) can pretty much undo any benefit you get from perfect asset allocation. As for the actual allocation, Bogle is a big advocate of simplicity - broad based index funds, somewhere between 50% and 70% in stocks, and the rest in bonds.

4. On Simplicity Here, Bogle argues that many people vastly overthink their investment choices. In fact, he argues that just investing in one very broad-based index fund and just dumping your money into it does better than a person who micromanages their portfolio. If you feel you must do something more complex than just a small number of index funds, Bogle offers quite a bit of advice, but most of it boils down to just emulating simplicity through complexity - so why not just keep it simple?

Part II - On Investment Choices

5. On Indexing Bogle lays out very carefully here how an index fund works: basically, an index fund is a mutual fund that just follows a very simple rule or two and buys everything that matches that rule. That way, there’s very little cost to manage it. For example, the Vanguard 500 has a very simple rule: “match the S&P 500.” That’s it - Vanguard pays very little to manage that fund because it just matches the S&P 500. I explained this strategy with much more clarity for beginners a while back - Bogle just covers the same material here.

6. On Equity Styles Does indexing work if you want to focus on a specific sector of stocks, like large-cap value stocks, for example? Bogle argues quite persuasively here that it does. An investing house could easily create an index based on a statement like “all stocks in the Wilshire 5000 with a P/E ratio under 10 and a company valuation of more than a billion,” for example, which would produce an index of large-cap growth stocks. Bogle then looks at such funds that do exist in various forms and compares indexed funds to managed funds in each grouping - and in almost every grouping, the indexed funds win.

7. On Bonds Bonds are perfect for indexing strategies because it’s very easy to identify and buy specific classes of bonds. Thus, no one should ever have to pay significant management fees for a bond fund. Bogle states that one should have a fraction of their portfolio devoted to bonds, either directly in bonds (via something like Treasury Direct) or via a bond index fund.

8. On Global Investing The risk-reward factor for international stocks is much different than that for domestic stocks. Generally, they tend to offer much greater risk in exchange for somewhat greater reward. For some investors, this might be a worthwhile tradeoff, but Bogle argues that investing in international stocks is not a necessary move for most individual investors.

9. On Selecting Superior Funds Lots of people out there desperately want to “beat the market” via a normal mutual fund, and it just doesn’t happen consistently. Other than Peter Lynch’s run with the Fidelity Magellan fund in the 1980s, no fund has consistently beaten the stock market over a multi-year period. The idea that one will find a “superior fund” is a mirage - it just doesn’t happen. Instead, you should seek a fund that consistently matches the market with low costs.

Part III - On Investment Performance

10. On Revision to the Mean “Revision to the mean” is a statistical phenomenon that happens over and over again in all sorts of fields. Basically, it means that you might be able to select a small set of stocks that does better than the market over some period of time, but over a long period any set of stocks will eventually move towards the market average. This means you might be able to find a fund that beats the market for a year or two, but over the long haul, it will eventually match the market. When you add in the costs to this picture, it becomes clear what the benefit of a low-cost fund is.

11. On Investment Relativism If you want to compare two funds, you should compare them using as many different periods as possible: one year, three years, five years, and ten years. If you can’t find that information about a fund, something is suspicious and it should be avoided. Advertisements for funds, of course, will cherry-pick from among those numbers to talk highly about a fund, but just selecting one or two of those numbers gives a very unclear picture.

12. On Asset Size An actively managed fund that sees some success will eventually see a lot of investors wanting to get in - and thus a lot of assets to manage. The more assets an active fund manager has to use, the harder it is to find the great bargains out there. Eventually, that manager will have so much cash that he or she will be forced to compromise their investment philosophy - and revision to the mean begins.

13. On Taxes Another concern with actively-managed fund is taxes. If the fund manager does a significant amount of buying and selling within a fund, the fund may end up requiring you to pay taxes on it at the end of the year, whether you actually sold any of your fund holdings or not. Indexing largely avoids this, because within the index a firm “buy and hold” mentality exists - rarely are items sold within a fund.

14. On Time In the end, though, time is the most important factor of all, and that’s where costs will eat you alive. Let’s say you can choose between funds that have a 2% cost and another that has a 0.2% cost. Over a long period of time, you might jump around between the 2% funds or you might buy and hold the 0.2% fund. Over that same period, both investments will eventually revert to the mean - in other words, both investments will match the market. The only difference is that the index fund will match the market with only a 0.2% reduction in your investment, while the others will match the market while peeling 2% off the top. Let’s say the market raises at 10% over 30 years. The 0.2% fund actually returns you 9.8%, while the 2% one returns you only 8%. If you put in $1,000 and wait 30 years, the 2% cost fund will be worth $10,062.66, while the 0.2% fund will be worth $16,522.29, a difference of $6,459.63. That’s a pretty important difference and an excellent argument for finding minimal costs.

Part IV - On Fund Management

15. On Principles Bogle argues that the entire concept of a mutual fund should be based on the principles of trusteeship, professional competence and discipline, and focus on the long term (remember, this is how Bogle sees the industry). He believes that if a fund manager ever abandons his or her basic principles, they let down all of their clients, something I do agree with even if I don’t believe that the principles he states are absolutes - mostly because I see a role for short-term funds.

16. On Marketing Bogle is really harsh here on funds that are heavily advertised, arguing that this advertising not only creates a false picture of the actual status of the fund, but also takes money out of the pocket of the investor. In other words, he basically advises people to avoid heavily advertised funds, because he believes a great fund should be able to stand on its own two legs.

17. On Technology The internet provides some amazing benefits to mutual fund investors. The amount of information available at one’s fingertips is amazing. It’s also incredibly easy to start investing, with online accounts incredibly easy to sign up for and manage. Yet there is a dark side, and that is the ease with which one can change investment direction with just a click or two of the mouse. Because of that, people tend to invest for the very short term, which can be disastrous.

18. On Directors Bogle argues that most directors of mutual fund companies are draining a company dry. These individuals collect fat paychecks without doing much at all because the real work of the company is handled by the fund managers and the personnel that support and directly manage those fund managers. Bogle argues that a company should spend far less on directors and return far more to their investors.

19. On Structure So how should a mutual fund company be organized? Bogle says that a mutual fund house should have as few middlemen as possible between the stocks owned in the fund and the individual fund investor, and most of those middlemen are focused entirely on service. Bogle believes that most funds are best served by just having the fund managers managing the money and service workers providing services to the investor and that’s it. No big management structure, no marketing department, and so on.

Part V - On Spirit

20. On Entrepreneurship This final section focuses on a few interesting issues not directly related to mutual fund investing. Here, Bogle tells his story of entrepreneurship, relating how and why he started Vanguard. It’s an interesting and inspirational short tale here, one that would perhaps be interesting fleshed out as an entirely separate book as it seemed to end just as I was getting interested - I definitely wanted more detail.

21. On Leadership Here, Bogle talks about leadership, compressing most of the material from books on leadership down to just a handful of pages. I generally avoid such books, as I’ve often found that a good leader comes from within, not from the pages of a book, but this was interesting reading. Bogle seems to generally feel that a good leader leads by example and by principle.

22. On Human Beings This final chapter is basically a “thank you” to all of the people at Vanguard, both the staff and the investors. Bogle seems to really get that any success he has is largely due to these people, which is really refreshing to see.

Buy or Don’t Buy?

Common Sense on Mutual Funds seemed to me to be a much meatier version of The Little Book of Common Sense Investing - or, since Common Sense came first, the other book is a bare-bones version of this one.

If you really want to understand Bogle’s (and by association, Vanguard’s) investment philosophy in great detail, Common Sense on Mutual Funds is well worth reading. It makes a strong, detailed, compelling case for investing in low-cost broad-based index funds, written by the man who really brought this investment strategy into the mainstream. In fact, I’d go so far as to say that if you’re interested in investing as an individual investor, this one’s worth reading.

On the other hand, if 400+ pages on these topics sounds like pulling nails, then Common Sense on Mutual Funds is probably not for you. It’s fairly long, somewhat dry in places (but quite entertaining in others), and doesn’t apply much at all to people who aren’t looking at investment options. If you’re mostly worrying about getting rid of debt or don’t have the cash to spare to invest, you’re quite fine leaving this book (and other investment books) on the shelf.

This Monday, the first entry in the book club reading of What Color Is Your Parachute? will be posted, so if you’re interested in participating, you might want to dig out your copy. I will be reading the 2008 edition of the book, but the changes from earlier editions are pretty minimal and you should be able to pretty easily follow along no matter what edition you have. If you’re not sure about participating, read my review of the book and it may help you make up your mind.

The schedule I plan on having nine entries in this edition of the book club, one a week for nine weeks. These will always go up on Mondays, so that you can read the piece on a lazy Saturday or Sunday afternoon. I plan on spending two weeks (i.e., two entries) on the first part of the book, two on the second part, and five on the last part because I think the writeups for the last part will be far more involved and interesting. This book is a quick read, with lots of pictures and such, so don’t be shy if it seems like I’m suggesting a lot of pages to read in a week. It averages out to well under ten a day, and many of those pages are littered with images.

Ready? The first entry, to be posted on Monday, will cover chapters one through four, up to page 59 in my 2008 edition of the book. It’s about fifty pages, but very lightly written and with a healthy dose of pictures. Try reading a chapter a night and you’ll be good to go!

A few days ago, I had lunch with an individual who is considering hiring me to give a multi-hour seminar to a business convention on personal finance. This person knows me from the local community and is a reader of The Simple Dollar and he felt that I might be the right person to give such a presentation.

During the lunch, out of the blue, he asked me to give a five minute nutshell version of what I would present to the group. I thought for a minute, pulled a pen out of my pocket, and asked him for five business cards. In those next five minutes, I summarized everything I know about personal finance in a pocket-friendly presentation.

I saved the business cards, scanned them in, and thus, for your enjoyment, is my presentation (with some extensive helper notes so you can know what I was actually saying while drawing these cards).

1. The Most Important Thing

In the end, this is the fundamental rule of personal finance: spend less than you earn. It’s the one point that comes up time and time again in almost every personal finance book you read or talk that you hear. Why? Because it’s true.

There are two avenues to achieving this goal: spending less and earning more. By working on either (or both) of these areas, you can increase the gap between those two numbers - and that gap is your ticket to freedom. The harder you work on either spending less or earning more, the bigger that gap will become and the quicker that train to your dreams will arrive at the station.

2. Earn More!

So how does one earn more? Many people will argue that there is no universal way for people to earn more money, and they’re right: some people are born entrepreneurs, others function much better in an office environment. Some people are endlessly creative, others are masters at completing long lists of tasks.

Once you dig past that, though, there are some common things that anyone can do, regardless of their financial state, to earn more money.

1. Get educated. This doesn’t mean drop out and go back to school. It merely means to keep learning new things. If something interests you, read a book about it. Take evening classes to get certification in a certain area or get a masters’ degree. No matter what you’re doing, there’s some way you can learn more and improve yourself.

2. More income streams. Always be on the lookout for ways to have money rolling into your pocket from a lot of different places. Maybe you’re a good writer and can sell a short story or an online ebook. Maybe you’ve got a little piece of land somewhere that you can lease to a farmer or a developer. Maybe you spend your free time managing a flower bed in the park - why not put a little wooden freewill donation box out there for people to drop a coin in? Maybe you have some extra cash laying around with which you can buy a long-term treasury note that will keep issuing you a check every six months. Having more income streams merely means that losing one of them (like your job) is less devastating in your life and it also means your overall income for now will go up.

3. Start a side business. Instead of burning a few hours in front of the telly each evening, how about investing at least part of that time into starting a side business? You can try starting a blog with a few ads on it, or maybe you’re good with woodworking and can make deck furniture. Maybe you’re good at baking bread and can take loaves to the farmer’s market, or maybe you deeply enjoy gardening and can sell vegetables. There are lots of possibilities out there for starting a business that will supplement your current income and perhaps eventually grow into your main income.

4. Move towards your passions. Whenever the opportunity presents itself, gravitate towards the things that really excite you, because passion is what will make you successful. For me, my passion is writing, so I’ve made an effort to gravitate towards it by working on The Simple Dollar in my spare time. For others, it could be anything - maybe it’s leading a team, or perhaps it’s writing beautiful computer code. Whatever really excites you and makes you want to do more and more and more and better and better and better, that’s what you need to move towards at all times.

5. Don’t burn bridges. You never know when a relationship you’ve forged in your past might come in handy later on, even the ones you completely don’t expect. Thus, even if you feel wronged in a situation or want “revenge” on some people - or even if you just feel an urge to spread negative gossip - resist it. As you get older, you’ll find yourself time and time again bumping into people that you forged relationships with earlier on - if you burned those bridges, you’ll find that eventually you’ll have burnt that very bridge that you need to cross to get ahead. My advice? Never spread a negative word about anyone, because it never helps.

6. Keep in touch! When you do build a bridge with someone, don’t let it get old and worn out - spend the time to keep in touch with that person. Shoot them an email or a phone call every once in a while just to see what they’re up to. When it’s clear they need help and you can easily provide it, always provide it. I found the book Never Eat Alone to be particularly powerful in this regard. I’m rather introverted, and it’s often a challenge for me to initiate and then keep communication going with someone, and this book provided tons of tips on how (and why) to keep contact with people.

3. Live Frugal!

For a lot of people, frugality is a nine letter word for cheap. They think of people doing stuff like buying cartloads of generic products, using forty coupons in the checkout aisle, wearing patched clothing, driving a rusted-out old vehicle, and other such things that it’s easy to look down your nose at.

Here’s a secret, something that I’ve witnessed several times in my own life and read about many more: those frugal people that you look down your nose at often have a mountain of cash in the bank (not always, of course, but more often than you think). They’re not drowning in a mortgage, they’re not making payments on a five figure credit card debt. They’re not working to death on the weekends or drowning an ulcer in Pepto-Bismol. They’re living their life according to their own rules.

The best part is that we can all apply some of those same rules in our own life. Here’s what you can do to start reducing that spending.

1. Maximize every dollar. Every time you spend money, you make a decision. You decide that whatever you’re giving that dollar for is worth it, and thus you make the exchange. The real key to spending less is to raise that definition of what a dollar is worth. You know those times when you buy something, but you realize you don’t really need it and you’re also not convinced that it’s a very good deal? Make the choice to not buy it, or buy a cheap version and see how much you actually use it. Don’t be afraid to shop around a bit.

Food is a great example of this. Quite often, people will eat out at places like Applebee’s and drop $20 or $30 on a meal that they could have made at home for $3. “But it saves time and is convenient,” you say? Just for fun, try making an equivalent meal at home sometime. You might be surprised to find out how easy it is and how much you’ll save.

2. Habits of all kinds are dangerous! Most people have some sort of routine in their day where they buy a morning latte or a bagel, or they drink six cans of soda, or they eat out at the same place each day for lunch. What these routines add up to is a lot of money. Spending $5 every day in a workweek adds up to $1,300 over a year - that’s a mortgage payment for a lot of people. Spend some time looking at the stuff you do every day, especially the ones that require you to spend money, and ask yourself if they’re really necessary or could be replaced.

3. The ten second rule Every time you go to make any purchase, even when you pay a bill, stop for ten seconds and ask yourself if this is really something you want to spend your money on. Do you really need this item? Do you really need to be paying $14.95 a month for unlimited text messages when you use maybe ten? Could you reduce that electricity bill by putting in a lot of CFLs? This one simple technique will often point you in the direction of spending less money.

4. Don’t make yourself miserable! Most of the time, when you cut a bit of spending from your life, you’ll find that you never miss it. However, there are times when you find yourself really regretting it. If that’s the case, then it’s probably a worthwhile expense for you. Saving money doesn’t have to equate to misery, it just means that you cut down on the unnecessary.

5. … but don’t forget the big picture. That, of course, doesn’t mean that you should justify every purchase with a basic “I want it and I have money in my account.” That shouldn’t ever be enough to motivate a purchase. I find that using a visual reminder in my wallet of what I’m financially working towards does a great job of keeping my mind on the big picture and helping me filter out what’s really needed and what’s just a fleeting desire.

4. Manage money!

Whenever you increase your income or decrease your spending, you’ll find yourself with more cash at the end of the month. That cash is your ticket to financial freedom, and the more you can get each month, the better off you are. The trick, though, is to not spend it, but to do things that will build a stable future for you. Here’s the game plan.

1. Pay off all high interest debt, such as credit cards. Anything with an interest rate over 9% needs to go as soon as possible. Use the extra money to make double or triple payments on these debts, focusing first on the one with the highest interest rate. When that one’s gone, keep going with each successively lower interest rate debt. This is akin to Dave Ramsey’s popular “debt snowball” technique.

2. Build an emergency fund. An emergency fund is an amount of money you keep in a savings account that’s intended to be used in the event of a major crisis, such as a job loss, a medical emergency, major car damage, and so on. I usually suggest to people that they measure their emergency fund in terms of months’ worth of living expenses - you should have a month and a half worth of living expenses for each person you claim as a dependent. So, for me in a house with two children and my wife, I have a six month emergency fund.

3. Max out retirement. By this, I mean you should go to one of those retirement meetings at work, ask exactly how much you should be putting away to ensure that your living expenses are well-covered in retirement, and put that much away. This varies a lot depending on how much you have in right now, how much your employer matches, and so on, so you should talk to your retirement planner at work about the specifics.

4. college savings? College savings are next. If you have kids, set up a 529 college savings plan for them and start automatically putting a certain amount into this account each month. The plan Iuse for my own children is College Savings Iowa, which is managed by Vanguard - I currently put in $100 a month for each child.

5. Pay off all debts. If all of these are covered and you still have cash left over (which you will, given some time), the next step is to pay off all of your debts. Get rid of your car loans, your student loans, and your mortgage. This is actually the step I’m focusing on right now, as I have already taken care of steps one through four.

6. Invest! You might also want to start investing at this point. My recommendation is to buy low-cost broad-based index funds because they don’t have many fees and grow very nicely over long periods of time. I personally invest with Vanguard directly through vanguard.com.

5. Control your own destiny!

Most people see the goal of all of this as being rich. That’s why you see so many books about millionaires on bookstore shelves - being a millionaire is something many of us aspire to, right?

Here’s the secret: it’s not about being rich. Having a big net worth is just an indicator of what this whole process is really about.

It’s all about freedom. Freedom from debt. Freedom from supervisors telling us what to do. Freedom to spend the time to do things right. Freedom to try out new things and follow our interests. Freedom to sleep until eleven one day, then stay up until two in the morning working on what we’re passionate about.

That’s what most people really want - I know that’s certainly what I want. Having a big bank account just means that I’m not beholden to others. I can follow my passions and dreams wherever they take me. If my job is not satisfying to me, I’m no longer tied to that paycheck - I can just get up and walk away. I can do whatever makes me happy and avoid most of what makes me sad, without regrets or worries.

It’s a lot of hard work to climb that mountain, but the air up there is the sweetest thing that there is.

Want to know more?

If you liked the information on these cards, you should really dig into some of the better personal finance books to learn more. I’ve read a pile of these and made a list of the best ones. You should also take the time to dig into The Simple Dollar as well as some of the other excellent personal finance and personal development blogs out there - they do a far better job of humanizing and explaining money and personal development than many of the “big” corporate sites.

Most importantly, remember that you can do this. Two years ago, I was almost bankrupt and in deep despair because I didn’t believe this stuff, either. It took a lot of learning and a lot of honest soul-searching, but I began to realize what was really important and I turned the ship around. Trust me: you can do it, too.

Quite often on The Simple Dollar, I’ll suggest some specific frugal idea, like rewashing a Ziploc bag, and inevitably someone will complain that I’m a “cheapskate” and that I should “get a life.” I usually find such comments quite amusing, simply because these individuals aren’t looking at the bigger picture. One instance of frugality doesn’t save you very much, but when that instance doesn’t take much time, either, the effective “hourly rate” for frugality can be impressive.

Let’s take a look at that Ziploc issue more specifically to show you what I mean. Let’s hypothetically say a new Ziploc bag costs $0.20, roughly appropriate based on the many varieties of Ziploc and the quantities you can buy (we like two gallon freezer Ziplocs for meal storage, and those are far more than $0.20, but the sandwich ones are much less). Now, let’s say I need one of those bags. It takes me about six seconds to dig a new one out of the box and about twelve to grab a used one and clean it. That means that the time cost of washing and reusing a Ziploc bag is six seconds. That six seconds saves me $0.20.

For most people, that six seconds versus $0.20 doesn’t seem impressive, but let’s say you make a habit out of it and you find yourself washing, say, two Ziploc bags a week and reusing them. After 300 weeks (six years), you will have washed about 600 Ziplocs, totaling about an hour of extra time used. Each of those 600 washings saved you $0.20. Thus, the total hourly rate for washing those Ziploc bags is $120.

$120 for one hour of work. Most of the same people who would look down their nose at washing Ziploc bags would jump for that kind of pay rate.

However, it is important to note a few caveats:

First, that hourly rate is usually spread out over a long time. You only work a tiny sliver of that hour at a given time and thus are only “paid” a tiny amount of that hourly rate at any given time.

Second, it doesn’t work well unless you make it part of the routine. Since we use Ziplocs so much, we just wash them and put them in a drawer instead of throwing them away, then retrieve them out of that drawer when we need them. It’s part of our Ziploc use routine - we only add new ones when the old ones start to degrade.

Finally, it’s often hard to figure out discretely how much you’re saving. I estimated a fair amount on the Ziploc numbers above. Since we use a lot of the two gallon freezer bags, which cost about $0.34 a pop, I think our hourly rate is somewhat higher. It’s also often hard to figure out how much time you have to use to be frugal - many people forget to subtract the time that you’d invest with the “normal” way of doing things from the “frugal” way, and they also don’t accurately estimate either time that well. I timed things for this post just to figure it out, for example.

What other things can be done for a high hourly rate at home? Obviously, any effort put towards trimming your monthly spending automatically will be absolutely great, but I’m looking beyond that to active things you might do to save money. I spent some time estimating the hourly rate on several tasks and here’s what I found.

Can recycling In Iowa, we have a 5 cent can recycling program. We simply toss our cans into a separate container (no extra time) and redeem them in a redemption machine about once every three months. The average redemption takes about ten minutes and we get back about $8 or so, giving a rate of about $48/hour.

Coupon clipping I spend about fifteen minutes each week leafing through the coupon section of the Sunday Des Moines Register. On average, I pull out $4 worth of coupons for stuff we actually need. Thus, my rate for coupon clipping is about $16/hour, which is great considering it’s a lazy Sunday morning activity at the breakfast table.

Leftovers I might spend five extra minutes in the evening prepping leftovers to take to work the next day. When there, it doesn’t take any longer to heat and eat leftovers than it does to order delivered food or go out and eat (costing about $7 a pop), so my rate for the leftovers is $84/hour.

Making my own hot chocolate mix Winter is upon us, and that means a giant jar of prepared hot chocolate mix is in my future. I could buy mix from the store at a cost of about a quarter a cup, or I could make my own at home for about ten cents a cup in about fifteen minutes (I like to shave down bars of dark chocolate for our mix). Let’s say each mix will make 30 cups, and I save $0.15 a cup, a single batch saves about $4.50. Thus, my rate for hot chocolate mix is about $18/hour.

Sewing A lot of minor clothes issues can be handled with sewing, like replacing a button on a dress shirt or fixing a broken zipper (I don’t tackle anything too complicated). If I can do that task in ten minutes and it extends the life of a $50 shirt again by half (meaning I save $25 from the stitching), my rate for sewing is $150/hour.

Frugality might seem silly at first, but if you use it on things that are part of your life routine that you will do over and over again, simple frugality tasks can be very lucrative by the hour.

Most of the time, I’m a pretty organized person who keeps up with the tasks thrown at me every day. Sometimes, though. the flood of demands on my time starts to spiral out of control.

Right now, for example, I’m buried under expanded and unexpected responsibilities. My son is going through a period of deep attachment to me and is also experiencing some strong separation anxiety, so I’m spending significant extra time with him, particularly in the morning. I’ve had a surfeit of tasks at my real job. I’ve conducted three lengthy interviews in the past week, and I’ve also been given the opportunity to try out my presenting skills (more on that in a day or two).

The end result is that I’m tired, and I feel like I have too much to do on my plate.

Thankfully, I have a toolbox of tricks to help me deal with this. Here’s how I’m handling it.

First, I list out everything I need to do and/or is weighing on my mind. Thankfully, thanks to my handy pocket notebook and “go” bag, this information is usually right at hand, but I usually make a big list of all of them on a piece of paper.

I then highlight only the ones that must be done immediately or are of deep, fundamental importance in my life. Right now, that’s keeping up with my writing requirements, doing a few specific job tasks, and ensuring that my son’s emotional health is okay.

After that, I just do the highlighted tasks and ignore the rest for now. Nothing else matters other than the highlighted tasks - the rest can literally fall off the face of the earth. My tasks are those highlighted - and nothing else.

Whenever something else comes up, I add it to the list instead of jumping up to do it immediately. The only exception to this is if it’s a personally devastating issue, meaning that if I don’t take action now, desperate things will happen. Everything else just goes on the list until the next go-round.

When the highlighted tasks are done, I go back and highlight a few more that are the most vital among the ones left, then do those. I just repeat this cycle over and over until things are back to normal.

I’ve found that more formal prioritizing ends up getting in the way of getting things done - and getting out of the hole that I find myself in. Some people use all sorts of prioritization schemes and multiple to-do lists, but every time I try something that complex, I find myself fighting against it and not getting real stuff accomplished.

Now, to do some research on separation anxiety and two year old boys…

It was interesting constructing this first weekly roundup. I basically kept reading my favorite blogs and saving the articles I liked the most from all of them, then I boiled the thirty or so I had bookmarked down to the handful that you see here. Before, with morning roundups, I would sometimes only find one or two in a day that I liked and stretch to put one in, or I would find six I liked and not want to post that many at once. With this, I just saved all the good ones and then tried to pare those down to great ones. So, here we go…

The Adventures of Single Parenting Personal Finance Right now, if my wife suddenly were not around and we became a single parent household, I actually think I could do it, but it wouldn’t be easy. (@ money smart life)

3 Things You Need to Know Before Giving to Charity These reasons are a big part of why I like giving to local charities. (@ consumerism commentary)

Why Do I Always Find A Good Deal After I Buy It? This seems to happen to me on a frighteningly regular basis. (@ gather little by little)

The Sandwiched Generation The title refers to people with young children and aging parents who are facing financial responsibilities to both … my wife and I are nearly in that group. (@ money, matter, and more musings)

10 Creative Recipes for Leftover Mashed Potatoes The most popular one at home is potato pancakes, but several of these sound quite good. (@ not made of money)

The Sinking Dollar, As Viewed From Overseas It raises prices in America, but lowers them elsewhere. Interesting stuff. (@ wise bread)

Save Money With Unusual Devices This is a really fascinating look at piggy bank variations and alternatives. I’ve looked at several of these and been impressed, but I haven’t made the leap to any one of them. (@ the digerati life)

The Simple Dollar Retro: You Don’t Need Six Figures: The Financial Realities of Living in Iowa Living rural can be very, very inexpensive, and part of the reason for that is stereotypes - urban areas market themselves to make rural areas look boring.

On an earlier post about losing financial focus, Erick left the following comment:

You mention that you are making progress to your goals but still have a long way to go. What are these goals? I assume reaching the “crossover point”? And I know this is nosy but when you say you have enough money in the bank to “easily” do those things, what do you mean in terms of actual figures? I’m not asking what your current bank account balance is or anything but I constantly read about people reaching financial independence what does that mean in general terms of actual dollar amounts for an average person with modest living? $1/2 million in the bank, $10 million, what??? I realize that it depends on what your standard of living is and such but I am just looking for some examples of actual dollar amounts that I can compare. thanks in advance.

Given that, I thought it would be useful to discuss my current financial goals in great detail. We’re basically marching through this list of goals in order, focusing vigilantly on the first one until it is gone, and continuing on with future ones.

Goal #1: Eliminate all remaining student loans

Right now, I have a single consolidated student loan outstanding that has a balance of about $20,000 and my wife has a single consolidated student loan with a balance of about $12,000. They’re both locked in at fixed rates, with mine a bit higher than hers (7.5% versus about 6.75%). Our biggest, most immediate goal at the moment is eliminating those loans, and we’re contributing every extra dollar we can to making both of those vanish. In terms of time, we are hoping to eliminate my debt by the end of 2008 and hers by mid-2009 (assuming no major life changes).

Eliminating these loans will leave us without any debt except for our mortgage. This is important to us, as we have a great desire to minimize our required monthly expenses so one of us could easily make a career change or choose to stay at home if we so chose.

Goal #2: Replace both of our vehicles

Once our debts are gone, we’re going to begin saving to replace both of our vehicles with late model used options. We’re anticipating a cost of between $12,000 and $20,000 a vehicle, as we’re looking for long-term reliable vehicles.

We have a small amount saved for this already, but we’re not growing that money until the student loans are gone. If we need to replace a vehicle before then, we will take out a loan to do it, but we don’t currently anticipate it.

So, once our student loans are gone, we will begin saving a total of $35,000 for two vehicle purchases. We are hoping to be able to pay cash for a vehicle by October 2010, then for the other one by the end of 2011.

Goal #3: Mortgage elimination

Once we have new vehicles, we’re going to focus on eliminating our mortgage, which should have a balance of about $140,000 at the end of 2011. Given that we have no car needs at that point and no other major debts, we will begin eliminating that big debt as quickly as possible, with at least double payments (and likely larger). We anticipate paying off our home in 2019, on our rough timeline.

Future Goals

Once that is accomplished, we’ll be around 40 years old, owning our own home and being entirely debt free. At that point, we have a lot of goals to dig into, from a house in the country to ensuring our children get out the door on their own two feet to an early retirement. We do not have goals associated with our net worth, though it is a good indicator that we are moving in the right direction.

Our route to these long-term “dream” goals is financial responsibility now. We won’t make it there without working hard and having some financial discipline today, so we practice frugality and make diligent, automatic debt payments.

Even more importantly, we find a lot of inspiration in watching our progress towards the goal. It’s a lot of fun to watch that debt go down with each payment, and it feels very good.