A few days ago, I wrote a post where I responded to a reader who felt I had nothing to offer her because my income was significantly higher than hers. I strongly disagreed - I feel very much that the principles of personal finance apply to everyone. I used the example of sharing money-saving tips with my parents, who earn significantly less than I do - we both benefit from a lot of these activities. Similarly, my father is an entrepreneur who has a thriving fishing and gardening side business - he doesn’t have a big bankroll, but he has passion. I learned entrepreneurship from him and it led me to have the courage to start The Simple Dollar and run with it.

Underneath that, though, Marjorie did have another interesting point worth discussing. There are simply some people in very difficult financial situations that I can’t help. If you are in a position where your earning potential is low and you have to work every spare minute to make ends meet, the idea of shaving a few dollars from your budget to help keep yourself above water is laughable. Most people in low-income situations already follow most of the frugality tactics I mention, not because it’s a good way to help get themselves in better financial shape, but out of pure necessity.

Larry Winget, in his very solid personal finance book You’re Broke Because You Want to Be, hit the issue right on the head. He made a distinction between the idea of being poor and the idea of being broke in a very clear way. Here’s what he had to say:

Please don’t say, “But what about the poor people, Larry? They don’t want to be broke.”

Great point. You’re right. I’m not talking about being poor.

Poor is a condition I find very sad. Sad, yet inevitable. Jesus said, “The poor will be with you always.” And they will. There are people who live in soicieties and countries where there are no opportunities for advancement and it takes all their effort just to survieve. They are not going to have enough to eat well or live well or take care of themselves.

So let’s get this straight from the outset so you can get off your high horse and understand what I am really saying. I didn’t write this book for the poor people of the world. I know it is going to take a lot more than a book to help truly poor people. To think otherwise would be insulting.

I am talking about broke. Broke is not a condition like being poor. Broke is a situation you find yourself in because you are either underearning or overspending.

In short, being poor means that you don’t have the resources available to you to improve your financial situation. For some, this may mean a personal challenge, such as a learning disability or physical disability. For others, it may be a confluence of events in life that close doors to progress, such as having children before you’re adequately prepared. I know some people in these situations and I know that there are many more in this group throughout the world. It will take some significant social progress to reach these people

Poverty is not something I can help. It’s something far beyond the ability of an internet blog to help. It requires significant social change and a very large commitment to lift all of the boats in the world. If I want to actually help with poverty, I can go over to the food pantry and help gather for them, I can donate some of my financial gains to charities that help with poverty issues, or I can get involved in political causes. No list of “tips” I can write can help with genuine poverty.

On the other hand, being broke means that you do have resources available to you to help improve your financial situation, whether you see them or not. This is usually due to a lack of personal finance education, poor time management skills, a lack of willpower, and so on. What I’ve found is that almost everyone who can access The Simple Dollar falls into this category - they have some resources somewhere that they’re not utilizing well, and by utilizing them better, they can achieve their dreams.

Being broke is something I can help. I can offer up my own experiences in a very detailed fashion. I can suggest fixes that work in a wide variety of lifestyles. I can offer all kinds of insights on how to better manage your time and how to use that excess time to increase your income.

If you’re reading this, you’re probably in the “broke” boat, were in the recent past, or desperately want to avoid ever going there. Welcome aboard. Let’s sail beyond the sunset together.

Yes, some people can fall into both camps. They are in a situation without many resources to spare and because they’ve been led to believe they can’t succeed, they don’t believe in those resources and don’t believe in themselves. I know some people in just this situation - they believe they’re in the “poor” camp when they’re actually in the “broke” camp. I would rather reach these people more than anyone else, and that’s why Marjorie’s email struck such a chord with me, because I believe she’s in this group.

The fact that some people have resources and some people do not is a very broad societal issue, one I can’t hope to solve. All I can do is try to reach out to the people who have resources available to them and help them to discover how to really use those resources. I don’t profess to have any kind of solution for any greater societal problem, but I do find a lot of value in helping people find ways to succeed themselves.

After my recent article about how to deal with a partner that hides and lies about money problems, several readers made the astute point that many of these situations are often the result of people lying to themselves about money, whether directly (by actually telling yourself false conclusions about the facts you already know) or indirectly (avoiding the facts).

I used to often lie to myself about money. I’d buy things on the credit card without checking balances or considering the consequences, believing it wasn’t that big of a deal or that I could easily afford it later. Sometimes, I’d figure out my complete financial state, know on some level that it was atrocious, but tell myself that it wasn’t bad and that I had things under control.

Here are some of the tactics I used to overcome that tendency to deceive myself about my financial state. Without these tactics, it would have been much more difficult to turn my financial life around.

First, realize what you’re doing
If you don’t recognize a problem, you’re going to go on deceiving yourself and digging yourself into a deeper and deeper financial hole. Here are some of the big warning signs to look for:
+ Do you often feel like you have to “justify” purchases because your brain tells you you can’t afford them?
+ Do you avoid looking at bills and financial statements?
+ Do you tell yourself that your “future self” will take care of this bill?
+ Do you try to block thoughts of your debts and budgeting out of your mind when you want something?
+ Are you often “surprised” by your credit card bills, but you don’t even think about the bills when you bust out the plastic?
+ Do you tend to believe you’re more well off than you are when you’re out in public buying stuff than when you’re looking at your bills?

If any number of those are true, you’re either directly or indirectly misleading yourself when it comes to your financial state, and that directly leads to financial trouble.

The first step is to simply realize you’re doing it - and to realize that it’s not helping you with financial success.

Figure out the truth
The next step is to figure out your exact financial state so that you can see the raw numbers. This means facing those bills that you dread and coming to terms with the fact that your income isn’t really matching your spending.

One good way to do this is to tabulate all of your spending for a given month. Go through all of your receipts and statements and determine where exactly every dime went for the past month. Group them together in obvious ways - all spending at each store, or all spending at each type of store, for starters. A person who just gets a coffee each morning might be able to tell themselves it’s not a problem, but looking at a pile of 23 charges to the local coffee shop for $8 to $10 a pop might make things look different - that’s a car payment. Four clothing binges? That’s a problem.

Another method for seeing everything at once is to calculate your net worth. That means tallying up the value of all of your assets, then subtracting from that the total of all of your debts. What’s left might actually be negative, which means that for all of the time you’ve spent working in your life, you’ve actually accumulated less than nothing.

These numbers are the truth of the matter. The truth is not the story you’ve created in your head. Look at these numbers carefully, and figure them up on a very regular basis so you can see the exact effect of the bad choices you make on your financial state.

Create some reminders
Once you’ve figured up these numbers, you may want to just push them out of your head and forget about them. Don’t. Put a copy of your net worth balance sheet up on the fridge and on the dashboard of your car. Wrap a note around your credit cards saying “I spent $800 on stupid things last month - that’s more than a week’s worth of pay.”

The key is making the truth so prevalent that you can’t avoid it. If the truth is around every corner, the lies have nowhere to hide.

For me, the most powerful reminder was a picture of my children wrapped around my credit card. My son keeps me honest with myself - I know that every bad financial move I make means fewer opportunities for him as he grows up.

Try a “cash only” spending plan for a while
Another tactic to enforce honesty is to switch to a “cash only” policy for spending. Whenever you intend to make a purchase, do it with only cash. This means using the ATM machine and keeping cash in your wallet for any purchases you might make. To enforce this, start keeping your credit card at home or keep only a low-limit one in your wallet for emergencies.

This keeps you honest in the sense that once there’s no money left, there’s no money left. You can’t deceive yourself because of the availability of credit - the amount of money you have is really all you have.

Be fully honest with at least one other person
One other tactic that’s fairly surprising but really helped me to face the truth of my situation was full honesty with another person.

When we faced our financial crisis in April 2006, I spent some time assembling all of this information about our financial state. I found out how much we owed on all of our debts, figured up our net worth, and put together a vague plan for what we needed to do.

Then I took the big step. I shared all of this with her. We sat down and went through everything. I showed her a complete picture of our financial state. We talked about our goals and what we wanted from our lives. We started to look for some solutions, too.

The most powerful part, though, was revealing all of the bad moves to my wife. She had a sense that we were in a difficult financial shape, but she really had no grasp as to how deep our financial troubles went. By showing her the whole picture, it went from just being something I could keep to myself and hide from others to being something that someone else knew about. She now knew the whole truth, just as I did, and thus any statement or action I made with regard to our money not only had to pass through my own sense of truth, but it had to pass through hers as well.

In short, she became a much higher standard of honesty about money. It’s a lot harder to deceive yourself if you know that deception requires you to also deceive the people you love the most. By opening the whole of our finances to her, any lie I told about our money, even to myself, became much the same as lying to her, something I can’t stomach.

Find someone you trust deeply and value deeply and open up your situation to them. You’ll find that you’ve committed yourself to a deeper level of honesty and it will push you to a higher standard than before.

Set microgoals
Pledge that you’ll get through just the next day without spending dishonestly. Take it one step at a time, and renew your honesty at the end of each day by taking a sincere look at what you spent that day. Then repeat it the next day. Start a journal about your progress, writing down the successes and the challenges of each day.

Eventually, you’ll come to truly trust yourself again. You’ll find that you’re naturally moving to a state of internal honesty, and that makes it much easier to be truly honest with others. That honesty about money will also lead you straight towards financial success, as you’ll be connecting the consequences of your spending with the rewards of getting things under control and building a surplus.

One major theme I’ve observed in a large number of recent personal finance books and articles is the idea of valuing experiences over things. For example, it’s more financially sensible to lead a spartan life filled with many memorable experiences than it is to subscribe to the consumer lifestyle. I’ve hinted at this concept several times recently, in my discussion of saving to splurge as well as my review of The 4-Hour Workweek.

On one level, this makes a lot of sense. In your final years, you won’t want to look back on a life that was spent accumulating stuff. Instead, you’ll want to look back on a life well lived, one filled with all kinds of interesting and valuable experiences. Life isn’t about the stuff you have, it’s about the things you do.

There’s only one problem with this philosophy. It’s just as prone to overspending as accumulation of stuff is.

I think back to the amazing honeymoon I had with my wife in the summer of 2003. We went to London, stayed in a hotel room overlooking Hyde Park for a week, and strolled to everything we wanted to see in the city. Then we stayed in Manchester for a few days, then a few days in Inverness, then a final night in London. It was unforgettable, but we spent money like it was water on the whole trip - the total bill ended up being in the low five figures. The summer after that, we spent about a week and a half in the Seattle and Victoria, B.C. areas, spending about $4,000 on a very memorable trip.

In short, the “experience”-based lifestyle is just as prone to overspending as the “stuff”-based lifestyle. You can just as easily blow thousands of dollars on your home entertainment center as you can on a memorable trip.

The key to keeping the experience-oriented lifestyle within reason is the same as keeping the item-oriented lifestyle in reason - frugality. Just as with shopping for the best deals on items, you can also do some careful planning and get the maximum value for your dollar when it comes to memorable experiences. Here are some ideas.

Don’t set the bar for enjoyment beyond what’s reasonable. My wife and I were in great danger of doing this with our London trip - we set the bar for memorable experiences pretty high with that one and we tried to compete with it for the next two summers. While it’s great to occasionally have a truly monumental experience, don’t try to make every other experience match up to it.

What really worked for us was spending three straight summers since then with only extremely modest trips - a camping trip to the Great Lakes in 2006, nothing at all in 2007, and a week along the shores of a nearby lake in 2008. Those experiences were highly enjoyable but didn’t break our finances, either.

Use the peak-end rule to your advantage. The peak-end rule states that your later judgment of an experience is mostly made up of the peak of the experience as well as how you felt at the end of the experience. That means that a trip where you jam every day full of activities isn’t really going to build a ton of great memories. Instead, make the days more leisurely and focus on having two great experiences - one in the middle of the trip and one at the end.

This actually works. My memories of the Seattle trip are really defined by two experiences - visiting Butchart Gardens (peak) and visiting an amazing bonsai garden (end). My memories of our London trip are mostly defined by visiting Parliament (peak) and a long train ride from Inverness to London where my wife slept on my shoulder and I looked at the countryside (end).

Fill your life with lots of enjoyable smaller experiences. Instead of blowing huge amounts on jaw-dropping experiences, fill your spare time with experiences that fulfill you deeply without emptying your bank account. Spend more time with your kids. Explore the nature near you. Go on shorter trips and discover the beauty and activities available in your own state that you’ve never discovered. Try some new activities that are outside of your comfort zone wherever you are.

For me, the most memorable experiences of this summer are ones that cost very little: playing Calvinball with my son, rolling over and over in the grass with my infant daughter, going to dozens of little community festivals and participating in the cultural activities, biking to the park regularly for family picnics, and so on. These things didn’t have much cost at all, but they’ll be what I remember from this summer and they’ll be very happy memories, right along that top shelf with visiting Parliament with my wife.

Why? The real key to making memorable experiences isn’t in blowing wads of cash on amazing peak experiences. It’s in figuring out what truly makes you happy and making that central in your life. I can name on one hand the things that make me the happiest - writing, playing with my kids, cooking and enjoying good food, and reading. Those things make me happier than anything else, and when I surround myself with them, I find tons of great and memorable experiences without spending much at all.

In the end, then, the real key is to find the elements of your life that make you happiest and make those elements the center of your experiences. The best part is that it doesn’t have to cost much at all and it will put you on the path to leading a memorable life.

This week’s roundup comes very close to my thirtieth birthday, which I’ll be celebrating this coming weekend. Considering this is something of a milestone birthday, I’ve been reflecting a bit on how much has changed during each decade of my life.

When I turned ten years old, I was in the midst of a summer vacation between my fourth and fifth grade years. I was particularly baseball obsessed that summer and I remember spending countless warm afternoons listening to Cubs baseball games on WGN AM 720.

When I turned twenty years old, I was doing a summer internship between my sophomore and junior years in college, where I spent my days sifting soil and some of my evenings doing technical support for scientific illustrators. I actually remember my birthday that year - it was pouring rain and I rode through the town I was staying in on a bicycle wearing a red poncho in the middle of that rainstorm, just enjoying all of it. This was very close to the time I made my biggest money mistake, actually.

Now? I’m married with two kids, own a house in a small town, and write for a living. When I was ten, I couldn’t have imagined what I would be doing when I was twenty. When I was twenty, I couldn’t have imagined what I would be doing when I was thirty.

What will I be doing when I am forty? It’s truly impossible to guess at this point. I think I’ll just let it come.

The Diary of an Un-Frugal Weekend: A Lesson in Being Prepared Sometimes even the best-laid plans for living frugal just completely go awry. At least Lynnae deals with it well. (@ being frugal)

Should Your Standard of Living Rise? An increase in standard of living results in only a temporary increase in happiness, so why should you raise your standard of living at all? (@ wise bread)

Personal Finance Kata Mindful reading is a valuable thing. (@ gather little by little)

In Memory of Randy Pausch: Inspirational Videos to Watch When You Are In a Rut This one always tears me up, especially since I had a son of my own. It doesn’t matter how much money I make in life or what I “achieve” - what matters is that I can be there for my children at that moment when they need me. (@ frugal dad)

A Great Life Need Not Cost The Earth It need not cost money, either. Great visual explanation of the value of simpler living. (@ no impact man)

Don’t Make Money Blogging This is pretty accurate stuff, actually. A must read if you’re thinking about earning a ton of money blogging. Hint: you won’t. (@ shark investor)

Lower Your Grocery Bill Without Clipping Coupons Lots of good tips here. I’d recommend not just shopping at Aldi by default - I’ve found that Fareway is actually quite comparable to Aldi around here and has a much better selection. (@ money saving mom)

This morning, my wife and I sent in the final payment on her student loans, which was our primary personal finance goal for 2008 and our highest interest outstanding debt. It felt good. Really good.

Our next personal finance goal is to pay off my remaining student loan, which has an outstanding balance of $14,800 or so. This was the goal we had penciled in as our primary goal for 2009, intending to pay it off by the end of that year. Paying off that debt will leave us with only our mortgage as debt.

Rolling back the clock just twenty seven months really puts this financial turnaround in perspective. My wife had roughly $24K in student loans, all told (now paid off). I had $10K in one student loan (already paid off) and about $25K in another loan (now below $15K). We also both had significant amounts remaining on our separate car loans - I owed at least $5K on my truck at that point (now paid off), and she owed at least $2K on her car (also paid off). We also had a combined $17K (approximately) in credit card debt.

Adding that up means we’ve paid off a stunning $68K in debt in a little over two years. For comparison’s sake, our debt repayment is roughly equal to our 2006 income and not too much lower than our 2007 income, which should give a good idea of how hard we’ve pushed the pedal to the floor since our meltdown.

Now, we just have the remainders of my single remaining student loan and a mortgage to pay off. That’s all.

How did we do it? I’ve written about this a number of times, but it’s just as true now as it was then. We took a hard look at our financial situation, realized we were simply spending far more than we earned, and pushed ourselves - and each other individually - to turn that ship around. We sold off mountains of video games and DVDs and trading cards. We adopted much less expensive hobbies. I began to look seriously at alternative avenues for raising money in my spare time - at first, it was repairing computers, and then I began to have some success as a writer as well. We started preparing food at home instead of eating out most of the time. We made a debt repayment plan and started snowballing our payments, meaning as soon as one debt was paid off, we transferred that whole payment as an extra payment on the next debt.

The most important thing of all, though, was realizing that we needed to turn things around for each other and for our children. Spending far more than we earned was creating a dangerous path for our future, one that simply couldn’t continue.

We use each other as inspiration to push ourselves harder to save money. If my spouse has the financial strength to do it, so do I. If our children have a life of rich and full experiences and they’re emotionally centered, then we’re doing our jobs as parents, even if they don’t have the latest and greatest of everything.

But, for now, it’s time for us to celebrate a little in the way we’ve become accustomed to. A pair of steaks from the freezer are thawing and soon I’m going to go harvest some lettuce from the garden and maybe a fresh tomato or two, plus there’s a bottle of homemade blackberry wine that will be opened up and poured as a dessert drink. An amazing dinner, not much different than what we would have spent a lot of cash on a few years ago, but instead prepared and eaten at home, together, as a family.

My wife and I both like to press our creativity and see what money-saving tactics we can come up with that save a sizable amount of money and have a lot of fun along the way. Here are eight we’ve discovered over the last several months (yep, I’ve been saving these along the way).

1. Community festivals can be a very cheap way to spend a summer weekend, particularly ones near your home or ones that line up well with other planned summer trips. Just take along a sack lunch, watch a parade and the other activities (or even participate), and even sample some of the local fare by buying one and sharing it with the rest of your group. Even better, you can participate in events that push you a bit outside your comfort zone and let you try something a bit different than usual.

For example, this past weekend, my wife and children and I attended Nordic Fest in Decorah, Iowa, which happened to fall on the same weekend as a family event. We spent most of Saturday at the festival. We tried out some of the Norwegian food (abelskivers were my favorite - balls of a pancake-like pastry covered in jam and powdered sugar, and they were only $0.25 a pop). We watched the parade (free). Our children got their faces and arms painted (free). We even spent a couple hours in the afternoon watching a rock throwing contest in which I participated. In fact, here’s a video of one of my attempts, in which I chuck a hundred pound rock roughly nineteen feet.

A cheap weekend of fun for the whole family, indeed. (If you’re unable to see the video, check it out here.)

2. Prepare a meal before you go on a long trip. Before a recent weekend trip, we made eggplant lasagna and put it in the refrigerator. Three days later, when we returned mid-afternoon, worn out from a very active weekend, we just popped the lasagna in the oven and had a very inexpensive home-cooked meal.

Before figuring this out, we would often eat out at the end of a long trip because we were worn out after the trip. It was simply much easier to do that than to go home and prepare a meal, and that often meant $20 to $30 would be invested in the meal. By preparing the “welcome home” meal before we left, we trimmed the cost down to $3 or so.

3. Be inclusive with the neighbors as it can save you money and help forge powerful relationships. We have a swing set and a sandbox in our yard and as our son has grown older, he’s begun to interact quite a bit with other children nearby. With the recent arrival of a new family next door, with a youngest child just slightly older than our son, this has kicked up a notch.

We just made it very clear to the neighbors that their children were welcome to play in our yard and on our play equipment, no questions asked, the very day they moved in. Before long, they had invited other children in the neighborhood to play on the equipment and we welcomed all of them. Because of this, our son has had an army of children to play with all summer, we’ve become familiar with many more families on the block, and our son has been invited to play with many other children, improving his social skills. All with absolutely no cost to us (and often some savings, considering we’re playing in the yard instead of engaging in other activities).

4. Making your own beer and wine is very cost-effective if you prefer craft beers and solid wines. If you’re a “two buck Chuck” person or you prefer Busch Light to everything else, making your own beer isn’t very cost-effective. However, if your tastes run more towards craft beers and solid offerings from local vineyards, then making your own can be very cost-effective (and very tasty, to boot).

For example, my wife and I recently made a batch of oatmeal stout at home. Oatmeal stouts are rather intricate brews with a lot of ingredients and you can rarely find them in stores for less than $11 per six pack of bottles. We made forty two bottles of oatmeal stout for about $45, all told. This averaged out to about $6.50 per six pack of bottles. Now, if you compare that price to most mainstream beers (Busch, Budweiser, Miller), that’s not a particularly strong savings, but if you compare it to more craft-oriented beers (Sam Adams, Goose Island, Sierra Nevada, Rogue, etc.), it can be a serious bargain - and a lot of fun. If there’s interest, I’d be glad to post a walkthrough and a cost analysis of the next batch we make.

5. I’ve started to save my shredded paper because it makes spectacular campfire kindling. Whenever I have a pile of papers to shred, I just shred them up, then get them just a little wet. Then I squeeze the shredded moist paper down into a consistent but loose ball (mostly just making sure they stick together from the moisture), then let the ball dry out in the garage.

Before a camping trip, I grab a few of these dry balls of paper and pack them away. Then, when we build a campfire, I stack up the wood, put the dry paper ball at the bottom, and light the paper ball. It goes up in flames very quickly and usually has enough heat in a football-sized ball to get some smaller pieces of wood burning. This saves money on campfire starters and lets us actually utilize the shredded papers instead of just tossing them in the trash.

6. Another “hot” tip - campfire ashes make great fertilizer. Just scoop up the ashes when you’re done and save them in a container. When you get home, dump them out around the base of any bushes you have, in your garden, or even in your compost bin. Wood ash contains plenty of potassium, calcium, and magnesium and works well as a fertilizer if applied at a rate of about five pounds per hundred square feet.

It’s worthwhile to note that you shouldn’t do this if your soil is already very alkaline. If you garden, you probably already have some idea as to the pH of your soil - if you don’t, do a pH test. If the pH is above 7 or 8, don’t add wood ashes to your soil. However, if the pH is lower, wood ashes will be a nice benefit - and you can’t argue with the cost and environmental friendliness of the source.

7. Look for “mistinted” paint at your local hardware store if you’re about to paint a room and don’t have a need for an exact shade. You’ll often find gallons for just a dollar or two and the paint is just fine - it just happened to not perfectly color match someone else’s needs. Often, you can find enough for a room of the exact same shade and, if not, you can easily get more just by asking them to make more of that shade.

This works best if you’ve decided to re-paint a room but aren’t too worried about the exact color of the room. For example, we’re discussing repainting my office in a light green. Since I’m not too concerned about the exact shade, we’ll just dig through their “mistinted” paint until I find a “light green” that I like and get it for incredibly cheap. That’s how you redecorate for pennies.

8. Perennial vegetables are an incredibly cost-effective (and effort effective) way to garden. Take, for example, our asparagus patch. We started it this spring and have some shoots up out of the ground. For the next three years, we’ll not even touch this patch - nothing at all. After that, fresh asparagus every spring, like clockwork, with no effort.

If you like fresh garden fare but hate planting and dealing with gardening and you also don’t like the cost of replenishment each year, look into planting perennials, which grow up automatically each spring. Many herbs are perennials, as are asparagus, Pacific spinach, sweet potatoes, strawberries, and countless others. Just plant them once and they come back every year with very little tending required, just harvesting. That’s cost-effective gardening.

Marjorie wrote in recently:

I used to enjoy The Simple Dollar until I read about your recovery from credit card debt. You paid off $17,000 in credit card debt in a little over a year? You’re not a poor person, you’re a rich person. You don’t have financial problems and you can’t relate to my situation. I will have to find another website to read.

I receive a comment like this once a week or so. Usually, I brush off the negativity and move on with life, but Marjorie’s comments really struck a chord with me, so I thought I’d address them.

The Simple Dollar has very little to do with “rich” or “poor.” It’s all about spending less than you earn, regardless of how much you earn.

Whether a person makes $20,000 a year or $200,000 a year, a person can save money by following the same basic frugal steps. The high-income person saves just as much at the store clipping coupons as the low-income person does. The low-income person puts just as much cash in their pocket from turning off light switches as a high-income person does. For both, it’s a struggle to overcome the temptation of spending money unnecessarily. For both, it’s a challenge to put away money for the long term when there are so many potential uses in the short term.

Naturally, there are some opportunities available at each income level that aren’t available at other ones. Families with $20,000 a year in income are going to be eligible for certain types of aid. Families with $200,000 a year in income are likely going to be choosing among purchases that aren’t available to the lower-income family.

But the principles don’t change a bit. Both families should seek to spend less than they earn. Both families should always strive to get the most value from their dollar. Both families should always seek to improve themselves using every opportunity available to them.

Here’s another truth: if you don’t understand the basics of managing your money, it doesn’t matter how much you make - you’ll wind up deep in debt. If you don’t manage your money well, it’s very easy to spend significantly more than you earn, no matter your income level.

People at every income level have difficulties managing their money. Simply having a strong income doesn’t mean you suddenly have the ability to manage that income well. I’ve had people write to me earning minimum wage and wondering how they’ll ever pay off a $6,000 car loan. I’ve had others write to me making $500,000 a year but having more than a million dollars in total debt. Both of those people are going to have a difficult road ahead and both are going to have to make some very difficult choices in the coming months.

To say that people at other income levels don’t have financial problems is a class-based insult. People at all income levels have financial problems. Similarly, to say that people at other income levels don’t understand the “plight” of your income level implies that a person at a certain income level has never experienced anything else, which is nonsense. I grew up near the poverty line - I know what it means to not have a lot of money and to have to really stretch to make ends meet. Luckily, I now earn more.

But if there’s one truth I’ve found from writing The Simple Dollar, it’s this: almost every good money-saving idea I have I can easily share with my parents. They’re in a completely different financial state than I am with a much lower income, but we constantly apply the same tactics. We clip coupons. We garden. We read because it’s fun and cheap. We drive late model used cars until they’re about to fall apart. And on and on and on.

What are the differences? My mortgage was almost ten times more than the one they took out in the late 1970s. I had more credit card debt than they ever had by a factor of at least five. I had $40K in student loan debt - neither of them ever had a dime of it. I may earn more, but my debt situation was far worse.

What’s the message here? It doesn’t matter how much you earn or how much debt you have, the basic principles of getting your financial life in shape are the same. Spend less than you earn. Resist temptations. Learn how to cut your spending. Create a debt reduction plan and execute it.

We’re all doing this, together. It’s not about rich or about poor - it’s about getting our financial lives back on track, and we all use the same tools to get there. That’s something everyone can strive for.

Each Monday, The Simple Dollar opens up the reader mailbags and answers ten to twenty simple questions offered up by the readers on personal finance topics and many other things. Got a question? Ask it in the comments. You might also enjoy the archive of earlier reader mailbags.

As usual, we’ll start things off with a few links to older articles that directly answer questions I’ve heard recently.
Tactics for making financial changes when your spouse isn’t on board
My personal finance background
The best “pop psychology” book I’ve read

And now for some great reader questions!

If you’re learning more about personal finance, is it helpful to read economics books?
- Lanny

It’s helpful in the sense that it provides context for personal finance. We make money and spend money, and because of that we function as a piece of the overall economy. Understanding how economies work can be very insightful as it can teach us why prices vary, how supply and demand works, and so on.

I’ve read a ton of economics over the last six months (a phase that’s winding down, actually) and I’ve found that after engrossing myself in the topic, I now understand quite a bit more about the whole nature of buying and selling beyond just picking the best quality item for the buck. There’s a large and complex game going on there.

Is it necessary reading? No. Is it insightful and interesting? For me, definitely. If you can stand it, I recommend starting with Adam Smith’s The Wealth of Nations - it’s dry in places, but if you really think about what he’s saying and try to apply it to what you’ve seen in your own life, it’s massively insightful. Follow that up with any sort of modern economics that looks interesting to you.

Trent, I know you’ve posted about moving among several majors in college. What degree did you actually end up getting? And in what sector did you work before you took the plunge to write full-time?
- Lisa

I finished college with a degree in biology, then went back immediately for a degree in computer science. After that, I worked in a pair of computer-heavy office jobs for several years before quitting to work on The Simple Dollar - I was largely a programmer, but often found myself doing stuff like desktop publishing, poster design, and so on.

In a lot of ways, it trained me well for doing this. The periphery skills, like the software that runs The Simple Dollar, are already in place. The area where I really need to work is on the writing itself.

How do you face the loss of a job from the main wage earner in the family. We have a four month emergency fund, but once it hit us - I am very worried. Four months is not a long time. We have auto pay on most bills and investments. Do we automatically stop the investments until a pay check starts flowing - or try to keep up with investments out of the emergency fund. Once a new job is obtained, do you rebuild the emergency fund first - or keep up with investments.
- Joanne

Yes, stop the investments for now. You can restart them later on. The key thing is to make sure you don’t sink right now, so tighten up all of your leaky spending and hit the pavement to find new work.

When you get back to work, rebuild your emergency fund before doing anything. Your emergency fund is your buffer zone - it keeps you financially alive during crises. Murphy’s Law pretty much states that the second you let your emergency fund slack off, you’ll find yourself really needing it.

Do you think America is heading in the right direction?
- Dennis

Yes, I do. Most people are really worried about America because of the poor choices our government has made over the last decade or so. The government is not America. America is all of the people out there quietly doing their job, having fun on the weekends, and trying to better themselves here and there.

That America is doing just fine. I see lots of people working their tail off. I see lots of people creating useful and interesting and exciting things. I see kids playing in the park across from my house. Just a few months ago, I saw tons of people helping each other hand in hand during the Iowa floods.

The media might like to put up scare messages to stir up ratings, but from where I sit and the people I talk to and see living their lives, things are generally all right. Of course there are things that could be improved, but there’s always something that could be better. If there wasn’t, we’d have nothing to work for. Right now, for instance, people are worried about oil prices. I see tons of wind turbines going up all over the place, and I see people all over investing in huge numbers of more of them - and solar panels, too. I see people scared about the housing crisis and banks failing, but we went through more or less the same thing in the 1980s with the savings and loans and that turned out fine.

I think America is all right, and it’s in much better shape than a lot of people like to think.

What do you think about investing in real estate?
- Marvin

I look at real estate as just another commodity to invest in. You’ll have speculators come in and bump up prices and you’ll also see things bottoming out from time to time.

I do think that real estate is something that does reward the patient and the focused, especially those who have a lot of cash in their pocket. If you’re willing to spend your time really hunting out real estate deals, you can do very well in real estate - but the time investment you need is likely enough that it would have to become your career to make it work.

I would love to read your thoughts about Amazon’s new Kindle.
- JB

My wife has a Kindle and she loves it. She reads (on average) four books a week and she is convinced that it is pretty much the most convenient way possible to enjoy books.

She’s particularly passionate about reading classics (for example, she’s reading Wuthering Heights at the moment), which is particularly convenient because tons of classics are in the public domain and available for free. All she has to do is point her Kindle’s web browser at manybooks.net and download away, all the classics she wants in Kindle format for free. The best part is that the web browser on the Kindle works anywhere that cell service works.

Her only real complaint is the relatively high price for new releases from the Kindle Store. She thinks they should always be substantially lower than the paper price since there’s basically no production cost.

Hi Trent, I am curious about how you plan to handle it if your children don’t turn out to be as finacially responsible as you are? Do you think you would help them out of financial problems by loaning them money, etc?
- Emmy

My feelings on this are somewhat related to my own background and what I’ve observed in similar situations.

With my own kids, I have no problem helping one of them out, but I don’t like the idea of lending them money and I especially don’t like the idea of helping one child more than another one. Thus, my wife and I have largely decided that if we have one adult child that needs, say, $500 for something and we decide to give it to him or her, we’ll give the same exact amount to each sibling to do with what he or she pleases.

Any other scenario I can think of seems unfair to someone.

What are your thoughts on the ethical argument for not eating animals? Specifically, the argument from Gary Francione that states that since animals have a vested interest in continuing to exist, we should not infringe upon that by killing them.
- John

I have one major problem with this argument: it applies to plants just as well as to people. Plants also have a vested interest in continuing to exist, so why is it ethical to eat plants and unethical to eat animals? Plants can sense external stimuli, just as animals do. Plants have defense mechanisms to sustain their life (thorns, for example). Why is it acceptable to eat plants, but not acceptable to eat animals?

From my perspective, the best case for vegetarianism is that it makes healthy dietary choices much easier. Just consume no meat at all and your diet is bound to get healthier.

How do you deal with it when you fail to achieve a financial goal?
- Ed

The first thing I do is try to look at all available data and see where I failed. When I set a goal, I usually try to keep track of progress towards that goal, and that means keeping careful financial records and so forth. So, for example, if I didn’t meet a target for the month, I look through my bank statements and my credit card bills and try to figure out where I went wrong.

Usually, I fail at goals because I either made a really dumb mistake or two or I set the bar too high. If I can find the mistake(s), I focus on them intently in order to correct the problem. If I can’t find mistakes, I assume I must have set the bar too high and use that knowledge for future goals that I might set.

You’ve mentioned that you might try something completely different with your career again in several years. What would you think about doing?
- Linda

Honestly? Teaching. I’d love to be a high school English, history, or math teacher. My only concern with that type of job is dealing with parents. I have a pretty low tolerance for people who look to blame others for their own mistakes, and I’ve seen plenty of parents who become infuriated with teachers because of things like failing a student because he or she cheated.

I just don’t think I’d deal with that situation very well. I can certainly say I wouldn’t bend on such a thing - if my cheating policy was automatic failure and the student was aware of it, that student would fail. And I’d stubbornly stick by it, probably until I got a pink slip.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.